Global Trends and Challenges on Financial Inclusion
Conference on Financial Inclusion: Challenges and Issues for the
Deposit Insurer
Alfred Hannig, Alliance for Financial Inclusion (AFI)
Manila, June 20, 2013
Overview of AFI
• Founded in September 2008, AFI is a global network of policymakers in
emerging and developing countries
• AFI is dedicated to accelerating the adoption of innovative financial
inclusion policy solutions with the ultimate aim of making formal
financial services more accessible and useable to the billions of
unbanked people
• AFI provides members with the tools and resources to share, develop
and implement their knowledge of cutting-edge policies
The Alliance for Financial Inclusion
2008
Concept design
2009
Building the Network
2010
Activating the
Network
2012
2011
Enhancing Network
value
Policy-Driving
Network
•
108 Institutions, 89
countries
•
Unique Peer Learning
network (working groups)
•
7 policy areas
•
More than 35 tangible
policy changes
•
Financial Inclusion as
mainstream international
policy agenda
•
Maya Declaration
Overview
•
Overview of AFI
•
Global Data on Financial Inclusion
•
Trend 1: Financial Inclusion as part of regulators mandate
•
Trend 2: Expansion through innovative use of technology
•
Trend 3: Focus on improving financial inclusion data
•
Trend 4: Focus on quality
•
Trend 5: Redefining Global Standards with SSBs
•
Trend 6: Countries make measurable financial inclusion commitments
Global Data on Financial Inclusion
2.5 billion of adults do not have access to formal financial system
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Source: World Bank – Global Findex. Based on the question: do you have an account at a formal institution
Global Data on Financial Inclusion
Global Findex Database with data from 148 countries. Key findings:
Distribution
unbankedpopulation
population
Distribution unbanked
(age
percountry
countryincome
income
(age 15+)
15+) per
25%
50%
50%
17%
6%
Banked
Low income
Upper middle income
3%
unbanked
Lower middle income
High income
• 2.5 billion of unbanked and that is
just an estimate, it could be much
higher.
• Main reported barriers to access are
cost of services, physical distance to
access
points
and
lack
of
documentation.
• Data shows potential of technology
and innovation to overcome barriers
• Huge untapped market
Source: World Bank-Findex, CIA yearbook. Based on
question: account at a formal institution.
Global Trends and Challenges
on Financial Inclusion
Trend 1: Financial Inclusion as part of regulators mandate
•
•
•
Financial Inclusion is no longer only a development concern but a
cornerstone of economic development framework and model;
Financial inclusion is a policy goal complementary to stability, integrity
and consumer protection;
Financial Inclusion is understood in a broad framework including access,
usage and quality of a range of financial services.
No. of
Countries
Have dedicated financial inclusion strategy
31
Financial Inclusion is part of institutional mandate
17
Created a dedicated financial inclusion unit
22
Global Trends and Challenges
on Financial Inclusion
Trend 2: Expansion through innovative use of technology
• Rationale: technological innovation to reduce cost of delivery and
expand access and usage on a large scale
• Example M-Shwari (Kenya): Interest bearing saving accounts and small
loans via mobile phone
• Account opening and loan disbursement immediately over the phone
• Cooperation between Safaricom and the Commercial Bank of Africa
• Credit scoring algorithm based on voice data, payment of phone bills
and savings history
• Total > 10 million USD saved in the first two months
Global Trends and Challenges
on Financial Inclusion
Number of live mobile money services for the unbanked by region
2001-2012 (year end)
Source: http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2013/02/MMU_State_of_industry.pdf
Global Trends and Challenges
on Financial Inclusion
Trend 3: Focus on improving financial inclusion data
•
AFI Core Set of Financial Inclusion Indicators
•
AFI Second Tier Set of Financial Inclusion Indicators and specific AFI
Indicator Sets e.g. MFS, Quality, Pacific Islands
•
FINDEX: First public database that consistently tracks people’s use of
financial products across countries
•
G20 Global Partnership on Financial Inclusion (GPFI) Subgroup on
Data and Measurement
Global Trends and Challenges
on Financial Inclusion
Trend 4: Focus on quality
• Rationale: service quality drives usage
• 50 AFI members call consumer protection a priority area
• 23 AFI members have made specific commitments related to
consumer protection
• Many countries are undertaking specific programs in financial
literacy and financial education
• G 20 Presidency of Russia emphasizes consumer protection and
financial literacy
Global Trends and Challenges
on Financial Inclusion
Trend 5: Redefining Global Standards
“While global standards are sufficient to allow proportionate
application, they were originally not established with financial
inclusion as a consideration; which can lead countries to adopt
conservative approaches that limit innovation.”
