Regulation as a Driver to Foster Digital Economy in Emerging Markets

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By FINTECH Books Contributor,  Mario Villada
Follow: @mavillada

The relationship between regulation and the adoption of new digital technologies in emerging markets still lack proper incentives to innovate and adopt and are giving room to the paradox according to which, even though the 4th revolution offers access to new technologies at a very low cost, emerging economies are still not vigilant and adopting them, due – among other causes, mainly to two critical factors: poor regulation (excessive or simply, obsolete and deficient) and lack of incentives for local and international investors and entrepreneurs to massively invest in such technologies in those countries.

Digital technology is providing the right path to democratize and give low income population more access to several services (such as financial services) but regulation in developing countries is yet not ready to back up the changes implied with the adoption of such technologies (new businesses models, disintermediation, blockchain instead of central deposits, privacy and, cybersecurity issues, new insurance product needs, among other situations).

There are huge opportunities that RegTech offers to emerging countries in terms of closing social gaps, expanding financial inclusion,democratising certain services and allowing the entrance of new players to long time and ‘well-established’ markets (entering as new competitors or allies of larger corporations) making those economies more ready to compete in the new global landscape where AI, cloud services, AR, Fintech, Blockchain and IoT promise to profoundly impact our lifestyles, consuming habits, interaction with others (including our companies’ stakeholders) and working force dynamics.

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