Digital Financial Services

Financial services provide opportunities often taken for granted in developed countries, including the ability to readily make payments, save and invest for the future, insure against misfortune and borrow to grow one’s business.

However, in developing countries around two billion people lack financial services. In most of these countries, more people have a mobile phone than a bank account. Innovators are making use of this unprecedented access to affordable technology to deliver digital financial services (DFS) to the previously unbanked at an impressive rate.

The UNSW Digitial Financial Services Research Team is conducting in-depth and pioneering research into the regulation of digital financial services with support from the Australian Research Council (ARC) and the United Nations Capital Development Fund (UNCDF).

DFS refers to any financial service or product accessible using a digital platform. These include traditional products such as basic transaction accounts, savings, credit, insurance and investments, and more recent innovative products such as e-money.

DFS have been successful in increasing financial inclusion – ‘banking the unbanked’ – and improving efficiency in the financial sector in many countries, both developed and developing. However, a critical factor in the success or failure of DFS in achieving these ends is the legal and regulatory environment. Do some laws create unnecessary barriers to entry for new providers of DFS? Have regulators created an environment wedded to traditional channels for delivering for financial services or one which encourages innovation in DFS? Are new users of DFS adequately protected against abuse, deception or loss of savings? What is done to secure the privacy of customers’ personal and sensitive information against misuse and disclosure?

Our research focuses on these and other legal and regulatory issues surrounding the provision and use of DFS, with the support of two CIFR-funded projects (E226 and T025, both have concluded in December 2015) and one three-year (2016-2018) Linkage project co-funded by the ARC and UNCDF.

The UNSW Team has worked intensively on these issues since 2013. In an earlier project in 2014-15, the UNSW Team undertook extensive in-country fieldwork in Malawi and Timor Leste and advised the central banks of both nations. The Team’s research findings were implemented into law and regulations in a range of countries in Africa and the Pacific.

Our work in the earlier project has been published in multiple journal articles, and further disseminated in many presentations to conferences and workshops. We produced a 120 page Regulatory Handbook to assist and guide regulators in the enabling regulation of DFS. The Handbook was launched at our major conference in Sydney in mid-December 2015. This conference brought together 78 participants from 20 countries, including two Central Bank Governors and representatives of a further eight central banks, and received very positive reviews.

The current Linkage Project aims to develop new proportional regulatory models to facilitate the provision of secure and effective DFS in developing countries and Australia.

The Project has achieved a great deal since its launch in early 2016. Most significantly, the UNSW Digital Financial Services Research Team has produced a Regulatory Diagnostic Toolkit (RDT). The RDT is the world’s first structured analytical framework to support regulators by using a systematic approach to assess, adapt and advance their regulatory regimes for DFS. It is innovative in three main ways: (1) it enables regulators to identify regulatory barriers to the growth, and gaps in the regulation, of DFS, (2) it identifies gaps in the data-driven evidence underpinning DFS policy development, and (3) it assists regulators to optimise their capacity by directing their resources where they can do the most good, in line with their objectives for market development.

We piloted the RDT in the Solomon Islands in 2016. This entailed two in-country visits and extensive desk-based research. The Team worked closely with the Central Bank of the Solomon Islands. With the Central Bank’s assistance, we were able to successfully engage a wide range of stakeholders from both government and private sector to participate in discussions on DFS regulation in the Solomon Islands. Using the RDT, we identified the main need of the country to be an effective consumer protection policy and, at the request of the Central Bank, provided extensive further assistance in this respect.

We have presented on the RDT and related issues at many regional and international forums in 2016, including the Global Policy Forum of the Alliance for Financial Inclusion (AFI – the alliance of 94 developing countries' central banks working to advance financial inclusion); the Pacific Islands Regional Initiative (PIRI – the alliance of Pacific Island Central Banks); and the Expert Group on Financial Inclusion Policy and Consumer Protection, hosted jointly by AFI and PIRI. The RDT was one of the three finalists in the UNSW Innovation of the Year Awards for 2016 (and the only non-STEM innovation among the finalists). Other Briefing Notes for UNCDF can be found here, and our blog posts on various issues concerning DFS regulation are here.

In developed countries, our team leader, Professor Buckley has presented our findings to: the UNCDF and the Better than Cash Alliance in New York City; the ASIC Annual Forum, ASIC's External Advisory Panel, the Melbourne Money & Finance Conference, two ‘masterclasses’ at Stone & Chalk on FinTech and RegTech respectively, as well as other conferences and workshops.



This project is being undertaken by the world’s first and, we believe, only university-based research team delving into the regulation of digital financial services and FinTech.


Key Documents:


UNSW Digital Financial Services Research Team

Ross Buckley           CIFR King & Wood Mallesons Professor of International Financial Law, and Scientia Professor, UNSW

Colin Picker             Professor, UNSW

Douglas Arner         Professor, University of Hong Kong

Louise Malady        Senior Research Fellow, UNSW

Cheng-Yun Tsang   Research Fellow, UNSW

Katharine Kemp     Research Fellow, UNSW


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