Digital Financial Services for Financial Inclusion

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PowerPoint PresentationDigital Financial Services for Financial InclusionJohn Owens, Senior Policy Advisor, AFI 26 March 2015 Bangkok, Thailand Bringing smart policies to life1Global Financial Inclusion Indicators Source: Demirguc-Kunt & Klapper (2012), World Bank Policy Research Paper 60252.5 billion of adults do not have access to formal financial system AFI | Alliance for Financial InclusionBringing smart policies to life2Overview of AFIAFI is a global network of policymakers in developing and emerging countriesFounded in 2008, AFIs goal is to support developing countries to develop and implement successful financial inclusion policiesThe goal of the AFI network is to accelerate the adoption of innovative financial inclusion policy solutions, with the ultimate aim of making financial services more accessible to the billions of people who do not have access to the formal financial system.Bringing smart policies to life3The AFI Timeline125 Institutions, 95 countriesUnique Peer Learning network (working groups)G20 Implementing partnerMaya DeclarationMore than 70 tangible policy reforms200820092010201120122013-20152015-Bringing smart policies to life484 members at the end of 2011. Currently XX membersGrowing Relevance of Financial Inclusion GloballyFinancial Inclusion is no longer only a development concern but a cornerstone of economic development framework and modelMinistries of Finance and Central Banks are including Financial Inclusion in their mandate together with stability and integrityFinancial Inclusion is more and more understood in a broad framework including access, usage and quality of a range of financial servicesDeveloped countries are increasingly facing financial exclusion problemG20 recognizes the benefits of financial inclusion for inclusive growth, stability and integrity AFI | Alliance for Financial InclusionBringing smart policies to lifeOpportunitiesGrowing alignment of interests among governments, private sector and global communityGreater understanding on the issues related to financial inclusion as well as more dataRecognition of country specific conditions and developing and emerging country-led approachesMore open communications with International Standard Setting BodiesTechnological innovation and enabling regulatory framework are driving new digital financial service models that support financial inclusion AFI | Alliance for Financial InclusionBringing smart policies to lifeBenefits & Opportunities of Digital Financial ServicesSource IFC Infographic: Bonny Jennings I AFI | Alliance for Financial InclusionBringing smart policies to life AFI | Alliance for Financial InclusionE-money ServicesMobile Financial ServicesUse of Agents Key Models of Digital Financial ServicesBringing smart policies to life8 AFI | Alliance for Financial InclusionConvergence & InteroperabilityFinancial InclusionBringing smart policies to life Policy, Regulatory and Oversight Proportionate AML/CFTTiered KYC RegulationsE-Money Operator RegulationsRemote Account Opening RulesAgent RegulationsInteroperabilityFair access to ICTSecurity and Fraud MitigationConsumer Protection IssuesBringing smart policies to lifeTechnological innovation to reduce cost of delivery and increase access on a large scaleProportionate financial sector policy and regulation is critical enabling factorIncreased importance of data to make informed policy decisionsQuality aspects (consumer protection) of financial InclusionCoordinated national strategies for expansion of digital financial ecosystems leading to more inclusive environments10Regulatory CoordinationTelecom operators as financial service providers & banks as telecom operatorsUSSD, Fair Access, Data SecurityWho provides oversight?Overlapping issues among regulatorsCoordination is critical and needs to be improvedBringing smart policies to lifeBangladesh: Mobile-Enabled Agent Banking Success AFI | Alliance for Financial InclusionBangladesh Banks Role:Agent Banking & Allowable ServicesEligibility Criteria for AgentsAllowance of Non-Exclusive AgreementsRisk & Operational IssuesConsumer Protection PrinciplesCoordination with BRTCResults:540,000 active agents25.2 M registered clients12.2 M active clientsBringing smart policies to lifePhilippines: Mobile-Enabled E-MoneyE-money regulations clearly set forth by Bangko Sentral ng Pilipinas E-money issuers under Central Bank SupervisionAgent guidelines issuedTiered KYC processPartnerships promoted with the financial sectorInterconnectivity between financial players, payment operators and e-money issuersBringing smart policies to lifeGiven that the Philippines is considered the texting capital of the world and has one of the highest mobile phone penetration rates, using mobile phones to conduct financial services is a natural next step in the country. Mobile phone banking services (MPBS) include services such as informational banking SMS notifications, international & local remittances, deposit & withdrawal services, micro-loan payments, utility bill payments, payroll services and mobile commerce opportunities for all sizes of businesses. Whether located in urban or rural areas, clients find that MPBS are easier to use to remotely access banking services. MPBS were developed as an innovative and effective tool to help expand outreach and increase access to banking services. Read bullets13Solomon Islands: Mobile Banking for Financial Inclusion AFI | Alliance for Financial InclusionCentral Bank of Solomon Islands: Agent Banking RegulationsExpanded Eligibility Criteria for AgentsTiered KYC RegulationsPublic Private Sector DialogueFinancial Literacy and the role of the Private SectorResults:From 80% without a bank account 5 years ago, 80% now have access to basic banking services Bringing smart policies to life Bringing smart policies to lifeinfo@afi-global.orgwww.afi-global.orgThank you! smart policies to life15


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