Innovations follow regulations

In the rapidly advancing world of artificial intelligence (AI) and fintech, we urgently ask: should innovation come before regulation or is it the other way around?

- LITO VILLANUEVA

As Commissioner Rogelio Quevedo of the Securities and Exchange Commission (SEC) shared at the Manila Tech Summit: "It should be technology that leads regulation."

His view reiterates a vital principle for emerging technologies: innovation must drive regulation, not vice versa. I have seen firsthand how innovation often outpaces regulatory frameworks in this industry. This is common not only in the Philippines but is a global phenomenon as governments struggle to keep pace with the rapid developments in AI, digital finance and blockchain, among many other emerging technologies.

This is due to many factors, such as outdated technology, legacy systems, rigid frameworks and poor digital infrastructure.

However, the danger lies in allowing regulation to stifle innovation rather than guide it. Limits must not constrict us. We can push boundaries.

Take the evolution of mobile technology in the late 1990s as an example. Commissioner Quevedo, who was part of Smart Communications during that transformative era, recounted how regulators were initially slow to adapt to the new wave of mobile communications.

The lesson was clear: had regulation been enforced too rigidly, it might have hindered the growth of mobile telecoms in the country, which today is the backbone of our digital economy.

Similarly, AI is the next transformative force that will shape the future of various sectors, including fintech. AI's potential to drive efficiency, innovation and financial inclusion is undeniable.