Digital financial services

We believe that governments can make smart policy decisions to enable innovative, safe and inclusive digital financial services (DFS).

Building inclusive, investable digital financial systems that accelerate national development

Digital financial services are now core to how people save, borrow, pay, and participate in their economies. For governments, DFS is no longer a niche innovation but a foundational pillar of economic transformation—one that expands opportunity, strengthens domestic markets, and attracts responsible investment. UNCDF supports regulators to shape DFS systems that are open, trusted, competitive, and aligned with development priorities—where competition, DPI, consumer safeguards, and gender-responsive policy work together to deepen financial sectors and improve people’s lives.

What This Focus Area Fixes

Across many emerging and frontier markets, digital finance has grown faster than the rules that govern it. Regulators see first-hand how innovative services reach millions—but also how concentrated markets, fragmented systems, and weak governance create structural obstacles. These frictions hold back investment, limit reach, and reduce the reliability of services that should be powering economic transformation. Countries have an opportunity to realign DFS policy with national development goals: opening markets, modernizing infrastructure, protecting consumers, and ensuring women and MSMEs can fully participate.

A central challenge is that DFS ecosystems rely on multiple interconnected systems—payments, identity, data governance, prudential rules, consumer protection—yet these systems often evolve at different speeds and under different authorities. When payment systems are interoperable but licensing rules remain restrictive; or when digital ID exists but cannot support remote KYC; or when women face disproportionate digital risk—DFS remains partial rather than transformative. The result is higher costs, lower trust, and muted investment appetite.

Governments are now recalibrating. By building coherent, gender-intentional DFS policy environments—anchored in competitive markets, inclusive DPI, and robust safeguards—regulators can lower barriers for providers, reduce risks for consumers, and enable capital to flow into productive sectors. DFS then becomes an engine for MSME growth, domestic resource mobilization, digital public service delivery, and affordable access to financial tools that strengthen resilience and expand opportunity.

Impact Signals

What governments can expect to see when DFS systems are functioning well

Lower cost and higher reliability of digital payments, driven by competition and interoperability.
More inclusive onboarding, with remote e-KYC and gender-intentional DPI reducing access barriers for women and rural users.
Higher consumer trust, evident in reduced complaints, fewer fraud cases, and stronger financial sector integrity.
Greater provider diversity, including fintechs and inclusive financial institutions entering and scaling in the market.
Increased capital flows, as investors perceive clearer rules, predictable market conduct, and investable infrastructure.

How We Drive Change

1. Diagnose systemwide bottlenecks
We map rules, incentives, and institutional gaps across competition, DPI, consumer protection, and gender inclusion to reveal the structural constraints shaping DFS markets.

2. Co-design policy reforms with regulators
Using global standards and UNCDF toolkits, we support authorities to design coherent, future-ready DFS policies—aligned with UN DPI Safeguards and national development strategies.

3. Build institutional capability to implement and enforce
Through embedded advisory, peer learning, and structured supervisory support, we strengthen ministries, central banks, ICT regulators, and competition authorities to operate predictable, investment-ready systems.

4. Enable investment and market participation
By aligning regulatory reforms with downstream opportunities (MSME finance, digital payments infrastructure, municipal digitalisation), we reduce risk, improve market integrity, and attract public and private capital.

Policy Actions We Support

Open markets through tiered licensing, proportional regulation, and competition frameworks that reduce concentration and support new entrants.
Modernize onboarding by enabling remote e-KYC and linking digital ID systems to DFS with strong safeguards.
Advance interoperability across payment systems and public platforms to reduce transaction costs and expand reach.
Strengthen consumer safeguards by designing predictable redress, transparent pricing, and liability frameworks aligned with global norms.
Embed gender-intentional policy design, ensuring women’s access, safety, and participation are reflected in data, rules, and institutional processes.
Promote data governance and responsible innovation, balancing market development with privacy, security, and resilience.