The rapid proliferation of financial technology across South Asian economies has created unprecedented opportunities for financial inclusion and digital transformation, yet simultaneously exposed regulatory gaps that threaten consumer interests and systemic stability. This paper examines the critical nexus between innovation facilitation and consumer protection mechanisms within existing national regulatory frameworks across the region. Drawing on comparative analysis of regulatory approaches in India, Bangladesh, Sri Lanka, and other South Asian jurisdictions, the study investigates how policymakers navigate the inherent tensions between fostering a competitive fintech ecosystem and implementing robust safeguards against predatory practices, data breaches, and systemic risks. The paper argues that effective regulation requires not merely restrictive compliance but rather a calibrated, innovation-aware legal architecture that accommodates emerging business models, including digital lending platforms, payment service providers, and alternative investment mechanisms, whilst maintaining stringent consumer protection standards. Through examination of licensing frameworks, prudential norms, and grievance redressal mechanisms, this work demonstrates that the regulatory challenge in South Asia transcends traditional binary approaches. Instead, it necessitates dynamic legal instruments capable of evolving alongside technological advancement, supported by institutional capacity-building among regulators and meaningful stakeholder participation. The research concludes that sustainable fintech governance depends on establishing enforceable consumer protection standards, transparent algorithmic accountability and cross-border regulatory coordination, without imposing prohibitive compliance burdens that stifle legitimate innovation. Ultimately, this paper contributes to ongoing policy discourse by proposing a contextualised regulatory framework suited to South Asia’s development imperatives and technological trajectory.