17 March 2021
Your Excellency Mr. Ali Hashim, Governor, Maldives Monetary Authority, senior officials from AFI member institutions, speakers and participants, colleagues from Maldives Monetary Authority AFI team, ladies and gentlemen, welcome to the two-day virtual member training on Strategic Approach to Digital Financial Literacy (DFL) co-hosted by Maldives Monetary Authority.
My sincere appreciation to Governor Ali Hashim for co-hosting this training which has been specifically organised and designed to respond to the demand from the AFI member institutions from South Asia. This is the first regional focused capacity building event organised specifically for members from South Asia and the content has been developed in consultation with them to support specific needs and priorities of the region.
In the last decade, adopting a digital focus to promote financial inclusion has been proven to be the accepted way forward. The pandemic has given DFS a further boost, following which, DFL has become a priority policy area for financial regulators. Given the digital transformation that is taking place in South Asia, this training on designing a strategic approach to integrate DFL in the institution’s financial education policy and initiatives will have an important role during the COVID-19 recovery phase.
The acceleration of innovative financial technology (fintech) and DFS globally have also presented unique opportunities for small island states. We begin to see evidence particularly from members in the Pacific and Caribbean, leapfrogging challenges such as geographic remoteness, infrastructure impediment, persistent challenges due to climate change, to advance their financial inclusion for women, youth, elderly, forcibly displaced and vulnerable and disadvantaged groups through digital innovations.
Pacific island countries are showing great strides in their adoption and adaptation of an innovative regulatory approach by agreeing to co-operate on a regional regulatory sandbox to present the region as a favourable market for innovation and a conduit to practical solutions and regulatory intervention to address MSME financing, digital payments, digital literacy and many other commonplace challenges. Similarly, in the Caribbean, we have the Bahamas leading on a digital currency initiative with specific focus to achieve their financial inclusion goals which includes DFL. These examples are testament to the fact that small island states can lead and present ground-breaking innovations to advance financial inclusion and become relevant oasis for peer learning going forward.
DFL is a key area of concern for financial regulators – both from developing and developed countries. And as innovations adopting technology for financial inclusion expands fast, it has been a key point of convergence between developing and developed countries. AFI has organised forums where representatives from Central Banks of developed economies such as Banco de Portugal, Bank of Finland have shared their work with AFI members and the deliberations have resulted in fruitful exchange to find solutions that work for all. Following the same trend, even though this is a region specific event, we have Speakers from other regions of the network and beyond, inclusion Bank of France.
The focus on DFL is also critically relevant for financial regulators because of the growing concerns related to consumer protection issues that emerge from the rather fast pace of DFS emerging across markets. DFL is a thematic area with many opportunities for further development. Its critical need is well amplified by AFI member institutions who have acknowledged that to ensure the sustainability of DFS for financial inclusion, there is the need to go beyond the generic approach to financial literacy and develop a specialized focus on DFL. The intention is not to re-design the ongoing financial education work, but to encourage a targeted approach to the development of the knowledge and capability of consumers in the effective and safe use of DFS.
To this end, since 2019 AFI’s Digital Financial Services Working Group with the Consumer Empowerment and Market Conduct Working Group have worked towards the development of relevant knowledge products to build the capacity of AFI member institutions to guide them in the promotion of DFL in their jurisdictions. In the coming months, AFI will be releasing a Guideline Note and Toolkit on DFL for regulators and policy makers. Let me add that these knowledge products stem from AFI’s high level commitment towards entrenching Consumer Protection for DFS which culminated in the ratification of the Policy Model on Consumer Protection for DFS during the Annual General Meeting in September 2020.
This training is indeed right for these times – when we are witnessing unprecedent usage in DFS driven by the ongoing COVID-19 pandemic. Hence let me use this opportunity to commend South Asian member countries for their proactive action to deepen DFL to safeguard the use of DFS for financial inclusion.
It is our hope that after this training, the AFI member institutions in South Asia will take proactive steps in integrating the outcomes of this training, specifically within the relevant financial inclusion and financial education strategies. I would also encourage you to ensure that the efforts at implementing DFL incorporates relevant provisions to address the unique challenges of the most vulnerable in our societies, especially women, youth, refugees and internally displaced people.
The global gender gap in access to finance across the developing and emerging economies has been stagnant at 9% since 2011. However, when we look at regional figures, we can see significant differences and in South Asia the gap currently stands at 18% with great opportunities for members to take gender sensitive action to decrease these numbers and meet their commitments under the Denerau Action Plan pledge to halve their gender gaps by the end of 2021.
South Asia is home to countries with some of the lowest financial literacy scores, where only a quarter of adults—or fewer—are financially literate. We can see that, particularly for women low financial literacy rates restricts them from accessing formal financial services in several ways.
People from vulnerable groups including women face unique challenges and barriers to be able to effectively access and use DFS. It is vital that regulators understand these needs and develop education programs that are relevant and appropriate for different population segments. At the Bangko Sentral ng Pilipinas, whom we have invited them to share experience in this training, they have developed a countrywide strategy to implement financial education campaigns with a focus of key target groups, including Filipinos working overseas and their families in the Philippines, MSMEs and Beneficiaries of the government’s conditional/unconditional cash transfer programs. These are all groups with high female representation. Not only in South Asia, but work is also being done in other regions: The Reserve Bank of Malawi has a special focus on financial education for women. It is also developing a consumer protection campaign with awareness materials in Braille and large print for the visually challenged.
While the pandemic has led to unprecedented challenges, it has at the same time also pushed us to expand our boundaries, explore new areas, experiment with the digital world. While the pandemic has compelled us to maintain a physical distance, it has brought us together like never before virtually. 2020 has seen phenomenal acceleration of the digital connect in every sphere of life, and has had strategic implications on the “leave no one behind!” principle.
AFI has consistently provided most of the services to its members. And I am confident that this training will provide a platform for participating AFI member institutions to share knowledge and experience and also receive inputs from relevant stakeholders from outside the network, aiming to enhance capacity to establish innovative and enabling policy environments for financial inclusion, particularly DFL.
As next steps to this training we look forward to working with member countries bilaterally and through regional cooperation to enhance and/or develop innovative policy solutions on this important topic.
I wish to thank Maldives Monetary Authority once again for co-hosting this Virtual Member Training and do wish you all an insightful and successful sessions. We look forward to continued collaboration with member institutions moving forward. Thank you.