BCTL-AFI regional training on FinTech for Financial Inclusion to strengthen sustainable and inclusive financial growth

Members of the Alliance for Financial Inclusion (AFI) from the Pacific region, small island states in Africa, and Latin America and the Caribbean are gathering in Dili, Timor-Leste for a regional training on FinTech for Financial Inclusion, organized by Banco Central de Timor-Leste (BCTL) and AFI on 10-13 December, 2018.

Supported by University of New South Wales (UNSW) Australia, the four-day regional training brings together 30 policymakers, stakeholders and regulators from different jurisdictions to learn and share knowledge on innovative approaches to financial regulation for financial inclusion, and dive into the definition, purpose, key approaches and guidelines to designing a regulatory sandbox. The training also emphasizes the importance of financial system integrity, consumer protection, data privacy and cybersecurity.

“Financial inclusion has long been a goal of the Banco Central of Timor-Leste, and we have initiated a number of programs to bring a wider range of Timorese citizens into the market for financial services,” said Deputy Governor Nur Alkatiri, BCTL, in her opening remarks. Deputy Governor Alkatiri further shared that the penetration of mobile phones in Timor-Leste is more than 100% of the population on average, meaning that mobile banking and e-wallet services should be excellent strategies for reaching unbanked people.

“Financial technology brings unforeseen opportunities to strengthen both financial stability and financial integrity, and therefore, brings more of the unbanked into the formal financial services, expanding financial inclusion,” said Eliki Boletawa, AFI Head of Policy Programs and Regional Initiatives during the opening of the training.

In addition to emphasizing the importance of financial system integrity, consumer protection, data privacy and cybersecurity, the training is also focusing on region-specific issues including FinTech for financial inclusion, a key policy area under the Pacific Islands Regional Initiative (PIRI) workstream.

“In a recent survey, the AFI network comprising of 107 members from 92 countries agreed that FinTech and RegTech are relevant to achieving their financial inclusion objectives,” revealed Eliki Boletawa as he explained the FinTech for Financial Inclusion framework — a tool to help fulfill the aspiration of an inclusive digital financial economy.

Drawing from the experiences of developing, emerging and developed countries, the framework suggests that the best approach is staged, and progressive — focused on four main 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.

The framework provides a guiding force to foster technological innovations that hold a promise to include the unbanked, close the gender gap in financial inclusion, manage climate change risks, mitigate the challenges of de-risking, and bring down the costs of cross-border remittances. The AFI network is developing policy models on various aspects of FinTech for financial inclusion through a member-driven, bottom-up approach.

The recent endorsement of the Sochi Accord on Fintech for Financial Inclusion at the Annual General Meeting in Sochi, Russia on 5 September 2018 provides a framework for AFI members to leverage innovative new technology-based financial services, or FinTech, to advance financial inclusion for the world’s 1.7 billion unbanked.

Recognizing the complexities around aligning legacy prudential regulations to fit nimble business models and unconventional technologies, rapidly being adopted by financial service providers and players, capacity building for regulators is an immediate need.

AFI capacity building programs are designed learning initiatives on innovative regulatory approaches for emerging technological innovations, such as blockchain, biometric ID, regulatory technologies (RegTech), cybersecurity and the cross-cutting issues around data protection and privacy so members successfully build capacity to leapfrog into new technology paradigms and achieve financial inclusive at scale.