Prof. Dirk Zetzsche of the University of Luxembourg has co-authored an international report on the use of FinTech for financial inclusion, which was presented at the 3rd annual Uni.lu Inclusive and Sustainable Finance Research Conference on 13 November.
The « FinTech for Financial Inclusion » report was commissioned by the Alliance for Financial Inclusion (AFI), global thought leader on financial inclusion policy and regulation. Its members include more than 100 central banks, regulatory bodies and government institutions from 93 emerging and developing economies.
A roadmap based on 4 pillars
Together with his co-authors – Prof. Douglas W. Arner (University of Hong Kong) and Prof. Ross P. Buckley (UNSW Sydney) – Prof. Dirk Zetzsche has developed a roadmap to harness the full potential of FinTech for financial inclusion. Their approach is based around four key pillars:
- Empowering access to through digital identification, electronic Know-Your-Customer (eKYC) services and simplified account opening.
- Enabling use by developing digital payments infrastructure and open electronic payment systems.
- Scaling use and encouraging digitisation of government payments and provision of services.
- Expanding the quality and range of services through sound financial market infrastructure and systems.
The implementation of these pillars would help underserved communities gain easier access by facilitating identification in areas where formal ID is often lacking. In a second step this process would create the platforms needed to carry out transactions. With the foundations laid, the third pillar could help apply technology in everyday lives by managing government payments and services (such as salaries, pensions, etc.) through digital platforms. Once fundamental infrastructure is laid in pillars 1-3, a broader ecosystem can be developed.
A practical and global approach
“The AFI is a practical organisation. The FinTech for Financial Inclusion report will inform a variety of our activities, including capacity building, global advocacy and in-country implementation,” explained Dr Alfred Hannig, the organisation’s Executive Director. “FinTech for financial inclusion has the power to be transformative. It is our task to help bring it forward,” Dr Hannig said.
“According to the World Bank, around a third of the world’s adult population – 1.7 billion people – lives without access to a bank account,” commented Prof. Zetzsche. “We have seen tremendous progress in countries such as China and India. This report can help set up a strategy to expand the use of FinTech as a major driving force for financial inclusion in developing countries.”
Prof. Zetzsche, Prof. Arner, Dr Hannig and Ali Ghiyazuddin Mohammad, digital financial services policy manager at AFI, discussed the report and its findings at the 3rd University of Luxembourg Inclusive and Sustainable Finance Research Conference, hosted on 13 November 2018. The event aligned with a recently signed letter of intent between the University of Luxembourg as well as the Ministry of Finance to promote research and teaching in sustainable finance.
The conference was organised in cooperation with microfinance organisation “Appui au Dévéloppement Autonome” (ADA) and the European Investment Bank (EIB). Prof. Zetzsche holds the ADA Chair in Financial Law (Inclusive Finance) at the University of Luxembourg. Together with ADA and the EIB he also organises the annual Certificate in Law and Regulation of Inclusive Finance
Photo caption, from left to right: Dirk Zetzsche, Alfred Hannig, Chee Soo Yuen (COO, AFI), Laura Foschi (Executive Director, ADA), Douglas Arner, Ilya Sverdlov (Head of Donor Relations & Global Partnerships, ADA)
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