Joint Digital Financial Services (DFS) & Consumer Empowerment and Market Conduct (CEMC)
Working Group Meetings,
Tuesday, 26 March 2019
Nassau, The Bahamas
Opening remarks by Chee Soo Yuen, Chief Operating Officer, AFI
Governor of the Central Bank of the Bahamas, Mr. John A. Rolle,
Deputy Governor of the Central Bank of the Bahamas, Mr. Derek Rolle,
Mrs. Clarissa Kudowor, Bank of Ghana and Chair – Digital Financial Services Working Group,
Ms. Armenuhi Mkrtchyan, Central Bank of Armenia and Chair – Consumer Empowerment & Market Conduct Working Group,
Ladies and Gentlemen,
Welcome to Paradise!!
Good morning and a very warm welcome to all of you to this beautiful setting of Paradise Island. For those of you who have traveled from abroad, you will agree that it is not easy to get into Paradise. We have all done something good to be here today!
To our co-host, the Central Bank of the Bahamas, we thank you for the very warm reception and arrangements accorded to us all. It is a great pleasure for me to be here in the beautiful island nation of the Bahamas.
Allow me to briefly express my gratitude to the Governor and the Deputy Governor, and the excellent staff at the Central Bank of the Bahamas who have been working tirelessly during the past months to make this event happen. We appreciate all your efforts in hosting and organizing these important meetings for the AFI network.
The Central Bank of the Bahamas is one of the newest, yet active member of the AFI network. The Central Bank of Bahamas have been actively participating in the Pacific Islands Regional and Small Island States initiative to share Its experience and learn from the experience of other small island countries within the AFI network. We are thankful for your active participation and we are confident that your membership will continue to strengthen our Alliance.
The AFI Working Groups represent the heart of AFI. The presence of approximately 100 member representatives here today reflects the importance that you, as the owners of AFI, attach to these meetings which are the engine of financial inclusion policy development and leadership globally. This week we begin our second joint Working Group Meetings between Digital Financial Services (DFS) and Consumer Empowerment and Market Conduct (CEMC) Working Groups will converge. We concluded the Financial Inclusion Data and Global Standards Proportionality working groups meeting in Cairo, Egypt which was held from 11-14 March and the final working group meetings will be held in Livingstone, Zambia between SME Finance and Financial Inclusion Strategy Peer Learning Group from 01-04 April.
Working Groups have a very special role to play in our journey to becoming a Policy Leadership Alliance. As we begin the implementation of the AFI Phase III Strategy in 2019, and as directed by the membership council during the AGM in 2018 in Sochi, Russia, the AFI network’s focus is now on three main strategic objectives: (a) Issuing Policy Guidance or Models, (b) In-country Implementation Support, and (c) Global Voice.
Please allow me to provide some thoughts on the intersection of technology and consumer policy especially in the context of growing use of technology and data in the delivery of financial services.
- Mobiles are now used by two thirds of the global population. Global smartphone adoption which is currently at around 60% and expected to reach 80% by 2025. Reducing cost of smartphones is driving this adoption.
- Mobile is also becoming the primary medium for internet access, fueled by falling data prices. For example, In Nigeria - data bundle cost as the percentage of monthly income reduced from almost 4% in 2015 to 0.75% in 2017. That’s a reduction of 3 percentage points just in two years!
Now, what are the implications of growing use of mobile and internet?
- There is pervasive digitalization with information and data glut. 90% of the data that the world has ever generated, was generated in the last two years.
- We create colossal amounts of data every single minute in the form of clicks, likes, searches, swipes, shares and streams. Just as I speak, in the last one minute there have been 3.9 million google searches, 4.3 million YouTube streams and approximately 120,000 visa payments.
As a matter of fact, last week one of the days my entire team back in the office was looking restless and distressed. Turns out, Facebook and Instagram were down for more than 10 hours. I also read about people calling police stations to report outage!!
Obviously, increasing digitization is also transforming payments and financial services. I will be preaching the choir if I talk about virtues of digitization of financial services here. Rather, let me safely assume that all of us here agree that technology holds promise in transforming financial services in order to advance financial inclusion.
