1. International Regulatory Experiences in Digital
Financial Services
John Owens, Senior Policy Advisor, Digital Financial Services, AFI
Digital Banking: Technologies and Innovations Minsk, Belarus April 24, 2105
2. Global Data on Financial
Inclusion
Source: Demirguc-Kunt & Klapper (2012), World Bank Policy Research Paper 6025
2 billion of adults do not have access to formal
financial system
AFI | Alliance for Financial Inclusion
3. The Alliance for Financial
Inclusion
• 120 Institutions
• 95 Countries
• Unique Peer Learning
Network Working Groups
• 7 Policy Areas
• More than 53 tangible
policy changes
• Shaping global discussions
(G20, G24, SSBs)
• Platform for public
private dialogues
• Maya Declaration: 52
concrete commitments
Building the
Network
Activating the
Network
Enhancing
Network value
Policy-Driving
Network
Independent
Network
AFI | Alliance for Financial Inclusion
4. Opportunities
• Growing alignment of interests among governments,
private sector and policy makers.
• Greater understanding and global practices exist on
regulating digital financial services that support financial
inclusion.
• Recognition of country specific conditions as well as
learning from practices in developing and emerging
markets.
• More open communications with International Standard
Setting Bodies and peer learning from other regulators.
• With the right policy/regulatory environment, digital
financial services can drive financial inclusion more
rapidly.
AFI | Alliance for Financial Inclusion
5. Benefits & Opportunities of
Digital Financial Services
Source IFC Infographic: Bonny Jennings www.itldesign.co.za IAFI | Alliance for Financial Inclusion
6. AFI | Alliance for Financial Inclusion
E-money Services
Mobile Financial Services
Use of Agents
Big Data
Crowd funding models
Key Models of Digital Financial
Services
7. AFI | Alliance for Financial Inclusion
Convergence & Interoperability:
A driving force for Financial Inclusion
Financial
Inclusion
9. AFI | Alliance for Financial Inclusion
Mobile E-Money Supporting
Financial Inclusion in Other Ways
2012
2006 13%
29%20 Million
bank accounts
4 Million
bank accounts
24 Million
registered mobile money users
Percentage of adults using a bank account in Ke
11. Small Value and Credit Savings
M-Shwari, a savings and credit
product from Safaricom and
Commercial Bank of Africa (CBA)
has registered a phenomenal
uptake.
The product enables M-PESA
subscribers registered for at
least 6 months to get a loan,
anywhere from
$1.15 to $235
for a 30 day term
instantly into their e-wallets.
AFI | Alliance for Financial Inclusion
US$ 1.7
billion
1st largest
bank in
terms of
accounts
US$ 322
million in
loans
35,000 to
10M in 2
years
12. Digital Financial Inclusion
Policy Trends
Technological innovation to
reduce cost of delivery and
increase access on a large scale
Proportionate financial sector
policy and regulation is critical
enabling factor
AFI | Alliance for Financial Inclusion
13. Increased importance of data to
make informed policy decisions
Quality aspects (consumer
protection) of financial Inclusion
Coordinated national strategies for
expansion of digital financial
ecosystems leading to more
inclusive environments
Digital Financial Inclusion
Policy Trends
AFI | Alliance for Financial Inclusion
14. Proportionate AML/CFT
– Tiered KYC Regulations
E-Money Operator
Regulations
Remote Account Opening
Rules
Outsourcing to Third Parties
Digital Signatures & Receipts
Agent Regulations
Interoperability
Key DFS Regulatory Options to
Support Financial Inclusion
AFI | Alliance for Financial Inclusion
15. 1) Risk management frameworks and resulting data for
risks pertaining to operations, liquidity, money
laundering, and terrorist financing
2) Consumer protection
3) Public disclosure of information
4) Outreach and financial inclusion
Four Key Areas in Digital
Financial Services Reporting
AFI | Alliance for Financial Inclusion
16. DFS Experiences in Tanzania
Create an enabling legal and regulatory environment
Support market development and encourage innovation
Proportionate regulation
Partnerships and cooperation
Partner with Telco Regulator
Encourage market cooperation (non-banks and banks)
Government Uptake of Usage of DFS
Revenue payments (Licenses and small taxes)
Adoption of DFS in National Financial Inclusion Strategies
Public and private sector adoption for national financial
inclusion goals
Interoperability
Consider private sector initiatives enhancing or developing
interoperability
AFI | Alliance for Financial Inclusion
17. 0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
Female Male Female Male
7.00%
11.50% 10.10%
17.90%7%
5.90%
41.10%
45.10%
30.40% 27.10%
17.20%
14.30%
Use informal
mechanisms only
Have/ use non-bank
formal products
Have/ use bank
products
20132009
DFS Experiences in Tanzania
AFI | Alliance for Financial Inclusion
18. Bangladesh: Mobile-Enabled
Agent Banking Success
AFI | Alliance for Financial Inclusion
Central Bank Issued Clear
Guidelines:
Agent Banking &
Allowable Services
Eligibility Criteria for
Agents
Allowance of Non-
Exclusive Agreements
Risk & Operational Issues
Consumer Protection
Principles
Results:
541,000 active agents
25.2 M registered clients
12.2 M active clients
19. Philippines Example of
Mobile-enabled E-Money
Challenges for Rural Banks
• Reaching deeper into rural areas without
costly investments in infrastructure
• Reducing costs of servicing clients
• Avoiding risks from robbery, holdup
20. Philippines Example of
Mobile-enabled E-Money
• Central Bank allowed e-money
services to be linked and used by
rural banks to offer basic banking
services
• Accreditation process was via the
Rural Bankers Association of the
Philippines (RBAP) that developed
and received approval for standard
procedures used by the industry.
• Accredited more than 1,100 rural
banking units and benefited >
300,000 rural bank clients.
• Processed over P17 B (US$400 M)
in mobile phone banking
transactions.
21. Solomon Islands: Mobile Banking
for Financial Inclusion
AFI | Alliance for Financial Inclusion
Central Bank Was Key To
Financial Inclusion Thru
Agent Banking
Regulations
Expanded Eligibility
Criteria for Agents
Tiered KYC Regulations
Close dialogue with the
Private Sector in
Developing Policies
Financial Literacy and
the role of the Private
Sector
Results:
From 80% without a bank
account 5 years ago, 80%
now have access to basic
banking services
22. Russia: E-Money Regulations
AFI | Alliance for Financial Inclusion
Central Bank Was Key To
Enabling E-Money Services
Revised “Light” E-Money
Regulations
Regulations for Payment
Agents & Kiosks
Tiered KYC Regulations
and Simplified CDD
Government/Private
Sector Working Group