AFI recently participated in a special workshop of the G20 Global Partnership for Financial Inclusion (GPFI) in Shanghai, China, convened by the People’s Bank of China (PBOC) in order to provide inputs and discuss pertinent topics for China’s G20 presidency agenda in 2016.
Since the 2010 Seoul Summit of G20 Leaders in the Republic of Korea, which established the GPFI, the G20 has worked with AFI in advocating for financial inclusion on a global stage as the issue has moved from the fringe to the mainstream on the international agenda. The workshop recognized the global progress that has been made in financial inclusion over the last few years, and the critical role of government and regulatory leadership in this. As Mr. Douglas Pearce of the World Bank Group stated, “AFI has had the single most catalytic role for the 60-plus countries that have set commitments through the Maya Declaration.”
In his presentation at the event, AFI’s Executive Director Mr. Alfred Hannig noted it was pleasing to see that, under China’s presidency, the GPFI will continue to build on the financial inclusion agenda items of former Presidencies and support the implementation of the G20 Financial Inclusion Action Plan. These efforts involve an emphasis on digital financial services, data and indicators, financial literacy, consumer protection, SME finance, and reaching particularly vulnerable groups such the rural, poor, youth and elderly.
“Our hard work has not gone unnoticed. This is not only because of our common advocacy efforts but also due to the recognition that financial inclusion’s positive impact on the world has become undeniable,” said Mr. Hannig. “Development actors realize they will not have the impact they seek until we reach every person who remains unbanked or underserved. Because of this, the international community is throwing its full weight behind the cause to scale up financial inclusion.”
Mr. Hannig continued to outline that there is a rich repository of knowledge across the AFI network and the G20, and there is a history of being able to effectively share that knowledge, adding: “The Addis Ababa Action Agenda is clear in its support of the cooperative platforms and knowledge exchanges, and this it seems to me should be our first step. Providing dedicated resources and funds to support robust learning exchange opportunities that will contribute the information we need to complete our path to a better future.”
The G20 workshop highlighted the critical role that digital financial services can have in catalyzing progress towards full financial inclusion, particularly in order to reach “last mile” consumers such as those in rural areas, migrants, youth and the elderly. The international community also stands at the point of a paradigm shift, looking beyond mobile financial services alone to broader digital-based financial services, including internet-based financing and peer-to-peer lending.
Such technological innovation offers opportunities to make progress. According to Francesca Brown of the UK Department for International Development, “We are commissioning research on archaic international payments systems, we think there is fin-tech out there that can make payment systems work better.”
At the same time new digital technology presents new consumer risks that need to be dealt with, as highlighted by China’s own national experience. PBOC Deputy Governor Mr. Gang Yi stated: “Digital finance can be a double edged sword, if the risks are not well handled the consumer interests can be damaged, so we need to enhance protection and financial education for consumers.”
In consequence, the importance of equipping regulators and supervisors to adequately understand and manage the risks of new technologies, will be vital. Alexia Latourte of the United States Treasury, said, “The issue of capacity building is crucial, regulators and supervisors are overwhelmed, there are new players and new standards, this area is hugely under-invested in.” Participants, drawing on the example of Ant Financial in China also discussed how big data could play an important role in helping to manage such risks.
Another prominent theme discussed at the event was public-private sector collaboration, regarded by all as essential to construct flourishing DFS ecosystems. Stephen Kehoe, Visa, summarized this point, saying, “Financial inclusion is all about making the ecosystem work…we need to work with AFI and BTCA as two players that can bring the public and private sectors together to have a real dialogue on these issues.” Mr. Hannig also concurred, noting: “We see that an early and consistent involvement of the private sector is desirable and definitely the way forward on the development and implementation of financial inclusion strategies.”
A further emphasis was placed on the need to close the gender gap in financial inclusion. One prominent example was shared by the GSMA’s Lara Gilman of the “Connected Women Program,” through which 10 telcos have already made commitments to close the connectivity gender gap. In this regard, the GPFI additionally welcomed the outreach opportunity for their agenda to be provided by AFI and the Bank of Tanzania (BOT) high-level conference on women’s financial inclusion to be held in Dar Es Salaam on 28 April 2016.