This week in La Romana, Dominican Republic, members from AFI’s Financial Inclusion Initiative for Latin America and the Caribbean (FILAC) held five days of meetings, co-hosted by the Superintendencia de Bancos de la República Dominicana (SB). Members exchanged insight on how to boost financial inclusion with public and private sector partners from around the globe.
“Financial inclusion is a pivotal strategic commitment assumed by this Superintendency of Banks, and we are delighted to have the opportunity to co-host this event to promote best practices in the region”, said Superintendent of SB, Alejandro Fernández W. during his welcome remarks.
The region is making strong progress in financial inclusion
The event kicked off with the 10th annual FILAC Experts Group on Financial Inclusion Policy (EGFIP) meeting. Regional representatives shared progress made on financial inclusion and discussed key policy challenges and achievements relating to Digital Financial Services, Gender Inclusive Finance, and micro, small and medium enterprise (MSME) finance, among others.
Members provided updates on national financial inclusion policy and regulatory reforms and presented new initiatives. In recent years, FILAC members have made great strides in advancing financial inclusion in the region. Peru launched a National Digital Transformation System to synchronize financial stakeholders and institutions on one interoperable platform aimed at boosting digital innovation nationwide, while Paraguay and Costa Rica approved landmark legislation advocating for more inclusive insurance policies with increased consumer protection. Ecuador, Paraguay, and Honduras have developed Environmental & Social Risk Management Guidelines as the standard process for credit risk assessment, seeking to promote corporate accountability and transparency.
In his opening remarks, AFI Executive Director, Dr. Alfred Hannig commended members for their joint effort in furthering financial inclusion:
“Each member institution in the region has its own identity but at the same time, you have successfully promoted a sense of unity with a shared vision of addressing common obstacles to financial inclusion. Therefore, I would like to encourage everyone here to take advantage of this collaboration and share experiences and challenges in your respective regions. Together we can design and implement effective strategies to expand access to financial services for those who need it most.”
At the EGFIP meeting, members explored new knowledge products, including the roadmap for advancing women’s financial inclusion and the diagnostic study on the financial inclusion of migrants in the FILAC region, and assessed measures to support the MSME sector through the COVID-19 pandemic recovery phase. They also discussed upcoming regional projects developed through the recently launched Luxembourg-FILAC partnership project.
Dialogue between FILAC members and Luxembourg on how to advance financial inclusion
There was a virtual dialogue with key financial stakeholders in Luxembourg, a pioneer in global sustainable and inclusive finance, and home to AFI’s European Regional Office. FILAC members discussed issues in sustainable finance, digital financial services, inclusive FinTech, cybersecurity, microfinance, and inclusive green finance with experts from Appui au développement autonome (ADA), the Luxembourg Development Cooperation Agency, the Luxembourg House of Financial Technology, and the University of Luxembourg. The dialogue presented a unique opportunity to exchange insight with the aim of informing regional financial inclusion policymaking and implementation and strengthening the capacity and technical skills of regional AFI members. In her opening remarks, Luxembourg’s Deputy Director for Bilateral Development Cooperation, Geneviève Hengen highlighted the two regions’ collaborative potential:
“With a shared vision and in a collaborative spirit, Luxembourg’s development cooperation is eager to work with our innovative partners in the LAC region. Our common priorities—gender, inclusive green finance, digitization, and financial literacy—are topics in which the LAC region and Luxembourg’s inclusive finance ecosystem both have expertise to share. A true partnership is based on mutual exchange, where our robust knowledge and expertise in inclusive finance regulation stands out, driving collective progress and innovation.”
The virtual dialogue formed part of a broad, ongoing cooperation between FILAC and Luxembourg. In December last year, Luxembourg’s Directorate for Development Cooperation and Humanitarian Affairs and AFI signed into effect a pilot project to advance financial inclusion in the LAC region. The project aims to advance regional digital financial services (DFS), inclusive FinTech, national financial inclusion strategies (NFIS) and inclusive green finance (IGF), with an overarching prioritization of gender inclusive finance. The project will stimulate the exchange of policy guidance, capacity building, and collaboration between the LAC region, knowledge partners in Europe and globally, and AFI members worldwide, as a means of advancing shared policy priorities in the global north and south.
