FinTech for Financial Inclusion in the Pacific
Financial regulators of the Pacific Islands Regional Initiative (PIRI) are embarking on a work stream on FinTech for Financial Inclusion in the Pacific during 2018 and beyond.
PIRI financial regulators have recognized that the disruption in financial technology (FinTech) offers great opportunities for developing and emerging economies to significantly drive the uptake of Digital Financial Services (DFS). PIRI policymakers have a common understanding that some innovations such as blockchain, biometric ID and cloud computing help countries to leapfrog into new tech solutions.
DFS brings unforeseen opportunities to strengthen both financial stability and financial integrity, and therefore, bring more unbanked into the formal financial services, expanding financial inclusion.
Covering a broad range of diverse technological innovations, the regulatory tasks are also becoming more complex as introducing solutions for FinTech for Financial Inclusion in the Pacific changes the nature of financial markets and financial infrastructure with implications on the regulatory landscape. The risks include unfair lending practices related to unmonitored use, the analysis of big data or increased systemic vulnerabilities due to threats of cybersecurity.
To tackle these changes and provide appropriate solutions, it is necessary to establish a collaboration across regulatory domains including between financial regulators, telco regulators and Ministries for Internal Affairs who are oftentimes in charge of ensuring data security and protection.
As part of its activities to help the Pacific deal with both the opportunities and risks of new financial technologies, PIRI’s work stream on FinTech for Financial Inclusion in the Pacific should include:
- FinTech knowledge repository that stores relevant material on technological innovations relevant to financial inclusion, closing of the gender gap, management of climate change risks, and mitigation de-risking challenges.
- Regulatory guidance led by the Digital Financial Services Working Group that originate from peer learning efforts among AFI members inside and outside the region.
- Systematic and focused dialogue with the private sector, development partners and other international stakeholders that enhance the mutual understanding of the risk profiles of FinTech innovations.
- Rationalize and coordinate multiple support activities and offerings from stakeholders as assistance to policymakers and regulators in PIRI who are facing resource constraints.
- Test-and-learn approaches such as regulatory sandboxes, innovation hubs or RegLabs, which support the application of approaches such as tiered KYC, eKYC (including digital identification) and RegTech.
- Capacity building activities for staff of PIRI Central Banks including practical exposure to FinTech innovations in pioneering countries and training for regulators in collaboration with technical partners (e.g. the International Monetary Fund or the Asian Development Bank) on issues such as cybersecurity and Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT).
- Challenge competition with incentives for FinTech innovators to develop solutions to resolve de-risking challenges, as well as RegTech solution proposals for AFI members in PIRI that are tested in sandbox environments.
Learn more about PIRI and its work with development partners.