Knowledge Exchange grant for mobile financial services in Afghanistan
The challenge
An extremely low percentage of the Afghan population has access to financial services. According to the recent CGAP’s Financial Access 2009 report, there are only 4 loan accounts from commercial banks for every 1,000 adults and 1.1 branches to serve every 100,000 adults. The development of mobile financial services is seen as a key way to promote greater financial access under challenging geographical and political circumstances. However, the opportunities in adopting mobile banking must also be carefully weighed against the regulatory risks - credit risk, operational risk, legal risk, liquidity risk and reputation risk. It is the responsibility of DAB to implement proportionate regulations that mitigate these risks while not stifling innovation in the use of technology to reach the unbanked.
The opportunity
DAB plans to develop a nation-wide electronic payments system to serve the unbanked and under-served communities in all provinces of Afghanistan in a cost-effective way. Toward that goal, DAB conducted a study visit to the Philippines and Malaysia to better understand the regulation, supervision and operation of mobile-based payment services. The Bank had already issued a license to a mobile payment services operator to operate in Afghanistan, but felt it necessary to implement more robust regulations for the industry. Therefore the knowledge and lessons learned gained during the study visit and the workshop were designed to enable DAB to develop a regulatory framework for mobile banking in Afghanistan.
The impact
Expected outcomes include the elaboration of concrete steps that will be taken towards developing a regulatory framework in Afghanistan to promote greater financial access through mobile payment services. The overall goal, to which this exchange visit will contribute, is greater access to financial services for low-income and unbanked populations in Afghanistan. The end goal for DAB is to better regulate and supervise mobile payment in Afghanistan and to expand access to financial services in the country."
