At the Annual General Meeting (AGM) in Sochi on 5 September 2018, members of the Alliance for Financial Inclusion (AFI) endorsed the Sochi Accord on FinTech for Financial Inclusion. The Sochi Accord provides a framework for AFI members to leverage innovative new technology-based financial services, or FinTech, to advance financial inclusion for the world’s 1.7 billion unbanked.

“The adoption of the Sochi Accord is extremely significant for AFI,” stated AFI Deputy Executive Director, Norbert Mumba. He added that “the traditional approaches need to be relooked so that we are able to deliver financial services efficiently and effectively.”

The speed and efficiency of FinTech innovations including blockchain, biometric IDs, e-wallets and cross-border remittances are opening the doors to affordable and high-quality financial services for the most vulnerable segments of society, especially Forcibly Displaced Persons (FDPs), MSMEs, marginalized women and the rural poor.

However, FinTech also introduces new risks for regulators and consumers, such as money laundering and data privacy. The Sochi Accord provides a platform for AFI members to understand these risks, share lessons and experiences with FinTech, and design appropriate regulatory interventions that balances innovation with financial stability and consumer protection. The Accord also offers a path for the AFI network to achieve several shared goals, such as closing the gender gap in financial inclusion, mitigating the impact of de-risking in developing and emerging markets, and building resilience among those most vulnerable to climate change.

At the 2018 AFI Global Policy Forum (GPF), the Sochi Accord will usher in a new era of Maya Declaration commitments and quantified targets that would allow AFI members to harness the potential of FinTech in their countries, and ultimately, improve financial inclusion, strengthen market conduct and consumer protection.