Startups as the golden standard for economic development in Africa - is it a myth, or does it have a chance to become a reality? In the past 5 years, the world has been a witness to the booming startup economy in the developed world. Dozens of successful startups, from Airbnb to Uber, have grown to become multibillion dollar companies. This rise of startups is a logical extension of the learning and knowledge economy, where creative and innovative ideas become the main strategic advantage for small businesses. Startups come to replace larger companies and even government institutions while closing the existing product, service, and need gaps. For many "fresh" businesses, Ethiopia is an uncharted territory. Ethiopia has some remarkable startup companies and has even launched a startup academy for new entrepreneurs. However, these efforts are still too fragmented to create a startup economy - Ethiopia needs a new government policy to foster the growth of effective startups in future. Startups represent a new standard of economic development in the 21st century. For decades, developed economies promoted an idea of small and medium businesses as a foundation for continuous economic growth and prosperity. Startups have become a new form of doing business in the global world where technologies, information, and continuous learning define the success of even the most ambitious enterprise. The global market has become too competitive and saturated. Only the most innovative and creative business projects have a chance to survive this harsh competition. Countries like the United States have already realized the dramatic potential of startup companies, providing policies that can harness the advantages of a startup economy and make these benefits available to everyone Ethiopia is represented by a sample of 60 businesses, 4 accelerators, 6 co-working spaces, 3 organizations, and 5 leaders on the StartupBlink Global Startup Ecosystem Map. The Development Bank of Ethiopia's (DBE) president, Yohannes Ayaleu (Ph.D.), announced last week that the organization had set aside ETB4 billion to support and encourage start-up innovators. The president announced that if new creative owners came to the bank and provided proof that the creative idea was theirs, the bank would do its part to turn their ideas into effective work in accordance with the bank's practice. He also noted that the budget could be raised if it were deemed necessary. It should be remembered that the DBE previously said that it has put aside ETB10 billion to continue granting financial access to small and medium-sized firms. This announcement was made three months ago. In related news, since it started operating in May 2022, Michu, the Cooperative Bank of Oromia's uncollateralized digital lending product, has disbursed approximately ETB200 million in loan facilities to SMEs. Indeed, it is a worthy to read article and read to be benefited. with regards,

1. Building the RegTech-SupTech-Digital
Financial Infrastructure Ecosystem
Douglas W. Arner
Kerry Holdings Professor in Law
RGC Senior Fellow in Digital Finance and Sustainable Development
Associate Director, HKU-Standard Chartered FinTech Academy
University of Hong Kong
Douglas.Arner@hku.hk

2. RegTech / SupTech?
• Use of technology – particularly IT – for regulatory implementation,
compliance and monitoring, by regulators, supervisors, market
participants, infrastructure providers and others
• A subset of Fintech? Uses across all regulated industries
• Vs Suptech? Two sides of the same coin, focusing on supervisory uses
• Regtechs? Startups not the major industry players eg IBM Promontory,
LSE Refinitiv, NASDAQ, Amazon …

3. The RegTech-SupTech-Digital Financial Infrastructure
Ecosystem
RegTech
SupTech Infrastructure

4. The RegTech Opportunity
• USD 380b+: fines 2008-2021
• USD 600b+: approximate financial sector tech spending (20201)
• USD 300-700b+: approximate financial sector compliance spending
(2021), approximately 40-50% on tech

5. Taxonomy
• Start ups / incumbents / BigTechs / supervisors / infrastructure providers /
individuals
• Efficiency / conduct: digital regulatory reporting, monitoring, enforcement etc
• Financial stability: macro/micro pru – reporting, risk management
• Market integrity / conduct: AML/CFT, reporting, monitoring, enforcement etc
• Sustainable development and inclusion: infrastructure, digital regulatory reporting
• TechRisk: data / cyber / infrastructure

6. Origins
• 1980s: NMS, Edgar, Finra, consolidated tape etc
• 1990s: VaR / Market Risk

7. The Evolution of FinTech:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2676553
1.0
2.
0
3.
0
3.
5
1866 - 1967 1968 - 2008 2009 - Current
Infrastructure Banks Start-ups
2007
4.
0
BaaS
Identity
Big Data
AI
IoT
Decentralized
2020 - Future
Developed
World
Developing
World
Telegraph
Telephone
ATM
E-
Banking
P2P
Credit
Scoring

