The convergence of digital public infrastructure and digital financial services is transforming service delivery globally. The integration of digital identities, digital payments and data sharing in financial services is reshaping how individuals, businesses and communities interact with their finances.
This integration is redesigning financial products, creating new risks and opportunities, and changing how the financial system is governed, requiring fresh regulatory thinking. To maximise the benefits of DPI for consumers and markets innovation, there is a need for improved coordination across financial regulation, data protection, competition and infrastructure oversight. The challenge is clear: how do we build DPI that truly empowers users, ensuring safe, seamless and reliable access for all?
Impact on financial outcomes
According to a paper by the World Bank, DPI is ‘an approach to digitalisation focused on creating foundational, digital building blocks designed for the public benefit… Common systems built as DPIs include digital identity and electronic signatures, digital payments, and data sharing.’
In a new report by the Cambridge Centre for Alternative Finance, ‘Digital Public Infrastructure and Digital Financial Services: Convergence, Landscape and Regulatory Considerations’, we identified 113 jurisdictions that have adopted at least one of the core DPI components, with 56 jurisdictions implementing all three (Figure 1).
Figure 1: Core DPI components
Source: Cambridge Centre for Alternative Finance
Early empirical evidence suggests a positive correlation between DPI and improved digital financial services outcomes. Jurisdictions with greater DPI maturity have seen higher debit or credit card ownership, higher usage of digital payments and lower barriers to account ownership.
Greater DPI maturity also appears to coincide with improved access to credit, government support and financial resilience. A well-developed DPI ecosystem may help reduce barriers by simplifying identity verification, expanding access to digital payments and enabling secure data-driven financial services. However, further research and more recent data are needed to better understand the specific drivers behind these relationships and the overall impact.
Global models, local lessons
Around the world, organisations have designed DPIs to serve diverse objectives. India’s Unified Payments Interface, for example, illustrates a successful government-private sector collaboration that scaled real-time digital payments, with financial inclusion at its core. Brazil’s Pix, by contrast, began as a targeted solution to a payments problem, demonstrating how a regulator-led, industry-inclusive approach can deliver equally transformative results.
These examples underscore the importance of a well-coordinated approach and context-specific strategies – each tailored to a jurisdiction’s unique policy and regulatory landscape, market dynamics and institutional capacity.
Within the DPI ecosystem, an important role is played by public-private partnerships, not only as users of DPI, but also as co-designers and operators. Across the globe, fintechs and platform providers are scaling key DPI components providing agility and reach. To ensure the long-term success of public-private partnerships, it is essential to align incentives, define clear roles and ensure accountability. Stakeholder engagement, public oversight and transparent governance should underpin this.
Navigating new risks and opportunities
DPI is a dynamic and interdependent ecosystem in which innovations, political choices and socioeconomic realities are in constant interplay. Innovations such as programmable money, artificial intelligence and digital wallets present new opportunities, but also give rise to new regulatory challenges.
These innovations raise questions about governance, financial stability, competition, data privacy, cybersecurity and ever-increasing fraud. Meanwhile, geopolitical fragmentation and shifting governance models may further divide financial ecosystems, making global regulatory coordination essential. Regulators need to stay ahead of these trends, recognising cross-sector dependencies and vulnerabilities to proactively manage risks.
The coordination challenge
Responsibilities for the core DPI components – digital identity, digital payments and data sharing – often fall under separate authorities. Central banks and financial regulators oversee payments, data protection agencies are responsible for privacy within data sharing, competition authorities manage complex market dynamics and various sector regulators have their own mandates.
This fragmented structure poses challenges around alignment, prioritisation and coordination, which are further compounded by rapid technological evolution that often outpaces existing regulatory frameworks.
Some jurisdictions are testing coordination models, ranging from national data-sharing bodies and dedicated coordination forums to novel decision-making and voting mechanisms. Others are exploring joint sandboxes to further understand how innovations could play out, while focusing on their own regulatory remits.
However, balancing privacy, competition and security remains difficult, reflecting the complexity of institutional, policy and regulatory coordination. Adopting a phased and pragmatic approach, starting with institutional mapping, ways of working, and targeted initiatives, may help prevent bottlenecks and strengthen domestic collaboration. This will help establish stronger national foundations for regulatory coherence for more formal activities before striving for cross-border collaborations.
The path forward
Effective DPI implementation relies not just on advanced technology or digital systems, but equally on thoughtful design, strong collaboration and robust governance. For regulators, this marks a shift towards a more agile, adaptive and holistic regulatory approach.
By prioritising cross-regulatory coordination and fostering public-private partnerships, regulators can proactively navigate emerging trends, evolving market and political landscapes and the rapid pace of innovation. This ensures DPI continues to deliver lasting public value while maintaining financial stability and consumer protection.
This article is an edited summary of a longer research paper by the Cambridge Centre for Alternative Finance. The full research paper is available here.
Pavle Avramovic is Head of Market and Infrastructure Observatory, Teresa Lam is Digital Regulatory Specialist and Sanya Juneja is Open Banking and Open Finance Lead at the Cambridge Centre for Alternative Finance.
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