he fintech sector has experienced unprecedented growth, raising record levels of capital. Revenues are expected to grow almost three times faster than those in the traditional banking sector by 2028, an inevitable reshaping of the global financial system. Fintech’s innovative nature can tap into a market long excluded from financial services: the billions who remain unbanked in developing countries. However, governments and fintech innovators must prioritize common market mechanisms on an international scale. Without cooperative action, fragmented approaches will slow or even halt the industry’s development potential.
Fintech has an opportunity not only to drive growth but to bridge global financial literacy gaps. Over 1.4 billion adults remain unbanked due to living in remote, impoverished, or cash–driven areas, irregular incomes, or a lack of documentation required by traditional banks. Traditional banks, albeit unintentionally, reinforce this, as these individuals often lack access to infrastructure, formal employment opportunities, or education, limiting their ability to participate in traditional institutions. Fintechs, however, are agile. They can test and implement innovations far more quickly than banks burdened by bureaucracy. For instance, while traditional banks rely on credit scores to open accounts, fintechs can leverage different sources to assess creditworthiness and intent. Tala, operating in Kenya, Mexico, India, and the Philippines, evaluates risk profiles in minutes using machine learning, serving customers with no formal financial history who are otherwise overlooked.
Yet substantial gaps remain: Indonesia illustrates both this progress and these challenges. From 2014 to 2017, the population’s account ownership rose from 36% to 48.9% primarily through government initiatives promoting financial inclusion and mobile wallet use. But rural populations lag, and most Indonesian fintechs focus on lending and payment, offering few savings options. Governments like Indonesia’s want change, but without policy coordination and strategic partnerships, this potential remains stagnated.
India shows what coordinated policy and fintech innovation can achieve. In 2009, India introduced the world’s most extensive biometric ID system, Aadhaar, assigning each resident a digital identity enabling widespread access to banking services, even for illiterate individuals. Aadhaar streamlines government services, reduces fraud, and increases inclusion. Building upon this, India launched the United Payments Interface (UPI) in 2016, a biometric authentication solution for e–commerce transactions developed with fintechs M2P and MikasuPayMakiasuPay. UPI has overtaken Visa in daily global transactions, handling 640 million payments daily, powering nearly 50% of real–time digital payments worldwide, and expanding to seven countries. This demonstrates the economic boost and global opportunities of exporting successful models.
UPI’s expansion is a turning point in global adoption, but reveals fragmentation risks. France adopted UPI primarily to serve its Indian tourists, the second–largest group of international visitors to the Eiffel Tower. Other European countries have expressed interest in adopting UPI and similar systems for tourism rather than for domestic use. Meanwhile, the European Union is pursuing its own Instant Payments Regulation to standardize euro–denominated transactions. While these systems are valuable domestically, their coexistence will intrinsically create barriers. Regulatory misalignment forces innovators to navigate multiple infrastructures and integrate into existing systems, increasing costs and slowing progress in the very markets poised to reap the most.
A lack of coordination creates confusion across developed and developing economies alike. The EU’s Financial Data Access Regulation aims to establish customer–centric frameworks for accessing financial information. Currently, the U.S. has no single legal standard for user data, but has leaned toward market–driven policies, such as the proposed Section 1033 of the Dodd–Frank Act, demonstrating independent visions in achieving digital sovereignty and risking the market devolving amid conflicting ideas.
Policies promoting intergovernmental cooperation through common regulations, international investment, and cross–border taxation need to become the norm. In 2018, the World Bank and IMF proposed the Bali Fintech Agenda, a blueprint of 12 policies designed to promote equitable development and technological innovation. Operationalizing these principles could be the key to a common international market.
Still, concerns remain about preserving fintech agility amid coordinated regulation. One way to bypass this is to implement regulatory sandboxes. Regulatory sandboxes are frameworks that temporarily exempt fintechs from regulations to test how innovations can gain traction before scaling. South Korea established a regulatory sandbox in 2019 featuring 18 projects, including blockchain initiatives, allowing leaders to determine the right regulatory fit while prioritizing innovation and oversight. These projects also incorporate bilateral and multilateral lenses to help regulators align sandbox outcomes with international standards. By utilizing regulatory sandboxes, governments can encourage innovation while balancing coordination and flexibility.
Financial inclusion is one of the most promising aspects of the global fintech landscape, with the industry poised to become a global engine for inclusion, investment, and development. But without common mechanisms, regulatory fragmentation threatens progress. By creating a common market, enabling regulatory sandboxes, and prioritizing intergovernmental cooperation, governments, banks, and fintechs can build a system that reinforces innovation and inclusion, reshaping the global financial order to bridge this longstanding divide.
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The fintech standoff: opportunity through the unbanked
Photo by George Prentzas on Unsplash
January 19, 2026
Fintech can transform global financial inclusion, but without coordinated policies, fragmentation will stall innovation and limit access, writes Savannah Taylor.
