Digital Financial Services (DFS) - Alliance for Financial Inclusion

DFS and Financial Inclusion

Digital Financial Services (DFS) has been a cornerstone of AFI’s work since its inception. This continues to be a key focus area for AFI members, as use-cases evolve with new and emerging technologies and the overlap with other core mandates of regulatory and policymaking objectives of market conduct, consumer protection, financial inclusion data and strategies, not forgetting SME finance. Furthermore, the rapid technological advances of DFS have increased the scope of work in this space significantly. The proliferation of digital identity systems, data driven financial products/services, crypto-currencies, blockchain applications, new ways for governments to augment the supervision of the financial industry and for the industry to automate compliance, all have immense potential for the member-base of AFI, hence, creating new opportunities for AFI to provide policy leadership, facilitate peer-learning and knowledge exchange, guidance and implementation support and extensive advocacy.

DFS Policies

AFI and its members are actively working towards improving financial inclusion globally through their Maya Declaration commitments and increasing support for in-country implementation and measurable policy changes.

Fundamental and emerging topics under DFS are explored in-depth through AFI’s Digital Financial Services Working Group (DFSWG).

DFS and Gender

“Digital financial services contributed to increasing financial inclusion of women, but in some countries, it has been disproportional. Even though access to finance for women is rising, the gender gap is still persistent” (Dr. Alfred Hannig, Executive Director, AFI).

The key to success in financially empowering women is through gathering data, analyzing insight and continuously crafting effective strategies to engage and include women.

DFS Maya Declaration commitments by AFI members

Reflects the network’s financial inclusion intervention priorities, DFS targets make up a significant share of Maya Declaration commitments with at least one appearing in every 50 commitments. DFS is among the top three working groups — alongside CEMC and FID — in terms of a continued uptick in commitments that address the usage and quality of financial inclusion.

Primary thematic area		2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Digital financial services National payment system Agent banking Mobile financial services E-Money	Maya Declaration targets	38	52	68	72	89	95	111	160	165	181	215
	Completed	21	27	37	38	43	47	48	60	65	80	95
	In progress	17	25	30	33	46	48	67	100	96	101	120
	Completion rate	55%	52%	54%	53%	48%	49%	40.1%	38%	39%	44%	44%

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AFI’s Digital Financial Services Working Group (DFSWG)

A platform for policymakers to discuss regulatory issues relating to digital financial services, including mobile financial services, branchless banking, electronic money and digital payment solutions.

DFSWG aims to promote digital financial services as a major driver of greater financial inclusion in emerging and developing countries.

It encourages policymakers to exchange experiences to develop a shared understanding of the risks in emerging digital financial services business models. At the same time, it works with global standard-setting bodies in order to represent the voice of developing and emerging countries.

Member
Institutions

Countries

273

Policy
Changes

Knowledge
Products

Chair

Stephen Ambore, Central Bank of Nigeria

Co-Chair I

Josephat Mutepfa, Reserve Bank of Zimbabwe

Co-Chair II

Tsolmontuya Bold, Financial Regulatory Commission Mongolia

Gender Focal Point

Ann Valery Victor, Banque de la République d'Haiti

KEY OBJECTIVES

Create an enabling policy and regulatory environment for transformational DFS at national levels;
Develop a shared understanding of the risk profiles of emerging digital financial services business models, which is essential in designing appropriate regulatory frameworks;
Stimulate discussion and learning on new approaches and good practices in DFS regulation by encouraging policymakers to exchange experiences;
Provide a platform for capturing, tracking and sharing information on innovative DFS, products, business models and appropriate new policy responses;
Establish linkages and provide inputs, where appropriate, to global Standard-Setting bodies (SSBs) and other stakeholders seeking to establish proportionate supervisory practices for DFS.

SUBGROUP AND PLANNED ACTIVITIES

RegTech Technical Taskforce (DFSWG Focal Points)

Planned deliverable: Special Report on Regtech for Financial Inclusion.

CBDC and Financial Inclusion

Planned deliverable: Special report to introduce members to CBDCs from a financial inclusion context, deliver an understanding of the underlying motivation, design choices and approach, risk mitigation options and provide insights into policy and regulatory implications to be considered in the evaluation of CBDC within an inclusive, sustainable, and secure financial system context. The work will be led by DFSWG and supported by other relevant working groups.

KNOWLEDGE PRODUCTS

2023

Policy Framework on Digital Financial Services for Women-led MSMEs in Latin America and the Caribbean

2022

2021

2020

2019

2018

2017

Guideline Note 29: National Retail Payment

2016

Guideline Note 19: DFS Basic Terminology

2014

2013

PEER REVIEWS

Maldives Monetary Authority
Regulation of Payment Services
SEPs Ecuador
Cybersecurity
BCR El Salvador
National Fintech Strategy
Maldives Monetary Authority
Guideline and Regulation on Electronic Customer Due Diligence
Bangko Sentral ng Pilipinas
Enhancing the Guidelines on Electronic Know-Your-Customer (e-KYC)

