Knowledge Exchange Program-2 – Harnessing the potential of Fintech in deepening Financial Inclusion: Practical Regulators Expositions
Tuesday, 1 December 2020
Opening remarks by Dr. Alfred Hannig
Good evening and warm welcome to the Knowledge Exchange Program-2 – Harnessing the Potential of FinTech in Deepening Financial Inclusion, co-hosted by Bank of Thailand (BOT)
Allow me to express my gratitude to Deputy Governor Ronadol Numnonda in supporting as co-host for the second edition of the knowledge exchange program, which has become a strategic platform for AFI member institutions to learn and share on topics of mutual interest. I would like to thank BOTs leadership in being a founding member in co-developing this strategic platform with Bangko Sentral ng Pilipinas (BSP) and Bank Negara Malaysia (BNM).
This edition of the knowledge exchange program has been developed in close partnership with member institutions and it is great to see participation of representatives from BSP, BNM, BOT, Central Bank of the Russian Federation, Mexico’s Comisión Nacional Bancaria y de Valores, National Bank of Cambodia and People’s Bank of China .
Countries represented by AFI member institutions are diverse in terms of geography, socio-economic development, cultural context and levels of financial inclusion. This necessitates a focused regional and country-based approach towards coming up with policy solutions to address financial inclusion challenges. They have complex challenges and priorities to be addressed and need innovative policy responses to advance their financial inclusion objectives. Moreover, AFI has also received requests from members for tailored knowledge exchange programs for them to learn from certain member institutions.
In this context, AFI – with extensive stakeholder consultation – co-created this knowledge exchange for members to learn and share on relevant topics focusing on country-specific implementation challenges and receive practical recommendations from peers facing similar challenges and issues.
Today we are taking a policy thematic approach on digital financial services (DFS), led by participating member institutions and identified stakeholders as well as knowledge partners, including developed country regulators such as Bank of England, Accelerate Estonia, CSSF Luxembourg and European Banking Authority, who are experts on specific topics. The program has two main pillars:
1 - Open banking and open API – focusing on the current state of open banking and open API, regulatory approaches, innovation and solutions to overcome implementation challenges.
2 - e-KYC and digital identification (ID) – focusing on the current state of e-KYC and digital ID, innovation in regulatory approaches, the need for stakeholder collaboration, their potential role in promoting financial inclusion and opportunities under the COVID-19 recovery phase.
Knowledge Exchange Program-2 is aligned with the Sochi Accord on FinTech for Financial Inclusion, which was adopted by the AFI membership in September 2018.
The accord calls for systematic dialogue among peers in developing and emerging countries as well as developed economies, showcasing policy learnings on issues of high shared priority, which include digital KYC processes and biometric ID. The event is a follow-up dialogue to the Prague event on Global Dialogue on Regulatory Approaches for Inclusive FinTech, where enabling FinTech ecosystems were identified as a key area of priority in the global 3D workstream.
As the world grapples with the ramifications of the COVID-19 pandemic, an economic crisis is threatening to reverse many years of gains in economic growth, poverty reduction and financial inclusion. However, despite these challenging times we see opportunity. Unlike the financial crisis of 2007-2008 – where highly leveraged financial institutions deemed ‘too big to fail’ had to be rescued by public interventions – the financial sector of today is far better capitalized and in a much stronger position not only to survive this crisis but also to actively contribute to an inclusive recovery: a bottom-up approach that supports individuals and communities, including women, workers in the informal sector, front line healthcare workers, micro, small and medium-sized enterprises, and vulnerable/fragile populations such as older people, persons with disabilities and forcibly displaced communities.
Financial inclusion is one of the key solutions available to mitigate the impacts of COVID-19 and build recovery and resilience. And, here, I emphasize the great opportunity before us.
It is in everyone’s interest for financial inclusion to move forward. While some countries are focusing on usage, access and quality of financial services, others are focused on maintenance of users within the financial system. The longer we are on the financial inclusion journey, the more focused we are on maintenance. These are the points of convergence for developing and developed countries, where we can learn from each other and work on the quality of financial inclusion. DFS innovative solutions are key to enhancing this quality.
Peer-to-peer engagement is at the core of AFI’s services, such as technical working groups, capacity building events, peer knowledge exchange advisory and in-country implementation (ICI), which provides grants and technical assistance.
Through AFI’s cooperation model, which is unique and country-led, AFI has been at the forefront of responding to the current crisis by supporting its members in designing and implementing high-impact tailored practical solutions to build recovery and resilience.
Specifically, in response to the pandemic, AFI launched a COVID-19 response initiative that has multiple platforms to support the recovery phase. To share a few:
COVID-19 policy response dashboard – a compilation of the policy responses from over 100 countries who are a part of the network.
COVID-19 webinars and publications – in last nine months, AFI has held several COVID-19 webinars and publications that brought together thought leadership on multiple thematic areas that impact financial inclusion and also support member institutions in their recovery phase.
ICI – enhanced focus on supporting members with tailored intervention both through grant and technical support on specific topics and issues that can support member institutions in their COVID-19 recovery plans.
In the current context of the pandemic, given the digital transformation in countries represented by AFI member institutions, innovative DFS solutions will be key to enhancing the usage and quality dimensions of financial inclusion.
I am confident that Knowledge Exchange Program–2 will provide a platform for participating AFI member institutions and their peers from developed country financial regulatory policymaking institutions to share knowledge and experiences, aiming to enhance capacity on innovative and enabling policy environments for digital financial inclusion and, more particularly, for enabling FinTech ecosystems.
AFI with the recent launch of its European Representative Office (ERO) is in a good position to collaborate with member institutions, especially on topics related to DFS. Going forward, ERO will help foster even deeper ties with member institutions in the region and across the network, as well as our partners. ERO will also channel AFI member views and experiences into strategic dialogues with standard-setting bodies, such as the Financial Action Task Force and Financial Stability Board, and engage regulators from the North, to support cooperation and exchange on topics of convergence such as the DFS.
As next steps to this program, we look forward to partnering with our members in enhancing and/or developing innovative policy solutions on specific areas by through tailored ICI programs, comprising of grants and/or technical assistance. We look forward to collaborating with member institutions.
Thank you, and I wish you a fruitful workshop.