FINANCIAL SERVICES
Regional dynamics, opportunities and challenges A range of opportunities exist for LMICs to exploit financial innovations. However, at the same time, there are challenges (many that are country-specific) to address, along with regional characteristics to factor in.
Sub-Saharan Africa (SSA): Mobile-first innovation and resilience tools SSA is the global epicenter of mobile money innovation, driven by sparse bank branch networks, strong telecom ecosystems and regulatory flexibility.
This region benefits most from
• What works exceptionally well: Mobile money (such as M-PESA), agent banking, PAYGo solar and productive use asset finance as well as parametric agricultural insurance. • Why: High mobile
innovations that bridge infrastructure gaps and smooth income volatility, such as mobile wallets,
PAYGo financing and climate risk insurance.
penetration, high energy deficits, large smallholder populations and telecom-driven innovation.
• Challenges: Market dominance by telecoms, consumer protection gaps in digital credit, rural agent liquidity issues and uneven digital ID rollout.
LAC’s strength lies in innovations that boost competition, lower costs and mobilize long-term capital rather than basic access technologies.
Photo: World Bank
Developing Asia: Digital public infrastructure and platform–led finance Developing Asia is the global leader in digital public infrastructure, exemplified by large-scale digital ID systems, interoperable payment systems and API-enabled platforms, application programming interfaces that provide seamless connections that automate business processes and enhance data sharing and integration across several apps and systems.
LAC combines strong financial sector capacity with persistent inequality and high informality. The region has become a global benchmark for digital banking, open finance and real-time payments (e.g. Brazil’s PIX, an instant payment system launched by the country’s central bank in 2020, which is used by over 80 percent of the population). • What works best: Digital‑only banks, open finance frameworks, real‑time payments and e‑invoicing‑based MSME credit. • Why: High smartphone penetration, fintech-friendly regulators and growing institutional investor bases. • Challenges: Inequality in digital access, regulatory fragmentation, consumer protection gaps and low adoption of agricultural insurance. Latin America & the Caribbean (LAC): Fintech competition, open finance and capital markets
• What works best: Real-time payments, interoperable QR systems, digital ID/
eKYC, platform-based MSME lending and health-focused microinsurance. • Why: Strong state capacity, large markets, coordinated public-private investments and high urbanization. • Challenges: Uneven digital literacy, regulatory constraints in some markets and varying levels of privacy and data governance.
This region is positioned to accelerate open finance models, merchant digitization and platform–based SME lending, building on robust payment and identity foundations.
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