Examining the Regulatory Challenges and Opportunities in the FinTech Ecosystem in Emerging Economies

Abstract

Authorities are a significant obstacle to the growth of the FinTech sector in emerging countries. This paper investigates regulatory issues and potentials in the environment of FinTech through survey data from 400 participants encompassing FinTech players such as leaders and employees, regulators, financial organizations, and customers. This created confusion since several issues negatively define the industry. These encompass a variety of elements, including the following: a lack of clear and adaptive regulations, data security concerns, and cross-border inconsistencies. Statistical regression analysis reveals the foregoing regulatory factors have a great negative relationship with FinTech growth, with unclear regulations being the most decisive factor (B= 0.42, P < 0.05). Moreover, regulatory opportunities that the financial sector’s stakeholders currently notice are regulatory sandboxes, M = 4.45, risk-based regulations, and others. Thus, it was concluded that there is a need for policymakers to approve an adaptive and integrated regulatory framework for the development of innovation as well as financial stability and consumer protection. The current dynamics and the structure of the FinTech market in emerging economies can be explained through the following strategies: The adaptation of structured regulatory systems, improving cybersecurity policies, and combining regulators and FinTech firms.