A country that encourages and promotes the adoption of technological developments in banking, which give ordinary citizens access to financial services, has a better chance to achieve financial inclusion in the digital economy.
This was the message expounded by global financial experts who attended the recent forum, “Financial Inclusion in the Digital Economy, organized by the Asian Development Bank” (ADB).
Financial inclusion expert Carol L. Realini noted in her presentation that in five years, about three billion people will have access to the Internet. Most of these people, she said, will use their mobile phones to access the Internet.
With the exponential growth of Internet users worldwide, she said financial institutions must use online platforms to provide better banking services. This way, they can reach people at the bottom of the pyramid and give them access to financial services.
“Many people today have no access to banking, which is painful, because they are part of the Internet economy but they do not participate in the banking system. So I think the work that we are all doing is to complement this change by giving those people not only access to the Internet, but also making sure they have good access to affordable banking,” Realini added.
A good identification system complements the move to mobile banking, together with a sound settlement system between banks, a sound regulatory reform to better universal banking, and giving nonbanks a role in the coverage of mobile banking, Realini said.
“It is going to create a society where everybody will have a universal opportunity to participate,” she said.
For her part, Rochelle D. Tomas, Bangko Sentral ng Pilipinas bank officer, noted that crowd funding, big data analytics, digital currency and RegTech should be enhanced.
“Crowd funding, in terms of financial inclusion, I think that is an important platform to acknowledge the need for easy access to finance. Another area is big data analytics, a lot of information and synergy will need to be on board to help us. Big data analytics presents a good tool for baks to reach people and facilitate easier access. Digital currency, which can facilitate transfers, payments, electronic commerce can also help our small and medium enterprises,” she explained.
“One last thing that was not mentioned is RegTech, which is simply the marriage of technology with regulation. It is maximizing possible technological solutions to ensure that cost to compliance are reduced and the capacity of the regulator is enhanced with real-time access to information and data from the institutions,” Tomas added.
Tomas also noted that the biggest challenge for a regulator is keeping pace with the developments in the industry because changes are seen happening almost overnight.
“From the regulatory perspective, I think the biggest challenge for us is to keep pace with developments in the industry. At the end of the day our primary goal is monitoring financial stability and looking at the overall system to determine systemic risks,” she said.
“There are a lot of concerns that we have in mind, but I think that the key thing here is openness to all the new developments because we have embraced financial inclusion as a policy, and we have to balance financial inclusion objectives with consumer protection risks, with financial integrity considerations,” Tomas added.