Policymakers and regulators who can spur innovation or adapt to innovation quickly are more likely to support DFS growth. Structured approaches may help balance policy objectives, facilitate market engagement, and provide a stronger basis for outcome measurement.

Innovation facilitators have become popular tools and approaches used by regulators to enable the development of DFS. The structure and design of innovation facilitators can vary greatly from simple points of contact within existing bodies to more structured framework environments to provide space for experimentation.

Generally, they focus on promoting greater knowledge exchange and interaction, with both new entrants and incumbents developing new technology-driven products and services. Facilitators can also be used to monitor market developments, including the challenges, risks, and opportunities related to technological innovation in the financial sector and the impact of this on financial stability.



A number of regulatory tools and approaches have emerged in response to developments in the DFS landscape. The choice of regulatory tool or approach depends on policy priorities and ecosystem variables such as legal and regulatory frameworks, the complexity of the market, and the availability of resources.

  • Wait and See

    Observer capacity by regulators: New fintech business models are permitted to function with the explicit intention of allowing innovations to develop with limited restraint for a period.

    “Wait and See” Approach Wait and See
  • Test and Learn

    An agile approach, where regulators grant restricted licenses or partial exemptions for new entrants or established intermediaries testing new technologies.

    “Test and Learn” Approach Test and Learn
  • Innovation Hub

    Point of contact for firms to raise enquiries with competent authorities on fintech-related issues and to seek nonbinding guidance on regulatory and supervisory expectations.

    Innovation Hub Innovation Hub
  • Regulatory Accelerators

    Partnership arrangements between innovators or fintech firms and government authorities to “accelerate” growth, innovate on shared technologies, and develop use cases that are particular to that authority.

    Regulatory Accelerator Regulatory Accelerators
  • Regulatory Sandbox

    Controlled, time-bound, live testing environments that allow innovators to test, on a small scale, innovative products, services, business models, and delivery mechanisms.

    Regulatory Sandbox Regulatory Sandbox
  • Direct Regulatory Reform

    Amendment or introduction of new laws and regulation.

    Regulatory Reforms Direct Regulatory Reform
Market conditions
  • How competitive is the market?
  • What is the state of financial inclusion (unserved or underserved individuals and MSMEs)?
  • Number and types of financial institutions?
Stakeholder ecosystem
  • How many regulators oversee financial supervision?
  • What is the level of coordination with technology regulators?
  • What is the level of development of the entrepreneurship ecosystem (incubators, accelerators, VC funds)
Capacity and resources
  • How much financial, human and technical resources does the regulator have?
Maturity of fintech market segment
  • What is the maturity of market players?
  • What is the relationship between incumbents and new entrants (fintechs)?

Decision Tree

The decision tree is designed to diagnose gaps and areas of development that are faced by policymakers and regulators. It then provides a set of recommended approaches. 


Country Examples

Link to Ireland case studies
Link to Kenya case studies
Link to France case studies
Link to Germany case studies
Link to Morocco case studies
Link to England case studies
Link to China case studies
Link to Australia case studies
Link to Philippines case studies
Link to Mexico case studies
Link to Thailand case studies
Link to Sierra-Leone case studies
Link to Hong-Kong-(China) case studies
Link to India case studies
Link to Pacific-Islands case studies
Link to Rwanda case studies
Link to Colombia case studies
Link to Malaysia case studies
Link to Lithuania case studies
Link to United States case studies
United States
Link to Indonesia case studies
Link to Brazil case studies
Link to Singapore case studies
Link to Jordan case studies
Link to United Kingdom case studies
United Kingdom
Link to South-Korea case studies
Link to Mexico case studies
Link to Estonia case studies

Impact Measurement Framework

Evaluations should be done to understand if the innovation facilitator framework is fit for purpose—this introduces agility into the regulators’ processes. Having a clear objective and intended outcomes can underpin a facilitator’s success. Outcomes should be defined at multiple levels:

  1. country-level outcomes.
  2. regulatory outcomes.
  3. market- and firm-level outcomes.
  4. operational and institutional outcomes.

Measurement, monitoring and evaluation of innovation facilitators

Photo Credit: World Bank
Source: World Bank