Nº 4 2015 > Digital Financial Services
ITU Focus Group on Digital Financial Services
The ITU Focus Group on Digital Financial Services held its second meeting on 20–22 April 2015 at the World Bank in Washington D.C. The Focus Group aims to provide a multistakeholder platform to discuss the regulatory and policy issues associated with financial inclusion, as well as innovations in digital finance that may benefit from standardization. The Focus Group is chaired by Sacha Polverini of the Bill & Melinda Gates Foundation. Over 80 delegates attended the meeting from 24 countries, including participants from international organizations and industry associations such as the World Bank, Alliance for Financial Inclusion, Consultative Group to Assist the Poor (CGAP), International Finance Corporation (IFC), the GSM Association (GSMA), the Institute of International Finance (IIF) and the Grameen Foundation.
Financial inclusion has been recognized as a vital enabler of the digital world, as it allows access to many different aspects of the digital economy (obviously payment, but also education and health services, etc.). The overarching and cross-cutting nature of financial inclusion has been recognized by UN Member States in the global post-2015 development agenda.
During the Focus Group meeting, the World Bank presented its 2014 Findex study. According to this study, the proportion of adults with an account (with either a bank or mobile money service provider) has increased from 51% to 62% over the past three years, resulting in a reduction in the number of unbanked people from 2.5 billion in 2011 to 2 billion people in 2014. The World Bank Group’s President Dr Jim Yong Kim established a goal in October 2013 for Universal Financial Access (UFA) to be achieved by 2020. To realize this goal, the World Bank Group aims to help 1 billion adults gain access to transaction accounts in contribution of reaching the overall objective, especially in 25 ’focus countries’ accounting for approximately three-quarters of unbanked people globally.
Participants at the Focus Group heard how digital financial services have played a great role in advancing financial inclusion. Best practices and lessons learned from Digital Financial Service (DFS) deployments were presented for various countries including Tanzania, Ghana, Egypt, Uganda, Burkina Faso, Bangladesh, Indonesia, Kenya, Brazil and Peru. In a number of Sub-Saharan African countries, there is now a greater number of people with a mobile money account with a mobile operator, than in the formal banking system. Of those 2 billion people who are unbanked, some 1.6 billion have a mobile phone in their households, so mobile money accounts are an important opportunity to further bridge the financial inclusion gap.
Indeed, a transaction account often provides a cornerstone for the provision of cashless retail payment services. Holders of transaction accounts should also be able to access broader financial services. From a payments perspective, efforts at financial inclusion should ultimately seek to make transaction accounts an effective gateway to other financial services.
Participants underlined that the collaboration between the telecom regulator and financial services regulator is key in establishing a conducive environment for DFS. In some countries (such as Tanzania), a Memorandum of Understanding outlines the respective responsibilities between the telecom provider and the Central Bank for the provision of DFS. In other countries, the government has mandated interoperability, but this has not always led to subsequent explosive growth in usage. Instead, authorities should undertake a market assessment and consult with all the different stakeholders before determining whether interoperability can be implemented. There is no single ’one solution fits all’ approach as far as interoperability is concerned.
Another widely held assumption is that if a poor person owns a mobile phone, they are automatically able to use it. A study by the Grameen Foundation suggests that this may sometimes prove a faulty assumption. Usability and “mobile phone literacy” are significant issues that may prevent poor people from benefiting from mobile-enabled solutions. If not properly designed, DFS applications can also lead to confusion among people who are not familiar with the predominant language or the number of screens that users may need to go through to complete a transaction. For example, depending on the transaction, it can take up to 16 steps to complete a transaction and this is often difficult or unsuitable for people who are not literate. In addition, in some countries, a lower proportion of women own or have access to phones, or may not feel comfortable using a phone.
The next meeting of the Focus Group will be held on 30 September to 2 October 2015 in Kuala Lumpur, Malaysia. More details will be made available on the Focus Group website at