Limited interoperability “slows” digital financial services: BCEAO

Interoperability is a key priority for network members in Africa as regulators seek to enable wider access to payment services and accelerate inclusive digital ecosystems, speakers said during virtual member training on 21-23 September 2020.

Governor Tiémoko Meyliet Koné of co-host Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) opened the three-day capacity building event by encouraging participants to pursue interoperable financial systems as a means of ensuring the fluidity of transactions and promoting greater financial inclusion.

“A lack of interoperability slows down the adoption and use of digital financial services (DFS),” he cautioned, explaining that as DFS diversifies, the ability of platforms to conduct seamless transfers across various accounts will prove essential for wider public access to payment services.

It was amid this backdrop, Koné said, that BCEAO began pursuing a regional platform designed to make financial accounts interoperable across its eight members countries: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Due to be completed in the coming months, the platform is expected to cut costs for individuals and small businesses, lower clearing and settlement risks and facilitate the digitization of financial transactions across its member countries.

But such progress comes twinned with challenges, and Governor Koné urged the training’s nearly 150 participants to pay close attention to sessions on regulation and supervision as a means to improve financial system stability and protect consumers.

“Digital payments tend to lose the trust of populations when they face the risks of fraud, identity theft and cyberattacks, which are not controlled,” he said, adding that “the same is true for the risks associated with weak security and data confidentiality”.

AFI Deputy Executive Director Norbert Mumba chimed with the sentiment, emphasizing that financial inclusion starts with payments, which serve as a gateway to other financial products and services including credit, savings and insurance.

“With a growing number of tech-enabled business providing services for cross-border transfers and remittances, regulators are further compelled to look at interoperability so as to provide a level playing field while at the same time mitigate risks such as customer protection, data privacy, integrity and reliability,” he said.

Over the course of the training, members from across the African continent and beyond were invited to share their country experiences with representatives from Bangko Sentral ng Pilipinas, Bangladesh Bank, Bank of Namibia, Bank of Thailand, Bank of Zambia, Central Bank of Nigeria and Mexico’s Comisión Nacional Bancaria y de Valores delivering insightful presentations on DFS interoperability from their home jurisdictions.

Many highlighted the central role of regulators and regulation in furthering financial access by engaging with stakeholders and encouraging fairness, inclusivity and affordability of services, particularly for the underserved. Participants also reiterated that  regulators must  adopt a clear vision based on best business models and ensure resilient infrastructure and data that supports the needs of targeted groups, such as women and rural populations.

After two days of BCEAO and AFI-led sessions on regulations, governance, cross-border interoperability and stakeholder engagement, the event ended on a full day of learning from the perspectives of the private sector via AFI’s Public-Private Dialogue (PPD) platform.

Global payment services company Visa, a long-term partner of AFI, took charge of the final day and drew attention to the architecture of DFS interoperability with participants exploring various case studies including on Quick Response codes and mobile network operators.

AFI’s PPD platform allows policymakers, regulators, the private sector, development partners and other key players to engage in frank and focused conversations, share technical expertise on key financial inclusion issues, develop more informed policy, and encourage innovation and investment.