8. Finance in the 2010s
• Crisis
• Regulation
• Technology

9. Drivers 2008-2020: Regulation
• Post crisis regulatory changes
• AML
• BCBS 239
• Mifid, Mifid 2 etc
• GDPR

10. EU Big Bang II?
• MiFID 2: Markets in Financial Instruments Directive 2 – transparency
across markets
• GDPR: General Data Protection Regulation
• PSD 2: Payment Services Directive 2 – open API banking
• eIDAS Regulation

11. The Future of Data Drive Finance and RegTech:
Lessons from EU Big Bang II
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3359399

12. Embedded RegTech
Programmable CBDC
Open-Source
Compliance
MetaVerse
Internal Risk
Management
EDGAR
Quantitative IT
Risk Aggregation
Know Your Customer
Artificial Intelligence
Authentication
Full Digital Onboarding
Data Standardization
Real-Time Reporting
Dynamic Surveillance
RegTech 1.0 – 1987-2008
RegTech 2.0 – 2009 -
2019
RegTech 3.0 – 2020-2025
RegTech 4.0 beyond 2025
Conduct Risk
Blockchain
Repeated Process
Automation (RPA)
Open Banking/ API
Driven
Know Your Data
Trustless
Neural Networks
F
U
N
C
T
I
O
N
A
L
3
G
*
B
I
G
D
A
T
A
*
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L
5
G
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N
L
P
*
D
L
T
Sandbox

13. • https://www.wiley.com/en-
us/The+REGTECH+Book%3A+The+Financial+Technology+Handbook+for+In
vestors%2C+Entrepreneurs+and+Visionaries+in+Regulation-p-
9781119362142

14. RegTech encompasses industry and regulators
Financial institutions
and industry
Regulators
• Major drivers of RegTech
development
• Demand efficient tools to
deal with regulatory and
compliance demands
• Global firms developing
centralized risk
management
• Lag in regulator
adoption relative to
private sector
• Yet need to develop
systems to deal with
rivers of new data and
cybersecurity
Start-ups
• Incentives to trade off-
data for faster market
entry
• Automation of
reporting and
compliance more
aligned with lean
business model

15. RegTech and the Reconceptualisation of Regulation
RegTech digital disruption is not just about greater efficiency in existing processes
but new processes altogether.
RegTech and the Reconceptualization of Regulation
SSRN: http://ssrn.com/abstract=2847806
RegTech Reconceptualization

16. COVID-19 and Digital Financial Transformation:
Building Better Financial Systems
Digital Finance, COVID-19 and Existential Sustainability Crises: Setting the Agenda for the 2020s by Douglas W.
Arner, Ross P. Buckley, Andrew M. Dahdal, Dirk A. Zetzsche :: SSR
• Digitisation
• Payments / CBDCs: Sovereign Digital Currencies: Reshaping the Design of Money and Payments Systems by
Ross P. Buckley, Douglas W. Arner, Dirk A. Zetzsche, Anton N. Didenko, Lucien van Romburg :: SSRN
• RegTech / SupTech
• AML / market integrity
• BigTech / data: Towards an Inclusive, SDG-Aligned Governance of Global FinTech Platforms (BigFintechs) |
United Nations Development Programme (undp.org)
Enabling Ecosystems: How To Boost Fintech Innovation and Financial Inclusion During and After COVID-19 –
NextBillion
• Building the infrastructure of finance
• Designing appropriate regulatory approaches
• Supporting the wider ecosystem

17. Financial Stability Board (Oct. 2020)
• https://www.fsb.org/2020/10/fsb-report-highlights-increased-use-of-
regtech-and-suptech/

18. RegTech and regulators
• Enforcement: GS / UBS, Citi
• Areas: AML / KYC, Digital regulatory reporting, risk management / data
aggregation / analytics
• MAS
• US: SEC, Finra, CFTC, Fed
• UK: FCA, BoE
• EU: ECB, ESMA
• BIS
• HK: SFC, HKMA, HKEx
• China: Ant

19. Strategy Lessons
• High level commitment
• Digital first: Internal / external
• Digitization of everything: Digital regulatory reporting, System design
• Tech
• HR
• Datafication

20. Providers
• Drivers: regulators, regulated institutions, startups, techs
• Providers: systems, tech, data, analytics, outsourcing

21. EU DFS
• removing fragmentation in the Digital Single Market
• adapting the EU regulatory framework to facilitate digital innovation
• promoting a data-driven finance
• addressing the challenges and risks with digital transformation,
including enhancing the digital operational resilience of the financial
system
• ESAP: European Single Access Point (ESAP) | European Economic and
Social Committee (europa.eu)