Many people have embraced this, and the result so far has been easier online offerings and more competition. There is, however, a possible negative effect of fintech’s rise too: the increase in risk for the financial system as a whole, as fintech tends to be un- or under-regulated. Regulators therefore have the unenviable task not to regulate fintech innovations in a way that reduces systemic risks while allowing for their further development.

The rewards for regulators should outweigh the costs: If regulated well, fintech could have a positive impact on SME financing, jobs and growth in otherwise anemic economic conditions in most countries. That prospect is already making them look at novel ways of crafting policies.