Fintech Regulation: How to Achieve a Level Playing Field

How regulation should evolve to encourage fair competition between traditional banks and new fintech and big tech players is now being debated. Some advocate moving from an entity-based to an activity based regulatory approach under the principle “same activity, same regulation”. However, there is only limited scope for further harmonising the requirements for different players in specific market segments without jeopardising higher-priority policy goals.

In this paper, BIS discusses how level playing field considerations should affect the definition of the regulatory framework following the emergence of fintechs and big techs. The paper also analyses the extent to which activity-based and entity-based regulations could help achieve socially desirable objectives.