The 4th Pacific Islands Regional Initiative (PIRI) High-Level Forum convened in Apia, Samoa from 6-7 June, 2018 under the overarching theme, FinTech for Financial Inclusion in the Pacific Islands. Organized by the Central Bank of Samoa (CBS) in collaboration with the Alliance for Financial Inclusion (AFI), the forum welcomed more than 120 participants from PIRI member countries, along with international and local stakeholders.

“Leveraging on digital platforms can bring us closer to our financial inclusion goals,” emphasized Governor Simione Athy from Reserve Bank of Vanuatu, and Chair of PIRI, during her opening remarks, alongside Governor Maiava Atalina Ainuu-Enari from CBS.

The forum highlighted that collaboration between stakeholders is an essential ingredient in closing the financial inclusion gap. Innovative FinTech solutions should be ‘additive and transformative’ and specifically targeting the unbanked. PIRI members identified international collaboration on regulatory and policy initiatives as a key issue, amidst the rise in financial technology.

“Technology can break geographical barriers. It enables delivery of financial services at rapid scale and speed, thus extending access to payments and financial services to underserved segments in a relatively short period of time,” conveyed Norbert Mumba during his opening remarks.

He also added that “the days of traditional financial institutions being the sole providers of everything are over. Innovations in technology are leading to marketplace fragmentation with FinTech companies and startups offering specialized products and services.”

Security concerns and KYC (know-your-customer) are barriers to widespread FinTech use. Many unbanked or low-income customers, for example those who live in rural areas or are engaged in the informal economy, lack the verification information necessary required by most banks. This effectively excludes customers from creating digital identities and credit histories, restricting the access and usage to many digital and FinTech products and services.

“The explosion of new financial products is resulting in cheaper, faster and accessible services. However, responsible care must be undertaken so customers are protected and safeguarded,” highlights the Honorable Minister of Finance, Samoa, Mr. Sili Epa Tuioti before launching the PIRI Financial Inclusion 2017 Status Report.

The forum also addressed the impediments to transform to digital that included safety and reliability, interoperability of bank and non-bank financial service providers, physical infrastructure, customer experience and education, and product design and usage of bank accounts. 

“FinTech will provide a promise for reach of access and usage of financial services to the targeted audience. However, caution must be taken that it does not advance fraud or any unwarranted activity,” said Governor Maiava, CBS, during the panel session.

Leading expert in international finance law, Prof. Ross Buckley from UNSW Sydney, highlighted the emergence of FinTech due to the rapidly growing scale of innovations. This growth stems from the needs and use of a regulatory sandbox approach to balance innovation and oversight, ensuring that the industry does not stifle.

Participants were enlightened on other segments specifically on fostering Micro, Small and Medium Enterprises (MSMEs) through new avenues of financing, climate change and women empowerment. A pertinent issue for MSMEs is financing gap, with challenges on scaling and implementing MSME finance including i) enabling legal frameworks and ii) the access to reliable, accurate data.  

One of the highlights of the forum was the panel session on climate change given the exposure of Pacific islands to natural disasters and the difficulties of accessing insurance payouts, cash and short-term loans following natural disasters. Banks in the Pacific tend to restrict lending and insurance payouts following these events, usually with a concern for liquidity. To scale up financial inclusion within the context of sustainable development, it is important that climate change is understood as a cross-cutting issue that presents risks and opportunities to national development strategies within the Pacific Region.

Having the right assistance and insurance can contribute to building the overall resilience of disaster-prone areas. There was a clear need to sensitize regulators and policymakers in the financial sector to the emerging opportunities of mainstreaming climate finance into financial inclusion, and addressing the risks that would compromise the development gains made by financial inclusion initiatives.

The forum also focused on women’s financial inclusion and economic empowerment. Despite progress that has been made in advancing financial inclusion globally, gender is still a predominant issue of which women remain disproportionately excluded from the formal financial system.

“Fiji has a large gender disparity (16 percent) higher than middle income countries and women that were previously banked have left the system,” revealed Duri Buadromo, Financial Inclusion Manager from Reserve Bank of Fiji (RBF). She also added that “one of the fundamental issues in understanding the status of financial inclusion for women is to have an accurate state of data from reliable sources.”

The forum continued with the announcement on high-level PIRI deliverables that included the endorsement of the PIRI Charter, the Zero-Draft on FinTech for Financial Inclusion, the PIRI Workplan on FinTech for Financial Inclusion in the Pacific Islands, and the Apia Action Plan on FinTech for Financial Inclusion in the Pacific Islands. The host for the 5th PIRI High-Level Forum will be hosted by the Central Bank of Solomon Islands in Honiara, Solomon Islands next year.