MEMBER INSTITUTIONS

Agency of the Republic of Kazakhstan for Regulation and Development of Financial market
Banco Central de Reserva de El Salvador
Banco Central de São Tomé e Príncipe
Banco Central de Timor-Leste
Banco Central del Paraguay
Banco de Moçambique
Banco Nacional de Angola
Bangko Sentral ng Pilipinas
Bangladesh Bank
Bank Al-Maghrib
Bank Negara Malaysia
Bank of Ghana
Bank of Namibia
Bank of Papua New Guinea
Bank of Sierra Leone
Bank of Tanzania
Bank of Uganda
Bank of Zambia
Banque Centrale de la République de Guinée
Banque Centrale de Madagascar
Banque Centrale de Mauritanie
Banque Centrale de Tunisie
Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO)
Banque Centrale du Congo
Banque de la République d’Haiti
Banque de la République du Burundi
Central Bank of Armenia
Central Bank of Egypt
Central Bank of Eswatini
Central Bank of Jordan
Central Bank of Lesotho
Central Bank of Liberia
Central Bank of Nigeria
Central Bank of Samoa
Central Bank of Seychelles
Central Bank of Solomon Islands

Central Bank of Sri Lanka
Central Bank of the Bahamas
Central Bank of The Gambia
Central Bank of the Republic of Uzbekistan
Central Bank of the Russian Federation
Central Bank of Sudan
Centrale Bank van Suriname
Comisión Nacional Bancaria y de Valores de México (CNBV)
Comisión Nacional de Bancos y Seguros de Honduras
Comisión Nacional de Bancos y Seguros de Honduras Direction Générale du Trésor,
Jordan Payments and Clearing Company
Microcredit Regulatory Authority of Bangladesh
Ministère de l’Economie et des Finances, Madagascar
Financial Regulatory Commission of Mongolia
Maldives Monetary Authority
Ministère de l’Économie et des Finances de la Côte d’Ivoire
Ministère des Finances et du Budget du Sénégal
Ministry of Finance – Eswatini
Ministry of Finance and National Planning Zambia
National Bank of Cambodia
National Bank of Rwanda
National Bank of Tajikistan
National Bank of the Republic of Belarus
National Reserve Bank of Tonga
Nepal Rastra Bank
Palestine Monetary Authority
Reserve Bank of Fiji
Reserve Bank of Malawi
Reserve Bank of Vanuatu
Reserve Bank of Zimbabwe
Royal Monetary Authority of Bhutan
State Bank of Pakistan
Superintendencia de Banca, Seguros y AFP del Peru
Superintendencia de Bancos de la República Dominicana
Superintendencia de la Economía Popular y Solidaria de Ecuador
Superintendencia General de Entidades Financieras de Costa Rica (SUGEF)

SNAPSHOT

	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
Events	1^st: Cape Town, South Africa 2^nd: Bali, Indonesia	3^th: Bangkok, Thailand 4^th: Riviera Maya, Mexico	5^th: Moscow, Russia 6^th: Cape Town, South Africa	7^th: Antigua, Guatemala 8^th: Kuala Lumpur, Malaysia	9^th: Arusha, Tanzania 10^th: Port of Spain, Trinidad & Tobago	11^th: Kuala Lumpur, Malaysia 12^th: Maputo, Mozambique	13^th: Yerevan, Armenia 14^th: Nadi, Fiji	15^th: Accra, Ghana 16^th: Sharm ElSheikh, Egypt	17^th: Aman, Jordan 18^th: Sochi, Russia	19^th: Nassau, The Bahamas 20^th: Kigali, Rwanda	21^th: Virtual Meeting 22^th: Virtual Meeting	23^th: Virtual Meeting 24^th: Virtual Meeting
Member Institutions	N/A	N/A	32	46	50	59	65	66	62	62	66	68
Knowledge Products (aggregate)	0	0	0	4	8	8	9	10	14	19	21	28
Policy Changes (aggregate)	4	10	14	23	37	44	54	91	97	143	184	TBD
Peer Reviews (aggregate)	0	1	6	8	10	13	15	16	18	19	20	TBD

Webinars

Trends and recent research by the Bank of International Settlement indicates an acceleration in the exploration of central bank digital currencies (CBDC) globally. Within the AFI network, about 40 percent of members have conducted experiments with 10 percent at pilot stages. This reflects a significant interest in understanding, exploring, and taking forward CBDC related interventions by the AFI network, as seen with the recent launch of Sanddollar by the Central Bank of The Bahamas.
The objective of this technical webinar hosted by the DFSWG was to address these questions through a plenary session delivered by technical experts, regulators and industry stakeholders, including country sharing from the AFI network. The webinar deep-dived into identifying the motivating factors for this growing interest, and its implications to monetary policy, financial system integrity & stability, consumer protection, and especially linkages to financial inclusion is therefore imperative.

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The AFI network-wide webinar with BigTech leaders, ecosystem experts and financial regulators discusses the role of BigTechs and digital platforms in response to the global emergency, the linkages on deepening financial inclusion, as well as how these technology players align and support regulatory measure and policy interventions. Topics covered include: digital infrastructure resilience, provision of essential services such as groceries and deliveries, payments and financial services, cybersecurity and fraud, compliance and measures to check high risk, AML/CFT transactions, and other broader policy and regulatory concerns such as data protection, data privacy, competition, awareness/education and consumer protection.

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