Digital financial literacy: critical for consumer safety
The event included two roundtable discussions where FILAC members convened with AFI public-private dialogue (PPD) and developing-developed country dialogue (3D) partners and stakeholders – including Mastercard, Thunes, the European Investment Bank (EIB), Banca d’Italia and Banco de España – to critically review existing digital financial literacy (DFL) policies and initiatives in the region and beyond, sharing ideas on how to boost DFL in the region, and sowing the seeds for collaborative approaches.
Recently, as a result of the rapid uptake of FinTech, financial regulators in the LAC region have stepped up their focus on ensuring digital financial services (DFS) are safe for users, implementing programs and policies related to financial education, digital financial literacy, and financial health. There remains however a need to further strengthen DFL across member countries. The roundtables allowed AFI members to discuss developments in DFS innovation, open finance, inclusive FinTech, data privacy, consumer protection, and digital financial literacy with their private-sector and developed-country partners.
The challenge: how to boost women’s access to financial services
AFI and SB co-hosted a three-day training session on policymaking for advancing women-owned micro, small and medium enterprises’ (WMSMEs) access to finance through digital financial services. FILAC members explored the challenges such businesses face, assessed the role of digital financial services in addressing the financing gap, and identified regulatory and policy solutions to boost financial inclusion.
MSMEs account for 90% of LAC enterprises and one-fourth of regional GDP. An estimated 46% of MSMEs in the region have female ownership participation while 20% are led entirely by women. Additionally, according to LAC Economic System (SELA), 30% of households in the region depend on women’s economic activities for their livelihoods. Yet despite their vital economic and social role, WMSMEs still face numerous challenges in accessing finance.
The financial inclusion of WMSMEs has been identified as a priority policy area by AFI members in the region. In March 2023, FILAC published the Policy Framework on Digital Financial Services for Women-Led MSMEs in Latin America and the Caribbean, highlighting ways in which regulators can use emerging DFS innovation to encourage service providers to deliver and develop effective, easily accessible, and reliable financial services for WMSMEs.
In conclusion, the FILAC regional initiative meetings proved to be a richly rewarding experience. AFI members greatly appreciated the breadth and depth of topics, as well as the choice of setting: La Romana, with its pristine beaches and authentic Caribbean atmosphere, served as the ideal backdrop for four days of stimulating discussion.
The Superintendencia de Bancos de la República Dominicana (SB) supervises the nation’s financial entities by ensuring their compliance with financial regulation as well as anticipating and counteracting risks to the country’s financial system. An AFI member since July 2021, SB has shown its commitment to advancing financial inclusion through various reports and initiatives in recent years. SB’s launch of the “basic bank account” provides previously unbanked individuals with an easy-access entry point to financial services, and SB has helped the country’s regulators and public sector players to promote financially inclusive products and services. SB forms part of the Commission responsible for coordinating and implementing the Dominican Republic’s recently launched National Strategy for Financial Inclusion 2022-2030 (ENIF), led by the Central Bank of the Dominican Republic.
AFI is the world’s leading organization working on advancing financial inclusion policy and regulation. The global alliance is made up of 83 member institutions including central banks, ministries of finance, and other financial regulators from 75 developing and emerging economies. AFI works on empowering policymakers to increase access and usage of quality financial services for the underserved through formulation, implementation, and global advocacy of sustainable and inclusive policies.
FILAC is the first regional financial inclusion platform of its kind in Latin America and the Caribbean. Consisting of 11 member institutions (Costa Rica, Ecuador, El Salvador, Haiti, Honduras, Mexico, Paraguay, Peru, Suriname, the Bahamas, and the Dominican Republic), it aims to promote inclusive growth and poverty reduction through sustainable financial inclusion policies by leveraging the collective expertise and knowledge of financial policymakers, regulators, and partners regionally and globally.