The Asia-Pacific Regulatory Policy Forum on Digital Financial Services and Financial Inclusion was held by AFI, in collaboration with Mastercard, on 3 August 2016 in Bali, Indonesia. It is the second of the four regional initiatives planned for 2016 under AFI’s Public Private Dialogue (PPD) Platform.

The day-long event had five engaging sessions that reinforced the importance and relevance of the PPD, which brought together the players from the private and public sector to deliberate on effective digital financial services (DFS) policy solutions for the Asia-Pacific region.

The discussions started with setting the scene on recent trends in DFS in the Asia-Pacific. It emerged that the various countries in the region are at different stages of DFS initiatives that are used for reaching out the underbanked with financial services. DFS has been earmarked as a key enabler to reach the underbanked in the region.

Shawn Miles, Executive Vice President, Global Public Policy at Mastercard, emphasized the importance of the PPD platform in forging the capacity of policy makers and regulators of financial inclusion in DFS by strengthening the synergies between private players and the public sector to address DFS uptake barriers in the region.

The key takeaways that came out of the event included:

• E-KYC is imperative in facilitating identification of the customer to ease client on-boarding. India’s case study was presented by the Reserve Bank of India to show case how practically this was achieved. About 200 million bank accounts were opened in India, through the easier KYC approach under the e-KYC initiative.
• Cybersecurity is important to build customer trust in the DFS schemes and also government confidence in the use of financial technologies. The ever-increasing dynamics in technology and the risks that arise thereof through security breaches require policymakers to be abreast with new methods to mitigate cybersecurity, including implementing new standards and regulations. The private sector players are key partners in providing capacity and tools to mitigate cybersecurity.
• The cost of cash is significant in many regions of the world. Cash still accounts for almost 80 percent of retail transaction. Promoting DFS to facilitate cash-lite is imperative through various strategies such as Government payments. The case of Indonesian Government decision to route Government subsidies payment via DFS is a significant step to address cost of cash. The Fletcher School at Tufts University has done substantive research on cost of cash and have developed a model for reaching an optimum level of cash-lite society by benchmarking with a country with a high level of DFS.

AFI members that attended the forum were from Bank Indonesia, Bangladesh Bank, Reserve Bank of India, Microcredit Regulatory Authority of Bangladesh, Financial Regulatory Commission of Mongolia, Royal Monetary Authority of Bhutan, Da Afghanistan Bank, Bank of Thailand, Bank Negara Malaysia, Bank Indonesia. Other institutions that participated include: MicroSave, Columbia Business School, the World Bank, Asia Group Advisors, the Fletcher School, Tufts University, FTI Consulting, Otoritas Jasa Keuangan (Indonesia Financial Service Authority), Spire Research and Consulting, Indonesia.