Innovations such as big data analytics, cloud computing, artificial intelligence, digital identity, blockchain are already disrupting financial services both at the front-end (such as product development, user experience and interface) and the back-end (such as interoperable payment infrastructure, alternative credit assessment models and digital identity platforms).
However, let me focus on the implication of these innovations on consumer policy. While there are many aspects to consumer policy, I want to focus on two very important aspects: First is financial capability and second is data privacy.
Let’s look at financial capability - As we talk about the scorching pace of mobile adoption, let us also remember the unconnected. 4 billion people in the world remain offline. A staggering 785 million in Sub-Saharan Africa alone. We expect this number to increase significantly in the coming years. And many first-time users of technology and financial services will not know much of either. So, it is imperative for providers and policy makers to work together in improving financial capability and well-being of the users.
On data privacy and I think this could also extend to increasing lack of competition and choice. BigTech companies are already using our personal data. At the risk of sounding paranoid, let me say that they may be knowing more about us than ourselves.
There is a meme on the internet in which a young boy tells bigtech CEO “my dad told me you are spying on us”. Bigtech CEO responds rather nonchalantly “He’s not your dad!”
On one side, data enables providers to develop new products, customize experiences and target hitherto unserved/underserved segments. We already see financial and non-financial data being used to offer insurance, credit, investments etc. However – there are questions around ownership, usage, storage of personal data. Further, there needs to be alignment of incentives between companies and users.
The convergence of the DFSWG and CEMCWG is timely. DFSWG is taking the lead on all things digital finance and fintech. I commend the working group for leading the way in shaping the networks thinking on new, frontier topics such as cross border remittances, interoperability, KYC innovations and cybersecurity. Their work will help scaling appropriate policy interventions especially in the context of rapidly evolving FinTech innovations.
CEMC on the other side, is working on four main areas namely financial education, responsible lending, institutional framework & supervision and gender. In this meeting here in the Bahamas, the Gender subgroup will be presenting it final deliverable which is a policy guideline on risk sharing mechanism – credit guarantees for financing for women. Clearly, CEMC working group has its role cut out!
We would like to express our gratitude to the DFSWG and the CEMC members for their tireless efforts and commitment to developing knowledge products, which we intend to use as policy guidance at the country level.
The DFSWG and CEMCWG must ensure a collaborative approach, in the interest of finding a right balance between innovation, consumer protection and market conduct. DFSWG and CEMCWG are like the yin and the yang of the AFI network.
Ladies and Gentlemen,
As AFI adopts its AFI Phase III Strategy, it is time for reflection on the path we have tread together and the way forward. AFI services have evolved in the past ten years - as AFI has expanded, as AFI network members have made significant progress and as the financial inclusion horizon has drastically changed. Much more has to be done but as, AFI Executive Director, Dr Alfred Hannig emphasizes, it is not about the speed that it takes to reach total financial inclusion but the big challenge of sustain the high levels of financial inclusion. Quoting him “AFI strives for sustainable and high-quality financial inclusion. We are realistic that it takes time and considerable investment to achieve this goal. Ten years is not enough.”
AFI reaches out to its members through a diverse range of services – in-country implementation, capacity building events, working group, global and regional policy forums and via the AFI Data Portal. The quality and success of these initiatives rests equally on two pillars – quality content and quality delivery.
Ladies and Gentlemen,
Allow me to end by reminding you that our upcoming 2019 AFI Global Policy Forum- the first to ever be held in Rwanda, the Heart of Africa. Under the theme " Using Technology for Inclusion of Women and Youth" we are now working closely with National Bank of Rwanda to create a milestone event. The GPF will be held from 11 – 13 September 2019 in Kigali, Rwanda with the Regional Initiative and Working Group meetings set to take place the 9 - 10 September. We again expect this to be a memorable GPF- and the Working Groups will play a key role in its success.
On that note, I wish to again congratulate the Central Bank of Bahamas and team for hosting these meetings and welcoming us all to this beautiful country. To Working Group members who are attending the working groups for the first time, I trust that you will find your participation worthwhile. To the leadership teams of the DFSWG and CEMCWG, and members, I wish you all fruitful and positive deliberations, and a successful week ahead.