Why Enabling Regulation is Essential to Fintech Success in Emerging Markets

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In emerging markets the world over, fintech innovation is jumpstarting financial inclusion for unbanked consumers and small businesses. In the process, the fintech sector has become a key focus of both traditional and impact-focused investors. At the core of all this progress is enabling regulation – i.e., a regulatory process that enables innovators to experiment with new approaches, with the aim of increasing access to and usage of financial services.

For U.S.-centric investors, the goals of most regulatory oversight of basic financial services may seem cut-and-dried, even obvious: protect consumers, stop scammers, prevent egregious fee structures that unfairly impact customers who can’t afford them, and so on.

But for emerging markets in Latin America, Asia and Africa/MENA—where Quona Capital invests—the work of regulators isn’t so clear-cut. Indeed, their efforts are often muddied by political interests, regime changes and a lack of true autonomy – and in countries without easily accessible legacy banking systems, they essentially have to start from scratch. For many of these markets, that has sometimes led to an “anything goes” approach to regulation, in which no one is looking out for the interests of brazil whatsapp number data consumers – but this has started to change.



Early regulatory reforms in India and Brazil’s financial sectors
In 2015, when we launched Quona Capital – a venture firm focused on fintech in emerging markets – the green shoots of regulatory reform had already started to appear in some key markets, indicating the huge opportunity that was on the horizon. For instance, the National Payments Corporation of India, a division of the Reserve Bank of India, developed the Unified Payments Interface (UPI) in 2016, creating a set of standards that enable a single mobile application to access different bank accounts and move money immediately from anywhere, at any time. These efforts built upon the work of the Unique Identification Authority of India – led by digital visionary and Infosys co-founder Nandan Nilekani – to provide each Indian with a 12-digit “Aadhaar” identification number, similar to a Social Security number in the U.S. These initiatives have enabled a broader ecosystem for enrollment, updates and authentication services in the banking sector that can drive fintech products forward. Recently, many countries outside of India have begun to accept UPI to reinforce digital payments, including the UAE, Nepal, Bhutan, Singapore and, most recently, France.