As emerging technology companies race to provide digital financial services, some traditional players have expressed concerns over the potential threats that such firms can pose to the stability of the financial sector.
The scepticism stems from the fact that emerging tech firms in the sector lack the experience in managing risk and have "weak" governance structures, among shortcomings.
This could potentially adversely affect the stability of the financial sector.
This has been the narrative for the past few years and still is for some players who also view emerging tech firms as their next big competitors.
However, this trend has been changing, according to the Alliance for Financial Inclusion (AFI), the global network of central banks and other financial regulatory institutions from emerging and developing economies.
Alfred Hannig, the Executive Director of AFI, said on Tuesday in Kigali that central banks and other financial regulatory institutions are currently responding to digital disruption.
"Digital financial services is actually the most prominent area we are undertaking," he said at a press conference while announcing the upcoming AFI Global Policy Forum which takes place this week on Thursday.
He noted that the question was how to deal with the challenges that come with the adoption of digital technologies and putting in place the kind of d regulatory frameworks needed to propel digital financial services.
Analysts have argued that regulators are trailing tech firms, which are disrupting the industry, in terms of innovation.
This sometimes leaves some products unregulated.
Moreover, Hannig indicated that countries such as Peru, Rwanda, Malaysia, Philippines and others have been able to respond to what might be the negative effects of these digital services.
They have established frameworks for consumer protection and electronic money issuance, among others.
John Rwangombwa, the Governor of the National Bank of Rwanda, highlighted that Rwanda put in place the regulatory sandbox, which allows emerging firms with digital financial services to test their solutions.
"In 2017, we launched a sandbox to allow financial technology companies to test their solutions for six months or above. We didn't have this framework before because we were scared they would cause instability in the financial sector, but today, we have been able to benefit from these digital services," he noted.
Riha Payment System is one of those fintech players that have received the privilege to work on a basis of a sandbox regulatory framework initiated by the central bank.
Through this framework, start-ups and companies are often given a testing approval for a limited time, without having to undergo a full authorisation and licensing process.
The central bank governor says, today, there are more people saving using mobile phones and able to acquire micro loans, compared to two years ago when the Government decided to open up for digital financial services.
This, he said, is enabling more people who are unbanked to be banked and many others to be financially included.
Rwangombwa said the Government has drafted a new financial inclusion strategy for Rwanda - currently awaiting cabinet approval - which he believes will enable more financial technology firms to play a key rolein driving up financial inclusion.
A case in point was to use technology to formalise savings groups (Ibibina) which he said most of them are currently operating under the informal sector, making it impossible for majority of women who are members of these groups to financially thrive.
As Rwanda hosts the AFI Global Policy Forum, statistics show that more than half of the 1.9 billion unbanked population globally are women.
The conference will bring this issue to the attention of over 800 global policymakers, regulatory institutions and development partners who are expected to attend the event.