17 March 2021
The Executive Director of AFI, Dr. Alfred Hannig, the Deputy Executive Director of AFI, Mr. Norbert Mumba, Esteemed participants, ladies and gentlemen,
Assalam Alaikum and Good Afternoon. It is an honor and a privilege for me on behalf of the Maldives Monetary Authority to welcome you to the MMA-AFI Virtual Member Training on Strategic Approach to Digital Financial Literacy.
Through our relationship with AFI is comparatively new to our peers, we are very honored to be co-hosting this important training. The assistance and rich peer-learning opportunities extended by this network has been extremely helpful in our journey towards the development of a National Financial Inclusion Strategy.
Maldives has been working on formulating the first National Financial Inclusion Strategy. The strategy will focus mainly on enhancing access to finance, digital financial services, financial consumer protection and financial literacy. This strategy will be formulated with broad consultation from both public and private stakeholders. The strategy is expected to be launched in the first quarter of 2022 and will pave the way for a more financially included Maldives.
The Maldives shares unique experiences in terms of accessibility and financial literacy. In terms of access, 85% of the total adult population have access to a bank account. Due to the scattered nature of the population centers and islands, that is not enough. Our quest for financial inclusion doesn’t end with this. We recognize that our challenges are quite unique in comparison with our neighbors and this calls for unique solutions. Our geographical distribution poses countless challenges in terms of cost of finance and accessibility.
Throughout the global financial industry, there is widespread technological disruption over the past few years. Concepts such as digital banking are becoming the norm, with service delivery over internet, mobile applications and other digital means threatening to make the more traditional methods of over-the-counter service delivery obsolete. In Maldives, the move towards digital channels is slowly gaining momentum.
We have one of the highest mobile and internet penetration in South Asia with 1 in 3 Maldivians having multiple mobile connections, the total mobile connections in the Maldives have reached to 166% of the total population. The nation-wide telecommunications network has made internet banking and mobile payments applications accessible throughout the country. In order to reap the most of this advantage and to bridge the gaps in access to finance, MMA has been working on implementing a National Payment System Development Project. This will facilitate a mechanism for instant payments for all Maldivians . This will enable Maldivians to leap forth into a new era of financial technology. Hence, digital financial literacy becomes more relevant, making this the right platform for us as policy makers and regulators to strategically align our vision.
Ladies and Gentlemen, digital technologies are increasingly integrated in the economy and are making a significant impact in the financial industry by introducing new products, services and providers. The move towards digital financial services was already boosting financial inclusion even before the current pandemic. Lockdowns and social distancing are accelerating the use of digital financial services, just as the SARS epidemic in 2003 hastened China’s launching of digital payments and e-commerce.
These innovations have the potential to bring about game changing benefits to consumers and entrepreneurs, such as extending the potential reach and access of financial services as well as offering more convenient, faster, secure and timely transactions. At the same time these developments also carry new risks that must be addressed properly to avoid serious threats to the financial well-being of consumers. Hence, the need for a strategic approach to digital financial literacy becomes necessary.
Ladies and Gentlemen, financial literacy, together with consumer protection, has been recognized as a critical enabler of financial inclusion and continues to retain an important position in the policy agenda of many countries. However, most financial literacy and education strategies do not address digital financial literacy explicitly, instead focus on basic financial concepts. Hence, this needs to be addressed at a policy level to fully capture the desired benefits of the new technological advancements.
Digital financial literacy can loosely be explained as the marriage of digital literacy and financial literacy to enable usage of digital financial services. It is having the knowledge, awareness and skill to effectively use digital technologies to conduct financial transactions. At the same time although digital financial literacy straddles the concepts of digital literacy and financial literacy, it has its own unique aspects due to the nature of the products and risks involved. As policy makers and regulators, these challenges need to be addressed strategically.
Digital financial services could be a double-edged sword in that while it promises to be an effective means of reaching the financially excluded, it can also create a new dimension of divide and disparity especially among the vulnerable groups. The path it takes would depend on the choices we make as policy makers. To ensure it takes a positive path, countries need to define digital financial literacy, design tools to assess it, and develop programs to promote digital financial education with special attention to vulnerable groups.
With this in mind, it is now my honor and privilege to declare this MMA-AFI Virtual Member Training on Strategic Approach to Digital Financial Literacy formally open.
I wish you all a fruitful session and hope that you make the most of this opportunity.
Thank you and Stay Safe.