Digital Financial Services Working Group (DFSWG) Webinar
COVID-19 and the Role of BigTechs and Digital Platforms in Response and Recovery
Thursday, 14 May 2020
Opening Remarks by Dr. Alfred Hannig, Executive Director, AFI
Ladies and gentlemen,
Warm greetings and welcome to everyone. I hope you are safe and in good health as you join us for yet another interesting webinar.
Thank you to everyone for making the time to be here - I note that more than 250 members have registered for this webinar. We are always excited to learn and share with members, stakeholders and partners as we continue to elevate our work in financial inclusion, which is apt and necessary at this time in human history.
While the repercussion of COVID-19 threatens to dismantle many recent development milestones, financial inclusion is one of the few solutions available to immediately address the issues facing hard-hit economies across the AFI network. Financial inclusion is actually better positioned than 12 years ago, when after the financial crisis we were still testing and learning on how financial inclusion can support economic recovery and strengthen financial stability and integrity.
As in other crises, and the financial crisis in particular, those worst-hit live at the bottom of the economic pyramid in the developing world. These groups are at greatest risk of slipping further into poverty as the least able to respond and rebuild, with neither safety nets to fall back on nor financial resilience. Equally worrying is how women are further disproportionately affected, including how they cope and how their businesses recover over time.
Across the AFI network, we have recorded robust responses that highlight innovative and impactful interventions and policies that ensure the financial health of these groups and allow us to explore opportunities to actively support resilience and recovery.
The situation we are faced with at present, which includes movement restrictions, is also offering opportunities for digital finance – especially with physical distancing becoming the current norm – as it allows for crisis responses to be fast, accurate and immediately available.
It is therefore not surprising that BigTechs and digital platforms are observed on the world scene with regard to their potential role in mitigating in some measure the growing record unemployment, dwindling income levels, economic downturn, and cascading impact on the world’s vulnerable population particularly women, rural population, informal sectors and MSMEs. They have leveraged their competitive capabilities and differentiated business models to support and contribute significantly to the response of the COVID-19 pandemic.
Some of the innovate ways in which they support citizens, maintain a supply and delivery of essential groceries and necessities, keep small businesses running, support contactless and remote payments, and support governments with rapid disbursement of financial support can be grouped in the following buckets:
BigTechs in Payments and Financial Services:
Similar to interventions from traditional financial service providers, we observed digital platform offer waiver/reduction of merchant fees, promote digital payments that are remote and contactless, facilitate the insurance of their partners, suppliers and downstream actors and offer digital credit to players on their platform.
BigTechs on e-Commerce and Social Responses:
Declared essential services by many jurisdictions, digital platforms became a conduit of supply and delivery of essential goods such as food, groceries, and necessities to many restricted to their homes. Many of such entities also leveraged their scale to raise relief funds through crowdfunding while supporting governments with the disbursement of financial aid to identified vulnerable groups and MSMEs in the form of digital coupons and cash vouchers.
Collaboration with Governments and Financial Regulators:
We have observed the growing collaboration between digital platforms and government and regulatory bodies in addressing specific barriers in response to the global crisis by leveraging on their unique economies of scale, learning, and differentiated capabilities. Regulators in turn are presenting new proportional and appropriate policies that would spur inclusive and sustainable innovations that are in alignment with existing regulation, data protection & privacy concerns, competition related issues and security.
Ladies and gentlemen,
Clearly, the future of financial inclusion as well as broader recovery from the global emergency will continue to be shaped by technology. While there are obvious benefits, there exist new and emerging risks of technology that are outside the conventional prudential responsibilities of financial regulators.
As we appreciate the opportunities presented by BigTechs and digital platforms from this plenary, I encourage all to ponder on ways to harness technology to address present issues around the access, usage and quality of financial services, financial health of vulnerable groups, impact on supply chains and MSMEs and how these insights can be drawn upon to enhance regulatory supervision, consumer protection and market conduct.
As technology facilitates access and distribution of basic essential needs such as groceries and financial services, frameworks that prevent, manage, and mitigate cyber threats and also integrate privacy, security and transparency, need to be prioritized on our agendas.
Finally, allow me to reiterate my call for action to the regulators, market actors and other stakeholders to leverage digital technologies in a responsible and safe manner as we reach out to vulnerable segments of the society such as the poor, women, forcibly displaced persons and MSMEs. Further exclusion is not an option.
It is therefore our hope that the insights drawn from the deliberations on this plenary will make clear the need for better market conduct and enhanced financial capability, which is never out of fashion, even in the advent of the glory of financial technology.
I wish you all a fruitful discussion. Thank you.