The recognition that inclusive economic growth begins with financial inclusion has placed the issue high on the agenda of many countries in Latin America and the Caribbean, where 40 representatives from 15 member institutions of AFI recently attended the “LAC Regulatory Policy Forum on Digital Financial Services and Financial Inclusion in Latin America and the Caribbean” on 1-2 October 2015 in Bogota, Colombia.

The international forum was conducted in cooperation with MasterCard, within the framework of AFI’s Public-Private Dialogue Platform (PPD), and included key members from Bolivia, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, and Peru. Participants delivered revealing presentations shedding light on the regulatory progress experienced in the region related to digital financial services, covering various concerns regarding the expansion of the digital finance infrastructure through the implementation of policies related to electronic payments, interoperability issues, bank-led and non bank-led deployments, as well as the approval of new laws that establish regulatory regimes applicable to new e-money providers.

El Salvador was recognized for recently becoming the first country in Central America to draft and pass a Financial Inclusion law, when, in August 2015, its national congress approved “Legislative Decree No. 72”, establishing regulations for the generation, use and distribution of e-money and basic accounts. Entities that will be able to provide e-money services now include banks, cooperative banks and savings and credit co-operatives, but mainly the new e-money provider which is a new type of regulated institution. The law also creates a simplified method for opening bank accounts.

A noteworthy lesson emanated from the Haitian delegation, which discussed how the Caribbean nation effectively utilized digital financial services to aid citizens in the wake of a huge catastrophe, specifically the 2010 earthquake that devastated the country. Banque de la République d’Haïti regulators quickly realized policies within the country needed to be revised in order to allow the delivery of money transfers to earthquake victims.

Colombian representatives outlined pertinent cases of private sector involvement in digital financial services, while Davivienda and Bancolombia illustrated that the private sector can be effective in fostering a cashless society with the support of government and international organizations. In both cases, these leading financial institutions proved that it is possible to achieve a “cashless society” in remote villages when all actors align interest and, in addition to offering technology, initiate financial education campaigns. Banca de las Oportunidades was seen as a key player in all these financial inclusion efforts.

Participants also highlighted the importance of cybercrime, technology and operational risk when offering digital financial services, both when using cards or e-money. Fraud, cyber attacks and technological risks were important concerns raised by both AFI members and the private sector.

“It should not be expensive to have access to your own means of payments … (and) an enabling environment needs an enabling regulatory framework,” said Ravi Aurora, Senior Vice President Global Community Relations at MasterCard.

The AFI PPD Platform has created unique opportunities for MasterCard, jointly with AFI, to design targeted capacity building offerings for AFI members in policy areas where the private sector has substantial expertise, such as digital payments, new technologies and risk management, and cyber security. The AFI PPD Platform has also created opportunities for MasterCard to explore how to best align its corporate financial inclusion commitments and programs to support AFI members’ Maya Declaration Commitments.

ABOUT THE AFI PUBLIC-PRIVATE DIALOGUE (PPD) PLATFORM

The AFI Public-Private Dialogue (PPD) Platform is a unique, global collaboration for public and private sector decision makers to share insights and work together to advance financial inclusion. It was launched at the 2014 AFI Global Policy Forum (GPF). One of the key benefits of the AFI PPD is a series of new capacity building offerings that are designed exclusively to meet members’ policy needs on how digital financial services can leapfrog financial inclusion, where AFI’s private sector partners have substantial expertise.

In 2015, AFI and MasterCard are delivering a series of capacity building events at the regional level in Sub-Saharan Africa, the Asia Pacific, Latin America and the Caribbean, and Europe and Central Asia. More than 250 attendees from AFI member institutions will have participated in these new member offerings before the conclusion of this year. Discussions are currently underway to further scale up technical capacity building opportunities for AFI members in cooperation with AFI PPD partners in 2016.