FinTech innovations can complement financial inclusion by broadening financial access “at scale” and improving the quality of financial services through “efficiency”, concluded 130 policymakers and regulators from 50 countries and over 45 institutions who are attending the FinTech Policy Forum, jointly organized by the Central Bank of Jordan (CBJ) and the Alliance for Financial Inclusion (AFI) on 2 April 2018 in Amman, Jordan.

“Technology advancements are redefining finance and the financial landscape. We are only beginning to understand how technology can transfer the payments platform,” said HE Governor Dr. Ziad Fariz, CBJ during his keynote address at the Forum.

Dr. Ziad Fariz launched Jordan’s regulatory sandbox framework for public consultations today at the FinTech Policy Forum. “As regulators, our principle responsibility is that supervised institutions are operating safely and soundly with applicable laws especially in treating consumers fairly,” he said. 

“We need to build capacity, enhance cybersecurity frameworks and strengthen partnership and cooperation while inculcating innovation within and beyond as we carry out our primary mandate of stability, integrity and consumer protection,” emphasized AFI Deputy Executive Director, Norbert Mumba during his opening remarks. 

Prof. Douglas Arner — leading authority on the issue of FinTech laws and regulations — started the proceedings on a reassuring note saying that “the idea of technology transforming finance is not new, not unfamiliar, and as a result, nothing to be afraid of.” Technologies such as the telegraph, ATM and computer have contributed to the transformation of finance. Smartphones are amplifying this transformation through rapid penetration across the globe with a potential to provide financial services “at scale.”

However, scale can create “risk blind spots” for regulators. FinTech companies can move from “too small to care” and “too large to ignore” to “too big to fail.” Prof. Arner suggested to build and facilitate a 21st century infrastructure for supporting market functions; develop appropriate regulatory responses and apply graduated regulatory requirements to firms based on their level of risk; and use regulatory sandboxes and other test-and-learn approaches as an opportunity to test new approaches.

With the emergence of FinTech as a key catalyst for financial inclusion, the Forum aims to highlight the need for a paradigm shift in regulatory and policy approaches, as well as share practical solutions that can bring financial services to the most vulnerable segments of society. There are 1.1 billion people who lack legal identity and women globally who cannot access financial services. As a result, they are restricted in obtaining formal financial services, while there are 65.6 million forcibly displaced people globally, one of the highest levels of displacement the world has witnessed. At the same time, there are 200 to 245 million MSMEs in developing countries with restricted or no access to finance — an estimated credit gap of $2.1 to $2.6 trillion.

During the Forum, HE Mr. Karim Kawar from IrisGuard talked about the potential of biometrics and iris technology for providing a formal identity to refugees. They have used the iris technology to successfully and effortlessly enrol over 2.3 million vulnerable Syrian refugees displaced throughout countries such as Jordan, Lebanon, Iraq, Egypt and Syria. He urged the regulators to consider innovative identity solutions to include FDPs.

“While the work towards developing frameworks that prevent, manage and mitigate cyber threats progresses, we should also enhance Public Private Dialogue (PPD) and global dialogue with the private sector, technology companies, researchers, development partners, and regulators from developed and developing economies,” AFI’s Deputy Executive Director highlighted during his opening remarks.

Participants debated on the potential of blockchain technology for financial inclusion. In the context of financial services, blockchain is being tested for cross-border transfers, payments, trade finance and securities settlement — potentially paving the way for financial inclusion by bringing in transparency and efficiency. The decentralised nature of blockchain technology also holds potential for strengthening cybersecurity.  However, panelists agree that there is lack of evidence on how blockchain technology can lead to transformational changes in the delivery of financial services to the underserved.

The Forum concluded by crowdsourcing problem statements related to issues that FinTech can potentially solve. Majority of the participants conveyed that FinTech can be useful in: identity and e-KYC solutions, alternate credit scoring and digital financial literacy.

Along with financial inclusion of women and forcibly displaced persons, FinTech is one of the three key thematic areas of focus in Jordan’s National Financial Inclusion Strategy (NFIS), first in the Arab Region. FinTech advances financial inclusion of people living in remote areas, women MSMEs, the youth and more recently, forcibly displaced persons. 

Principal member of AFI since 22 April 2016, Central Bank of Jordan has had the leading role in FinTech for financial inclusion. CBJ’s FinTech innovations include interoperable retail payment systems; digitizing payments such as cash transfers and bill payments; innovative identity solutions that help include vulnerable sections of the society such as rural poor, women and forcibly displaced persons.

The Alliance for Financial Inclusion (AFI) is the world leader on financial inclusion policy and regulation. AFI is member-owned network of over 100 financial inclusion policies making and regulatory institutions from 90 developing and emerging countries, covering up to 85 percent of the world’s unbanked. AFI develops and promotes evidence-based policy solutions that help improve the lives of an estimated two billion unbanked, almost half of the world’s adult population who do not have access to financial services.

The event is held as part of the Financial Inclusion Initiative for the Arab Region (FIARI), launched by the Arab Monetary Fund, the Deutsche für Internationale Zusammenarbeit GmbH (GIZ) and AFI at the 2017 AFI Global Policy Forum in Egypt.

For additional information please contact:

Central Bank of Jordan

Ms. Maha Bahou

Exc. Manager, Payment Systems and Financial Inclusion

Maha.Bahou@cbj.gov.jo

Alliance for Financial Inclusion

Sulita Levaux

Working Groups Policy Analyst

Sulita.Levaux@afi-global.org

Monika Lajhner

Head of Communications

Monika.Lajhner@afi-global.org