BigFintechs and Their Impacts on Sustainable Development
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Preprint
BigFintechs (BFTs) have become new giants of global finance bringing with them key new challenges, particularly for emerging and developing economies. The purpose of this Technical Paper is to garner a more robust understanding of the emerging impacts (positive and negative) of BFTs across the full spectrum of the Sustainable Development Goals (SDGs), to better inform the dialogue around a new generation of governance innovations to address such impacts, particularly with regard to least developed countries (LDCs). The current focus of research and practical approaches to Fintech regulation, governance and supervision are viewed as the domain of the financial sector and, to a limited degree, the technology sector. These approaches relate to the implications of harnessing emerging technology in delivering financial services, with a global focus on issues of privacy, financial security, money laundering, taxonomy, benchmarks and overall financial integrity and stability. However, BFTs are playing an increasing role in shaping (in both positive and negative ways) a sustainable future, including issues that have previously been considered as outside the realm of examination. To date, there has been no holistic examination of all the activities in which BFTs are involved. Therefore, the understanding of their cross-cutting impacts across the SDGs, policy, regulatory and corporate governance is equally limited. The current narrative of the 'Fourth Industrial Revolution' and the digital economy in terms of ensuring the transformative nature of digital technologies are harnessed for sustainable economic development and that developing countries and especially LDCs are not left further behind. The narrative is premised on the notion that Fintech has an enabling capacity and that there are certain risks largely related to data governance, consumer protection and operational risk management that must be addressed. Furthermore, BFTs are examined largely within subsets of activities related to their financial service offerings rather than across their evolving ecosystem of activities and the implications of these across the full spectrum of the SDGs and for LDCs. This paper begins with the premise that the nature and scale of BFT activities carries different emerging trends, risks and vulnerabilities in LDCs. This paper broadens the examination in three key aspects: (i) it covers a fuller spectrum of BFT activities, brought into the scope of this paper through their connection to the Fintech element employed; (ii) it engages an impact lens developed to capture a fuller range of the environmental, social and economic SDGs; and (iii) the paper presents a case study and landscape analysis with a view to advancing the collective understanding of emerging trends and their impacts, particularly on LDCs.
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