Promoting Financial Inclusion through Innovative Policies
Post-event Statement
ADBI organized this four day workshop on "Promoting Financial Inclusion through Innovative Policies" in partnership with: (i) Advisory Group on APEC Financial System Capacity-Building; (ii) APEC Business Advisory Council; (iii) Alliance for Financial Inclusion; (iii) Foundation for Development Cooperation; (iv) Inter-American Development Bank; and (v) International Finance Corporation. This event brought together more than 80 policy makers and experts on financial inclusion from Asia and the Pacific. It included a half-day field visit to the Japan Finance Corporation and PlaNet Finance Japan. The workshop discussed approaches to and exchange country experiences on financial inclusion, focusing on the following six key areas. - Agent Banking. Innovative policies and regulations can facilitate partnerships with non-bank agents like post offices. They can deliver financial services to unbanked customers at lower costs, and with greater convenience. Case studies from Russia, Mexico and Eurogiro were discussed.
- Mobile Banking. With the explosive growth of mobile phone usage around the world, particularly among the low income and rural group, a range of operations, such as deposit taking, withdrawal, payment transactions, and other conventional banking services, can be offered through mobile technologies and services. This would however require close collaboration between banking and telecommunications regulators. There were case studies from the Philippines, Cambodia, Japan and Mobile Money for the Unbanked Initiative.
- Diversifying Providers. Regulatory reform can lower barriers for start-up institutions which can develop various financial products geared toward low-income clients. Policy instruments should be designed to promote new entrants without distorting the market. Case studies from Uganda, Cambodia and Indonesia were discussed, along with a special case study on micro-insurance.
- Reforming Public Banks. Two successful cases were presented: Union Bank of India, a public bank which promotes financial inclusion yet remains commercially viable; and the Khan Bank of Mongolia, which had been privatized, re-nationalised and re-privatised, and now successfully provides microfinance services to the whole country.
- Financial Identification. Many poor people lack personal identity (such as birth record) or financial identity (such as credit or transaction history) which constrains their access to formal financial services. Various options were discussed for developing identity, taking advantage of IT innovations and statistical analysis.
- Consumer Protection. The key elements are education, transparency, disclosure, fairness, responsibility and fair recovery practices. Case studies from Peru, Malaysia and South Africa on consumer protection and financial education were discussed.
The microfinance industry itself has been evolving over the last three decades. The scope of financial services that MFIs are providing has expanded to include not only microcredit but also savings, insurance and money transfer. The current global financial crisis, however, highlights the need for greater financial inclusion. The financially excluded are suffering greatly from the crisis due to tighter credits, and many others are seeing their access to finance being cut off. Finally, the workshop concluded with the discussion on the role of government, private sector, civil society, development institutions, and regional cooperation in enhancing financial inclusion, including the need for the vast number of organizations involved in the financial inclusion agenda to work together. Read the summary of proceedings. |
Background
With over three billion people worldwide lacking access to financial services, there is considerable demand from developing economies for a more inclusive financial sector. A recent GTZ study on 10 economies demonstrates that policies play an important role in enabling and expanding financial services to reach a wider cross-section of the population.
This workshop on “Promoting Financial Inclusion through Innovative Policies” seeks to provide a basis for the design of a policy initiative on financial inclusion that will be proposed to the APEC finance ministers. The results of the workshop will be published in a report and distributed to relevant officials, particularly APEC finance ministers and senior finance officials, and to regulators and influential private sector organizations in the Asia-Pacific region. Training materials based on the workshop presentations will be developed by ADBI for use in its capacity building work.
Objectives
This four day workshop aims to assist policymakers develop strategies in six key areas to provide an enabling policy environment for promoting financial inclusion through microfinance. These six key areas were identified at a workshop co-organized by APEC Business Advisory Council and the Advisory Group on APEC Financial System Capacity-Building in Jakarta, Indonesia on 23 January 2008, and are as follows: - Agent banking: This refers to policies and regulations governing correspondent banking agents, or agents from the non-bank sector such as retail commercial outlets including lottery kiosks, pharmacies, post offices and the like, which establish partnerships with banks to provide distribution outlets for financial services.
- Mobile phone banking: This involves policies that lower transaction cost and increase access to financial services through mobile technologies and services. Mobile phone banking may provide a host of features, such as cash deposits and withdrawals, third-party deposits into a user account, retail purchases, over-the-air prepaid top-ups using cash in the user’s account, transfer of cash or airtime credits between user accounts and bill payments. Mobile phone banking presents challenges to regulatory capacity, as it cuts across various regulatory domains including banking, telecommunications, payments systems and anti-money laundering.
- Diversifying providers: This deals with policies that lower the regulatory barriers for start-ups and for offering savings and insurance products for low-income clients, such as through rural banks (Indonesia) and microinsurance mutuals (Philippines).
- Reforming public banks: This relates to policies that improve the governance and management of state banks to help them provide more effective financial services, including commercially sustainable financial services.
- Financial identity regulations: This refers to policies that endow clients with a financial identity, by transforming their transaction history into a financial asset, which they can use to leverage access to credit and other banking services. Regulatory frameworks would need to adopt a flexible approach to supporting the generation of financial identity, facilitating information sharing in the initial stages of development and introducing protective measures during the later stages that involve large-scale information processing.
- Consumer protection: This covers policies that address technical and delivery security, reducing predatory lending or increasing disclosure of information, efficient dispute settlement, data protection and enhancing comparability of offers.
The workshop also aims to provide a peer-to-peer learning and knowledge-sharing platform among policy makers that will enhance their capacity to develop an innovative and enabling policy environment for financial inclusion. In addition, potential projects for individual economies (e.g. policy implementation for one of the six solutions) and exchange programs (e.g. study tours and regional working group on specific topic) will be identified during the workshop, and Alliance for Financial Inclusion will follow these up for further discussion and possible support.
Outputs
- Better understanding by policymakers on the above six areas and/or solutions to provide enabling policy environment for microfinance
- Sharing of country experiences and practices on microfinance
- Networking among policy makers, microfinance experts and operators/institutions
- Policy inputs into the APEC Finance Ministers’ Process
- Summary of proceedings
- Training materials for MFTOT course
Participants
Senior government officials and regulators involved in microfinance in Asian developing economies (e.g., central bank officials, financial supervisory authorities, finance ministry officials), senior APEC finance officials, government officials from relevant agencies, senior executives of relevant public sector firms (e.g., development banks), key policymakers and legislators, and microfinance institutions.
How to Apply
Participation is by invitation only.
Language
English (no interpretation will be provided)
Partners
Advisory Group on APEC Financial System Capacity-Building
APEC Business Advisory Council
Alliance for Financial Inclusion
Foundation for Development Cooperation
Inter-American Development Bank
International Finance Corporation
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