The Executive Director of AFI, Dr. Alfred Hannig,
Esteemed Governors, Management of AFI,
Ladies and Gentlemen,
Assalam Alaikum and a good afternoon to you all. I am very pleased and honored to welcome you all to the second leaders roundtable of the South Asia Region Financial Inclusion Initiative (SARFII) on the important topic of advancing digital financial inclusion amid economic uncertainty. I take this opportunity to extend the thanks of Maldives Monetary Authority and the rest of the region to AFI for taking the initiative to establish SARFII to strengthen regional cooperation in financial inclusion within the South Asia Region.
Today, as we attend this important discussion, it is worth considering how technology has revolutionized our way of life. In an increasingly interconnected world, where technology is transforming every aspect of our lives, it is crucial to understand the impact of new and disruptive technologies on the financial sector. As financial sector regulators and policymakers, we must recognize the power and potential of digital financial services in uplifting economies and improving the lives of millions. These technologies have revolutionized the way we handle money, making financial transactions faster, more secure, and more convenient.
In the South Asia region, where a significant portion of the population remains unbanked or underserved by traditional financial institutions, digital financial infrastructure plays a vital role in promoting financial inclusion. By providing access to financial services to those who were previously excluded, we can empower individuals, particularly the poor and marginalized, to participate fully in the economy and improve their livelihoods.
Growing economic and financial uncertainties and accelerating climate crisis in the region pose a significant threat to enhancing financial inclusion in the region. The World Bank forecasts a downward growth outlook for all the countries in the South Asia region and estimates that 750 million people in the region have been affected by natural disasters in the past two decades. The impact of these economic uncertainties and natural disasters is more severe on vulnerable segments of the population. Hence, as financial inclusion champions, it is imperative that we embrace the crucial rule of digital transformation and digital financial inclusion in mitigating the impact of economic uncertainties and climate risks and building resilient, inclusive, and sustainable economies.
Recent data indicates that Small and Medium Enterprises (SMEs) make up more than 96% of all Asian businesses, providing two out of three private-sector jobs on the continent. While SMEs are considered the backbone of the continent’s growing economy, they face major challenges in terms of access to finance. Digital financial services could play a vital role in bridging this gap by facilitating access to credit and insurance for SMEs. By leveraging alternative data sources, such as transaction history, digital footprints, and supply chain data, lenders can assess creditworthiness more accurately, extending loans to those who would have been deemed too risky by traditional banks. This access to credit enables entrepreneurs to start or expand businesses, stimulating economic growth and job creation.
Digital financial services can also play a vital role in bridging the gender gap that exists in financial inclusion in the region. Digital financial services provide a convenient and accessible way for women to access financial services, helping them to overcome the barriers to financial inclusion, especially the restrictive social norms that limit women’s access to traditional financial services. In many societies, women face restrictions on mobility and may not have control over their physical assets. Digital financial services offer an opportunity to bypass these barriers by providing remote access to financial services. Similarly, while women are increasingly seen as more vulnerable than men to the impacts of climate change, digital financial services help them build resilience against natural disasters.
However, to fully realize the potential of digital financial infrastructure, collaboration among countries in the South Asia region is essential. Financial inclusion knows no borders, and the challenges faced by one country may be similar to those faced by its neighbors. By sharing experiences, knowledge and best practices, countries can learn from one another and leverage financial inclusion and digital financial services to build resilience against economic uncertainties and climate risks.
I take this opportunity to reiterate MMA’s vision as Chair of SARFII, to establish interoperable payment systems that allow seamless transactions across borders. I invite the SARFII member countries to form joint policy initiatives and work towards harmonization of regulations to facilitate the establishment of seamless cross-border payments within the South Asia Region.
Today, as we approach the first anniversary of SARFII, important strides have been made towards financial inclusion in the region. The knowledge product that is being developed as part of the SARFII action plan for 2023 will serve as an essential tool in highlighting payment innovation trends in South Asia and identifying the emerging risks related to consumer protection, fraud, and cybersecurity. The findings from the report will facilitate high-level policy and regulatory recommendations towards an enabling payment ecosystem in South Asia.
I conclude by once again emphasizing the importance of building digital financial infrastructure as a resilience tool against economic uncertainties and climate risks in the South Asia region. By leveraging technology, we have the opportunity to create more inclusive and resilient economies where every individual has access to affordable and secure financial services. Let us work together to build a future where no one is left behind. I hope that today’s discussion will be fruitful in advancing digital financial inclusion in the South Asia region. I thank the AFI team for organizing this virtual event, and I conclude with the hope of seeing you all in person next time.