FinTech for financial inclusion among key focus areas at FSB RCG Asia in Sydney
AFI Deputy Executive Director (DED) Norbert Mumba presented on FinTech for financial inclusion during the meeting on Financial Stability Board (FSB) Regional Consultative Group (RCG) for Asia on 5 November, 2018 in Sydney, Australia. The session, Using FinTech to Promote Financial Inclusion was moderated by the Governor of Bank Negara Malaysia (BNM), Nor Shamish Yunus, who is also a co-chair of RCG. The other lead discussant was Lyn Javier, Managing Director of Bangko Sentral ng Pilipinas (BSP).
Governor Nor Shamish Yunus, opened the session stating that the development of FinTech allows for new opportunities to scale up provision of financial services for the unbanked, and requested AFI to share its experiences with participants, particularly the Sochi Accord on Fintech for Financial Inclusion.
The Alliance for Financial Inclusion (AFI) endorsed the Sochi Accord, the organization’s commitment to developing regulatory or policy interventions that balance innovation in technology-based financial services (FinTech) with oversight. The Sochi Accord encourages peer learning and progress on FinTech for financial inclusion including the exchange of tested, and transformative solutions to accelerate access and use of financial services.
"The adoption of the Sochi Accord is extremely significant for AFI," stated Norbert Mumba at the meeting. He added that "the traditional approaches need to be relooked so that we are able to deliver financial services efficiently and effectively."
The meeting revealed that while technology has enabled financial service providers to create more customized, accessible and affordable products and services for underserved individuals and communities, there are risks. Against this backdrop, members of the FSB RCG discussed the mix of policies and regulatory environment that balances risk and innovation. Some of the ideas included regulation focusing on the risks involved in specific activities rather than entities and promoting an environment that does not hamper innovation.
“FinTech for financial inclusion needs to be transformative; the challenge to keep pace with rapid technological developments is unprecedented. Better market conduct and enhanced financial capability could help avoid a backlash towards financial inclusion,” emphasized Norbert Mumba during his presentation, while sharing AFI’s framework on FinTech for Financial Inclusion.
The framework is based on four major pillars: Digital ID and eKYC; Open Electronic Payment Systems; Account Opening & Digitization of Payments; and Design of Digital Financial Market Infrastructure and Systems. The four pillars give a foundation for an evolving digital financial ecosystem and help economies maximize the financial inclusion benefits from FinTech while also balancing financial stability, consumer protection and financial integrity.
About the Financial Stability Board (FSB)
The FSB monitors and assesses vulnerabilities affecting the global financial system and proposes actions needed to address them. In addition, it monitors and advises on market and systemic developments, and their implications for regulatory policy.
The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.
The FSG meeting in Sydney addressed the volatility in capital flows and its impact on domestic financial systems, the effectiveness of stress tests in the banking sector, resilience against cybersecurity attacks, using FinTech to advance financial inclusion, and improving access to trade finance.
The FSB RCG for Asia is co-chaired by Philip Lowe, Governor, Reserve Bank of Australia and Nor Shamsiah Yunus, Governor, Bank Negara Malaysia. Membership of the RCG for Asia comprises financial authorities from Australia, Cambodia, China, Hong Kong SAR, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.