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Report highlights opportunities for financial innovation in Western Balkans

4 June 2020

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Cambridge Centre for Alternative Finance, working with World Bank, identifies regulatory frameworks as key to unlocking potential of innovative financial services for …

Cambridge Centre for Alternative Finance, working with World Bank, identifies regulatory frameworks as key to unlocking potential of innovative financial services for consumers and MSMEs

A joint report from the World Bank and the Cambridge Centre for Alternative Finance (CCAF), based at the Cambridge Judge Business School, has highlighted the need for more proactive and enabling regulatory actions in the Western Balkans to help realise the opportunities presented by technology-enabled financial innovation.

The report, Fintech Innovation in the Western Balkans: Policy and Regulatory Implications & Potential Interventions, identifies that, despite high growth in the use of card and digital payments, there remains unexplored potential for other form of FinTech business models and activities in the region, with only 67 FinTech firms from the region identified in the study. The fact that banks are predominantly owned and headquartered outside of the region is highlighted in the findings as an inhibitor to the development of innovative local financial solutions.

“Whilst the Western Balkans region has recently seen a growth in the use of digital financial services, it is coming from a low base; in 2019, only eight per cent of the Western Balkan national population used online banking services, compared to 58 per cent in the EU,” says Mario Guadamillas, Practice Manger for the region in  in Finance, Competitiveness & Innovation at the World Bank. “This low penetration of digital financial services presents opportunities for FinTechs to expand and scale in the region, to create more competition and benefit more customers, especially in light of Covid-19.”

The report presents indicative recommendations to regulators and policy makers, advocating a need for proactive steps, including increasing stakeholder engagement, facilitating industry data collection, providing regulatory clarification for non-bank financial services firms, as well as increasing the level of national, regional and international coordination between regulators.

“Fintech is often seen as a panacea for every issue, however enabling it requires a conscious effort,” says Isfandyar Zaman Khan, Lead Specialist for Finance at the World Bank.

Bryan Zhang
Bryan Zhang

“Access to finance remains challenging for millions of consumers and businesses in the Western Balkans and FinTechs can be a part of the solution”, says Bryan Zhang, Executive Director the CCAF. “This study highlights that innovators and regulators can work together to facilitate a more enabling environment for digital financial services to take root and flourish in the region.”

“The current regulatory frameworks in the region might not be fit for purpose when it comes to FinTech, with regulators taking an entity or sector-based approach,” says Ana Odorović, Co-Lead Author and Research Associate, CCAF.

Grigory McKain, Co-Lead Author and Research Associate, CCAF adds, “There is a lack of certainty and leeway for firms with innovative businesses wishing to operate in the region, something that the strengthening of regulatory frameworks would be helpful to alleviate.”

This article was published on

4 June 2020.