Financial technology (FinTech) innovations are revolutionizing the finance industry and poised to yield significant benefits on underserved populations. This includes through mobile money and e-wallets, crowdfunding (P2P lending and equity crowdfunding platforms), alternative credit scoring, cross-border remittances, payment technologies using digital Know-Your-Customer process and regulatory technology.
By offering technology-enabled solutions, FinTech companies (FinTechs) can better address customer needs and preferences to ensure the enhanced availability, accessibility, usage, convenience and quality of services and tailored products. This may, however, disrupt traditional financial institutions’ business models, necessitating new thinking and approaches with the use of technology to ensure financial systems stability, integrity, security and inclusion.
Regulators are beginning to embrace new innovative regulatory approaches to gain insight into the functions of FinTechs while also ensuring that consumers are educated and protected. These new approaches – including regulatory sandbox environments, innovation hubs and others – demonstrate the unique potential of FinTechs to help address and close the financial inclusion gaps for individuals, small businesses and even address barriers within disadvantaged populations while incorporating concerns for climate change, sustainability and resilience.
The AFI Inclusive FinTech workstream is supporting the network through direct country engagements and regional initiatives, such as the implementation of the Regional Regulatory Sandbox for the Pacific Islands Regional Initiative and the African Financial Inclusion Policy Initiative with a policy framework on responsible digital credit.
Sochi Accord: FinTech for Financial Inclusion
Launched at the 2018 AFI Global Policy Forum in Sochi, Russia, the Sochi Accord strengthened the determination of AFI members and affirmed their commitment to leveraging digital financial solutions (DFS) and FinTech for financial inclusion. It aims to accelerate the access and usage of financial services with a special focus on closing the gender gap, managing climate change risks, mitigating of de-risking challenges, advancing the inclusion of forcibly displaced persons, reducing the financing gap for small businesses and lowering costs for cross-border remittances while simultaneously promoting financial stability and integrity. AFI has also identified ways in which institutions can strengthen peer learning and knowledge sharing with the aim to develop regulatory or policy interventions to balance innovations and oversight.
Inclusive FinTech Maya Commitments by AFI members
FinTech-related commitments under the Maya Declaration are currently incorporated under the DFS section.