Governor Amando Tetangco Jr., Governor of the Central Bank of the Philippines
•
GPFI and HM Queen Maxima have engaged with SSBs on
financial inclusion and supported to catalyze the review of
existing or formulation of new guidance
•
Annual G-24/AFI Policymakers’ Roundtable
•
Redefining risk with an extended risk framework
•
A Different Role for SSBs – Toward Peer Learning
Global Trends and Challenges
on Financial Inclusion
Trend 6: Countries make measurable financial inclusion commitments
Maya Declaration: The first global and measurable set of commitments on
financial inclusion by developing and emerging countries
Country commitments
Concrete and measurable individual commitments
based on national circumstances
(Maya Declaration on
Financial Inclusion)
Key components of
Maya Declaration
Financial Inclusion strategy / action plan
Evidence-based
data
• Knowledge
Supporting
G20 Principles
Partners
World Bank
Group:
Financing / TA,
Data, etc.
Enabling
environment/
Technology
•
•
•
•
Leadership
Cooperation
Diversity
Innovation
DFIs:
Investment,
TA
Proportionate
regulatory
framework
• Proportionality
• Framework
AFI :
Peer learning,
Working groups
Progress review,
Support services
Consumer
protection and
empowerment
• Protection
• Empowerment
Knowledge
providers:
CGAP, Research
institutions
Private sector
Donors
GPFI
Others
Overview of Maya Commitments
39 and growing….
Latin America
Africa
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Bank of the Republic of
Burundi
Banque Centrale du
Congo
Central Bank of
Ethiopia
Bank of Ghana
Central Bank of Guinea
Central Bank of Kenya
Reserve Bank of Malawi
Central Bank of
Mozambique
Bank of Namibia
Central Bank of Nigeria
National Bank of
Rwanda
Ministry of Economy
and Finance Sénégal
Bank of Sierra Leone
Bank of Tanzania
Bank of Uganda
Bank of Zambia
•
•
•
•
•
•
•
•
•
Banco Central do Brasil
Ministry of Social
Development Chile
Ministr of Finance &
Public Credit Colombia
Banco Central del
Ecuador
Banco Central del
Reserva &
Superintendencia del
Sistema Financiero
El Salvador (joint
commitment)
Superintendencia de
Bancos Guatemala
CNBV Mexico
Central Bank of
Paraguay
SBS Peru
Central Asia &
Europe
Asia Pacific
•
•
•
•
•
•
•
•
•
•
•
Microcredit
Regulatory
Authority,
Bangladesh
Bank Indonesia
Reserve Bank of Fiji
Bank Negara
Malaysia
Financial Regulatory
Commission of
Mongolia
Central Bank of
Pakistan
Bank of Papua New
Guinea
Bangko Sentral ng
Pilipinas
Central Bank of
Samoa
Central Bank of
Solomon Islands
Reserve Bank of
Vanuatu
•
•
Central Bank of
the Republic of
Armenia
National Bank of
Belarus
Middle East &
North Africa
•
Palestine Monetary
Authority
IADI and AFI
• Deposit Insurance directly contributes to financial inclusion by
protecting small depositors and indirectly by heightening their trust in
the financial system;
• Potential participation in proposed Peer Learning Program with SSBs and
AFI members on extended risk framework (next activity Frankfurt
conference on 28 June);
• Potential cooperation on financial inclusion review of IADI core
principles?
Thank you