T
he fintech sector has experienced unprecedented growth, raising record levels of capital. Revenues are expected to grow almost three times faster than those in the traditional banking sector by 2028, an inevitable reshaping of the global financial system. Fintech’s innovative nature can tap into a market long excluded from financial services: the billions who remain unbanked in developing countries. However, governments and fintech innovators must prioritize common market mechanisms on an international scale. Without cooperative action, fragmented approaches will slow or even halt the industry’s development potential.
Fintech has an opportunity not only to drive growth but to bridge global financial literacy gaps. Over 1.4 billion adults remain unbanked due to living in remote, impoverished, or cash–driven areas, irregular incomes, or a lack of documentation required by traditional banks. Traditional banks, albeit unintentionally, reinforce this, as these individuals often lack access to infrastructure, formal employment opportunities, or education, limiting their ability to participate in traditional institutions. Fintechs, however, are agile. They can test and implement innovations far more quickly than banks burdened by bureaucracy. For instance, while traditional banks rely on credit scores to open accounts, fintechs can leverage different sources to assess creditworthiness and intent. Tala, operating in Kenya, Mexico, India, and the Philippines, evaluates risk profiles in minutes using machine learning, serving customers with no formal financial history who are otherwise overlooked.
Yet substantial gaps remain: Indonesia illustrates both this progress and these challenges. From 2014 to 2017, the population’s account ownership rose from 36% to 48.9% primarily through government initiatives promoting financial inclusion and mobile wallet use. But rural populations lag, and most Indonesian fintechs focus on lending and payment, offering few savings options. Governments like Indonesia’s want change, but without policy coordination and strategic partnerships, this potential remains stagnated.
India shows what coordinated policy and fintech innovation can achieve. In 2009, India introduced the world’s most extensive biometric ID system, Aadhaar, assigning each resident a digital identity enabling widespread access to banking services, even for illiterate individuals. Aadhaar streamlines government services, reduces fraud, and increases inclusion. Building upon this, India launched the United Payments Interface (UPI) in 2016, a biometric authentication solution for e–commerce transactions developed with fintechs M2P and MikasuPayMakiasuPay. UPI has overtaken Visa in daily global transactions, handling 640 million payments daily, powering nearly 50% of real–time digital payments worldwide, and expanding to seven countries. This demonstrates the economic boost and global opportunities of exporting successful models.
UPI’s expansion is a turning point in global adoption, but reveals fragmentation risks. France adopted UPI primarily to serve its Indian tourists, the second–largest group of international visitors to the Eiffel Tower. Other European countries have expressed interest in adopting UPI and similar systems for tourism rather than for domestic use. Meanwhile, the European Union is pursuing its own Instant Payments Regulation to standardize euro–denominated transactions. While these systems are valuable domestically, their coexistence will intrinsically create barriers. Regulatory misalignment forces innovators to navigate multiple infrastructures and integrate into existing systems, increasing costs and slowing progress in the very markets poised to reap the most.
A lack of coordination creates confusion across developed and developing economies alike. The EU’s Financial Data Access Regulation aims to establish customer–centric frameworks for accessing financial information. Currently, the U.S. has no single legal standard for user data, but has leaned toward market–driven policies, such as the proposed Section 1033 of the Dodd–Frank Act, demonstrating independent visions in achieving digital sovereignty and risking the market devolving amid conflicting ideas.
Policies promoting intergovernmental cooperation through common regulations, international investment, and cross–border taxation need to become the norm. In 2018, the World Bank and IMF proposed the Bali Fintech Agenda, a blueprint of 12 policies designed to promote equitable development and technological innovation. Operationalizing these principles could be the key to a common international market.
Still, concerns remain about preserving fintech agility amid coordinated regulation. One way to bypass this is to implement regulatory sandboxes. Regulatory sandboxes are frameworks that temporarily exempt fintechs from regulations to test how innovations can gain traction before scaling. South Korea established a regulatory sandbox in 2019 featuring 18 projects, including blockchain initiatives, allowing leaders to determine the right regulatory fit while prioritizing innovation and oversight. These projects also incorporate bilateral and multilateral lenses to help regulators align sandbox outcomes with international standards. By utilizing regulatory sandboxes, governments can encourage innovation while balancing coordination and flexibility.
Financial inclusion is one of the most promising aspects of the global fintech landscape, with the industry poised to become a global engine for inclusion, investment, and development. But without common mechanisms, regulatory fragmentation threatens progress. By creating a common market, enabling regulatory sandboxes, and prioritizing intergovernmental cooperation, governments, banks, and fintechs can build a system that reinforces innovation and inclusion, reshaping the global financial order to bridge this longstanding divide.
