Digital financial services (DFS) differfrom traditional financial services in several ways thathave major implications for regulators. The technologyenables new operating models that involve a wider range ofactors in the chain of financial services, from design todelivery. The advent of DFS ushers in new providers such asnonbank e-money issuers (EMIs), creates a key role foragents in serving clients, and reaches customers who haveotherwise been excluded or underserved. This in turn bringsnew risks and new ways to mitigate them. For many years now,CGAP has been interested in understanding how these newmodels are regulated, and how regulation might have to adaptto enable DFS models that have potential to advancefinancial inclusion. This focus note takes a close look atfour building blocks in regulation, which we call basicregulatory enablers, and how they have been implemented inpractice. Each of the enablers addresses a specific aspectof creating an enabling and safe regulatory framework forDFS. Our focus is on DFS models that specifically targetexcluded and underserved market segments. The authorsanalyze the frameworks adopted by 10 countries in Africa andAsia where CGAP has focused its in-country work onsupporting a market systems approach to DFS.
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