How do we break the barriers of mobile financial services to make financial inclusion real? AFI members examine emerging challenges.

inside | New challenges, new solutions P2 | Regional cooperation for financial inclusion P3 | Meet a Practitioner P3 | Strategic Approaches to Financial Inclusion P3 | Snapshots P4

news and views from the AFi 2012 Global Policy Forum | issue three: Friday 28 september 2012

Simone di Castri, Regulatory Director, GSMA

Carlos Lopéz-Moctezuma, CNBV MexicoHemant Baijal,Vice President, Global Public Policy, MasterCard Worldwide

Today at the GPF

Morning: Announcement of new Maya commitmentsA highlight of the GPF! AFI member institutions announce a new batch of commitments to financial inclusion under the Maya Declaration.

Afternoon: GPFi ForumThe G20 Global Partnership for Financial Inclusion meets to review milestones and discuss key issues moving forward.

evening: Cocktail dinner hosted by the G20 Mexican PresidencyCelebrate, enjoy, and see you next year!

Working groups report back

Key Takeaways interoperability is a means to an end. Financial inclusion should be a key focus rather than

interoperability itself. Although it is a tool that can contribute to financial inclusion in certain circumstances, it does not guarantee it.

interoperability must make business sense. Regulators need to be cautious about intervening and ask whether they are creating risks and extra costs for service providers by launching products and services in a market that is not ready to support them. Without a strong regulatory framework and customer confidence in the security of the system, interoperability will not succeed.

Timing is everything. There is no question that we need interoperability – the question is when and how. The maturity of the market must be taken into account and data and information need to be gathered that reveal the right time and the right source to launch services.

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Résumé quotidienLes séances du Forum de mercredi ont été dirigées par les cinq groupes de travail d’AFi dont les présidents ont donné un aperçu des progrès réalisés au cours de l’année écoulée. Les membres d’AFi continuent à mettre l’accent sur les approches stratégiques de l’inclusion financière, cela s’est manifesté au cours des débats de politique qui se sont déroulés au cours de la journée. Plusieurs membres ont participé à la session sur la rupture des barrières inhérentes aux services financiers mobiles – un sujet qui a continué à susciter des débats au cours des séances de l’après-midi sur la coopération régionale pour l’inclusion financière. L’innovation et l’élargissement de l’accès dans les domaines de l’éducation financière, les nouveaux modèles économiques, la micro assurance et les systèmes de paiement sont les thèmes qui se sont démarqués au cours des séances de la journée ; un grand pourcentage des membres d’AFi ont fait part de leur intérêt à élaborer des stratégies nationales en vue de porter au niveau suivant l’inclusion financière dans leur pays. Les nouvelles séances sur les initiatives de coopération régionale ont suscité l’intérêt de nombreux membres ; c’est un domaine dont on s’attend qu’il connaisse plus de croissance au cours de la prochaine année.

Breaking barriers

This year the Core Set of Financial Inclusion Indicators was adopted by the GPFI and the G20. This was a great achievement.”

Luis Treviño Garza, FIDWG

We created a new subgroup on harmonization with international initiatives. We saw the need to have the voice of developing economies heard and recognized in the Standard Setting Bodies.”

Belinda Caraan, CEMC

Give us your feedback on the network!

We're making a film on the progress of AFI over the last 4 years and are keen to hear from members old and new. Please come and tell us your financial inclusion story and share your thoughts on AFI. It will only take a few minutes and it’s fun! Visit the video diary room across from the Old Harbour Ballroom today.

Technology is the enabler not the driver of financial inclusion.”

Brian Richardson, Chief Executive, Wizzit, South Africa

How do we get people to change behavior from cash-based to cash-light?”

Brian Richardson, Chief Executive, Wizzit, South Africa

News and views from the AFI 2012 Global Policy Forum issue three 2/4

new challenges, new solutionsThe afternoon of Day 2 focused on second generation solutions to emerging financial inclusion challenges.

If there is no financial education and no consumer protection among the public, then there will be no trust in the financial system. This will result in low levels of participation, high levels of instability, and will hinder economic growth. In the same way that general consumer protection agencies are not well placed for financial consumer protection, Ministries of Education often lack the expertise, capacity, and priority to take on financial education. So it is for these reasons that central banks have no other choice but to rise to the occasion.”

Armenuhi Mkrtchyan, Central Bank of Armenia

Financial education: Key to the success of financial inclusion and consumer protectionWhy should central banks play a role in improving financial literacy and education? Because these contribute to a more stable and participatory financial system.

Key takeawayFinancial education can help to improve trust between clients and banks and empower people to make the right choices and protect themselves. Financial education should be a part of overall national financial inclusion strategies and efforts.

new business models for financial inclusion: Key challengesWhat are some of the biggest challenges facing service providers? Meeting the real needs of customers with appropriate technology solutions.

Key takeawayUnderstanding and tailoring technology to the needs of customers and using “carrot” incentives to change customer behavior help to drive product and service uptake and usage. Harmonized regulations and better communication between regulators and service providers also help to expand financial inclusion, “which is by definition a volume business.”

