This article is part of Access Partnership’s series ‘The New Privacy Playbook: Adapting to a Shifting Global Landscape’, which explores the evolving landscape of data governance – highlighting both the obstacles and the innovations emerging across sectors and regions.
The stagnation problem
The financial sector across Asia Pacific (APAC) stands at a crossroads. Personalised banking, AI-driven investment products, and enhanced credit scoring offer tremendous opportunities – but they all depend on one thing: customer data.
Yet despite this potential, much of APAC remains trapped in a false choice between innovation and privacy. While markets like Singapore, Australia, and Japan race ahead with sophisticated regulatory models that enable both aspects, others impose blunt instruments like data localisation and network separation rules that effectively kill innovation before it starts.
The result? A widening digital divide that threatens to leave parts of the region behind.
This fragmentation isn’t just holding back individual markets; it’s preventing APAC from establishing itself as a cohesive financial powerhouse to rival Europe or North America. Without a course correction, we risk creating a two-tier financial ecosystem: one where advanced markets flourish and others stagnate under the weight of outdated regulations ostensibly designed to protect privacy.
Why traditional approaches are failing
Most current data governance frameworks across APAC were built for a simpler era, when the main concerns were basic user consent and preventing data breaches. They weren’t designed for a world where:
- AI models train on billions of data points across jurisdictions
- Real-time financial services require instant cross-border data flows
- Consumers expect personalised products and services that can only be created with advanced data integration and analysis capabilities
- Privacy Enhancing Technologies (PETs) can actually enable innovation rather than restrict it
The traditional regulatory response – copy-pasting restrictive data privacy frameworks or imposing national barriers to data flows – is increasingly out of sync with today’s technology. Rather than protecting consumers, these rigid approaches are denying them access to next-generation financial services.
APAC’s privacy innovation leaders show the way
The region’s most advanced markets are demonstrating that privacy and innovation can be mutually reinforcing:
Singapore has moved beyond simple restrictions to actively facilitating responsible innovation. Its PET Sandbox, with major participants like Ant International and Mastercard, allows companies to test privacy-preserving technologies in controlled environments before scaling. Even more forward-looking, the Monetary Authority of Singapore’s (MAS) collaboration with technology providers and financial institutions on Quantum Key Distribution (QKD) shows how regulators can help future-proof financial security.
Australia’s open banking framework takes a different approach: shifting control to consumers while creating standardised ways for them to safely share financial data with trusted providers. This consumer-centric model has spurred competition while maintaining robust privacy protections.
Japan has focused on facilitating dialogues on the application of PETs like federated learning for payments and financial services. This regulatory agility lays the foundation for sector-wide adoption of PETs. These examples share a common thread: they’re designed for flexibility and interoperability, not restriction and isolation.
The real cost of regulatory fragmentation
For financial institutions, the current regulatory patchwork creates impossible choices:
- Build different systems for different markets, multiplying costs
- Restrict innovation to the lowest common denominator
- Focus only on the most advanced markets, leaving others behind
For consumers, the costs are equally severe. Those in markets with outdated or overly restrictive regulations miss out on financial inclusion opportunities, from AI-powered credit scoring that could help the underbanked to personalised financial education tools.
And for regulators themselves, fragmentation means diminished influence in global standard-setting and increased vulnerability to financial crimes that exploit regulatory gaps.
A practical path forward
APAC needs a coordinated approach to financial data governance; not a single regulation, but a coherent framework that balances innovation with protection. This should include:
1. A regional regulatory sandbox network: Connected environments where financial innovations can be tested across multiple jurisdictions simultaneously, with common privacy standards and shared learning.
2. Tiered data risk assessment frameworks: Not all data uses carry the same risks. A unified approach to data risk tiering would allow appropriate controls without blanket restrictions.
3. PETs adoption roadmaps: Market-specific but regionally compatible plans for implementing privacy-enhancing technologies, such as:
a. Differential privacy for dataset analysis
b. Zero-knowledge proofs for authentication
c. Secure multi-party computation for collaborative analytics
4. Data flow agreements: APAC-wide principles for responsible cross-border data flows in financial services, modelled on the region’s most successful bilateral arrangements.
5. Public-private innovation incubators: Collaborative initiatives between regulators, financial institutions, and technology providers focused specifically on privacy-preserving financial innovations.
The urgency of action
Financial innovation won’t wait for regulatory alignment. As global technology firms and fintechs increasingly determine where to deploy capital based on regulatory environments, APAC faces a critical choice: continue down the path of fragmentation or build a coordinated approach that preserves both innovation and privacy.
The region has a narrow window to establish itself as a global leader in privacy-preserving financial innovation. Those markets that adapt fastest will not only serve their citizens better but will help shape global standards for decades to come. For financial institutions, regulators, and policymakers, the mandate is clear: engage now in shaping this regional approach, or risk being left on the wrong side of APAC’s widening digital divide.
Access Partnership’s specialised advisory team can help navigate this complex landscape and drive regional alignment through:
- Policy forecasting that anticipates data governance and financial sector-specific regulatory developments across key APAC markets
- Stakeholder mapping and engagement strategies targeting critical decision-makers, leveraging our deep relationships with financial regulators
- Regulatory advocacy (campaigns, submissions, workshops, thought leadership) focusing on creating an enabling environment for cross-border data flow and minimising restrictions
- Country-specific regulatory mapping and assessments on appetite for PETs adoption
- Development of market-specific PETs adoption strategies and compliance roadmaps
- Formulation of PETs application and use cases in the financial services sector.
For organisations interested in shaping APAC’s financial innovation and data governance future, contact our Data Governance team at [email protected].
