Investment in digital finance startups continues to grow for companies that are creating innovation for integrating distributed digital banking, mobile solutions and delivery platforms, micro-finance, payment solutions, peer-to-peer lending and crowd-funding.
Digital finance encompasses the areas of financial technology, digital payment systems, and digital financial products such as digital derivatives, digital securities, digital carbon credits, and a wide variety of digital forms of traditional financial products.
The digitalization of the economy is growing at a phenomenal rate, impacting and challenging the way we conduct financial transactions. In 2012, a total of 22.2 million megabits of data crossed the global economy involving $4 trillion in digital financial transactions among 194 million people. If the spread of digital technology in finance and rising prosperity continues, the global flows will triple by 2025, boosting economic growth.
Digitization of the financial sector is transformative because it reduces costs of services and distribution and creates purely digital financial products and services, some of which are entirely new, and others of which may not be new but are delivered on international digital platforms that are new. These technological changes create significant new opportunities for new FinTech, and many new opportunities for governments and companies to drive growth and innovation, opening the door to greater participation by entrepreneurs.
These changes put pressure on governments to consider how their economies should participate and how they can enable participation through the right business environment and regulation, and ways in which they can capitalize on the global shift to digital finance. There will need to be new investments and focused policy to embrace the increasingly digitization of finance to consider a wide-range of untested issues.
Currently, there are no global regulatory regimes or regulatory infrastructures that address digital finance, including how machine-to-machine digital financial transactions will be regulated in the Internet of Things.
The role of the Institute is to provide thought leadership for the public and private sectors to guide policy, regulatory and investment decisions in a way that supports FinTech investment and innovation.