When we think about extending financial inclusion to an underserved group, usually those people are fairly vulnerable. They face similar kinds of risks in life that everyone else faces, except they are exposed more often and the consequences are more severe.”

Craig Thorburn, World Bank

Microinsurance: Part of the financial inclusion ecosystemWhat is the role of microinsurance and how does it fit into integrated financial inclusion strategies? Discussions explored this question as well as whether AFI members were interested in adding microinsurance to AFI’s core policy areas.

Key takeawayGetting microinsurance right means figuring out how to expand access to insurance while determining the role of proportionate supervision regulations in supporting this access. it also means determining the role of policy and regulation in developing inclusive insurance markets, innovative payment systems, and affordable insurance products.

Who takes the lead on financial education in your country?

do you believe that microinsurance should be a key component of the financial inclusion ecosystem in your country/jurisdiction? 56% Central bank

14% Ministry of Education

16% No single entity

10% Private sector

4% Civil society or consumer groups

68% Strongly agree

29% Partially agree

3% Strongly disagree

News and views from the AFI 2012 Global Policy Forum issue three 3/4

Meet a practitionerBy knowing more about what is available, how services are used, and the level of satisfaction with financial services, policymakers and service providers can improve financial inclusion.

Financial inclusion measurement must extend beyond traditional access and usage — it must include quality measures as well. This includes measures of convenience, security, pricing, consumer protection, financial literacy, and more.”

Diane Bizimana, Banque de la Republique du Burundi

Regional cooperation for financial inclusion

Asia & the Pacific 600 million adults in the region are unbanked (45%)

175% Growth in the Philippines’ ATM network from 2001 to 2011

5,000 microcredit providers in China

shaping a strategyThe three I’s of successful financial inclusion strategies are:

There are three obvious benefits to developing a national strategy: the insights gained through diagnostics, the process of setting milestones, and most importantly the creation of ownership among key stakeholders who take things forward.”

Saeed Ahmed, State Bank of Pakistan

Africa / AMPi400 million Mobile phone subscriptions in Africa

US$30 million In M-PESA transactions are handled daily in Kenya

P2P (person-to-person) payments account for the vast majority of MFS transactions

4 MNOs in Congo reach 55% of the population

Latin America98%of people in Latin America have a mobile phone, but only 2% use it for money transfers

75%of agent banking transactions in Brazil and Colombia are payments

26,000Projected addition of banking agents in Mexico

does your country have a national financial inclusion strategy?

Yes

nO

PARTiAL

33%

33%

41%

33% 34%

25%

2012

2012

2012

2011

2011

2011

Information: National strategies founded on baseline data and diagnostics Institutionalization: A long-term structure and process to support the strategy Implementable: Strategies that are realistic, do-able, and measurable

Unity and diversity is our specialty in Asia. Within the diversity we have common practice, and that is making financial inclusion real.”Deputy Governor Chakrabarty, Reserve Bank of India

How do we make the poor access the market? We have several instruments in place in Africa: the most important one is mobile financial services because it transcends physical distances.”Njuguna Ndung’u, Governor of the Central Bank of Kenya

We should talk more about how we can help each other. The affinities are far more than the differences.”Daniel Schydlowsky, Superintendent, SBS Peru

Regional integration is a dominant theme in Asia at the moment. As the economies deepen their ties it makes sense that financial inclusion is not just a domestic issue but dealt with at the regional level as well.

The biggest challenges to expanding financial inclusion in the region are interconnectivity, accessing rural areas, developing mechanisms across borders, and coordination between institutions and the public and private sectors.

Next steps: The Central Bank of Kenya will coordinate with AMPI members and schedule a follow-up meeting in February 2013. The goals of this meeting will be to decide on a governance structure and the broad goals of the network.

Sources: World Bank Global Findex database and Finscope Survey 2011

Regional financial inclusion initiatives are an important new focus for the AFI network. Groups from Africa, Latin America, and Asia & the Pacific gathered to discuss shared challenges and opportunities for collaboration.

AFI is funded by the Bill & Melinda Gates Foundation and administered by GIZ (German International Cooperation)

News and views from the AFI 2012 Global Policy Forum issue three 4/4

exchanging ideas

Department:

REPUBLIC OF SOUTH AFRICA

Today’s agenda spurred discussions on new financial inclusion challenges and practical solutions.

Bon appétit!

Alliance for Financial inclusion (AFi)399 Interchange Building,

24th floor, Sukhumvit Road,

Klongtoey – Nua, Wattana,

Bangkok 10110, Thailand

t + 66 (0)2 401 9370f + 66 (0)2 402 1122

www.afi-global.org

Alliance for Financial inclusion (AFi)399 Interchange Building,

24th floor, Sukhumvit Road,

Klongtoey – Nua, Wattana,

Bangkok 10110, Thailand

t + 66 (0)2 401 9370f + 66 (0)2 402 1122

www.afi-global.org

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