Greater financial education and efforts to promote digital onboarding are deepening access to formal financial services in Eastern Europe and Central Asia (EECA), experts said at a regional gathering co-hosted by Central Bank of Armenia on 14-15 October 2020.

More than 40 participants from financial sector regulators and policymakers in seven countries representing AFI’s Eastern Europe & Central Asia Policy Initiative (ECAPI) attended the bi-annual event, held virtually owing to the outbreak of COVID-19. This is is the second time Armenia co-hosted ECAPI EGFIP meeting this year, with first taking place taking place June 1-3.

Central Bank of Armenia Deputy Governor Vakhtang Abrahamyan, speaking via live feed, expressed gratitude that restrictions on hosting physical meetings had not stifled members’ willingness and motivation to address pressing financial inclusion issues.

“The impact of this pandemic is proof of how important it is to strengthen the financial sector by developing policies and initiatives related to financial education and literacy and digital financial services,” he said. “Our efforts should address building a strong system of consumer protection with ongoing and targeted educational activities”.

The 6th ECAPI Expert Group on Financial Inclusion Policy (EGFIP) and Member Training came amid turbulence times for Armenia

Reflecting on the challenges faced, AFI Executive Director Dr. Alfred Hannig reminded participants that they must not lose sight of opportunities that arise during the ongoing COVID-19 pandemic, explaining that financial inclusion offered a tried and tested solution to mitigate the negative impacts of crises and build recovery and resilience.

Despite being AFI’s youngest regional initiative, Dr. Hannig said that ECAPI had already made “tremendous progress and important contributions” to the network – including its recent knowledge product on financial competencies – that help “advance the implementation of the core financial inclusion objectives set by ECAPI’s leaders and showcase EECA’s leadership in the network”.

Launched in 2018, ECAPI is the primary platform for AFI member institutions in the EECA region. It is comprised of central banks from Armenia, Belarus, Russia, Tajikistan and Uzbekistan as well as the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market  and Financial Regulatory Commission of Mongolia (FRC Mongolia).

In delivering his opening remarks, Dr. Hannig also provided several network updates, including that Mastercard Foundation had approved AFI’s proposal on supporting its COVID-19 Policy Response, focusing on MSME finance and digital financial services. Bill & Melinda Gates Foundation, another long-term AFI partner, he said had also approved a project to support the development and dissemination of five key knowledge products.

The EGFIP gathering provided members with the opportunity to exchange ideas and experiences in financial education, financial literacy, electronic Know-Your-Customer (e-KYC) and electronic identification (e-ID). Over the two days, they also agreed on a workplan for the coming year and formally inducted FRC Mongolia as the vice-chair of the expert group.

The latest achievements across the ECAPI region were highlighted during subsequent member training including Russia’s promotion of online financial education webinars, Tajikistan’s upcoming national financial education strategy and Uzbekistan’s most recent financial literary survey. By drawing on the lessons and experiences of regional peers, the training aimed to familiarize members with various approaches and practical policies for developing robust national financial education and literacy strategies.

Several challenges were raised in advancing financial literacy and education, including obtaining stakeholder participation, as well as maintaining high-quality and targeted content that uses modern and innovative delivery methods.

More encouragingly, however, participants noted significant scope to promote digital financial literacy through gamification and social networks, encourage cross-agency collaboration, expand training of trainers – particularly in remote locations – and target specific groups with tailored financial education programs, including women, youth, the elderly and rural populations.

Participants switched gears on the event’s second day to focus on e-KYC and e-ID during sessions organized as part of AFI’s public-private dialogue (PPD) and developed-developing country dialogue (3D) platforms.

Here, Visa’s Iuliia Verbova, director of government engagement for the Commonwealth of Independent States and South Eastern Europe, described e-KYC and e-ID as great enablers of financial inclusion. She, however, added that both require collaboration from a wide variety of stakeholders – such as bank, FinTechs and regulators – to create enabling ecosystems.

Mastercard’s Dan Johnson, vice president of digital identity, cyber and intelligence solutions, concurred. Citing an increasingly global market, he also urged regulators to seek to align their identification standards so that consumers can gain access to basic financial services in different national jurisdictions. In addition, he encouraged the use of regulatory sandboxes to promote innovation in the private sector.

Karel Horak, CEO of Home Credit in Kazakhstan, reiterated the need for robust e-ID systems that provide convenient and safe services to customers, citing examples in China of centralized identification networks.

“Financial inclusion and financial literacy are always high on our agenda, so we’re working hard on this,” he said, before nothing that a basic level of technological advancement was needed to encourage this.

Home Credit, a global consumer finance provider, is AFI’s newest regional PPD partner having joined the network’s PPD platform to help advance financial inclusion in Central and Eastern Europe and Central Asia.

Regulators further expanded on this subject during a 3D session that saw panelists share their knowledge and experiences in Belarus, Estonia, Germany and Russia. Among the notable takeaways were National Bank of Republic of Belarus’s plans to promote biometric authentication and insight into how strict e-ID security features was stifling private sector innovation in Germany.

Building on the success of the two-day virtual gathering, ECAPI leaders are expected to gather in the coming month for high-level virtual dialogues, following similar meet for held for leaders in Africa and Latin America and the Caribbean region.

In the previous week, AFI marked another milestone with the opening of its new Europe Representative Office (ERO) in Luxembourg, co-hosted by the country’s Ministry of Finance and Ministry of Foreign and European Affairs.

Aimed at enhancing collaboration with the wider European community, the office will directly benefit ECAPI members by fostering deeper ties with partners, standard setting bodies and developed country regulators that supports peer learning in Europe and Central Asia. In line with AFI’s regionalization and decentralization strategy, the ERO will also enhance global dialogue further afield in Sub-Saharan Africa, the Arab Region, Asia and the Pacific, Latin America and the Caribbean.