The Institute of International Finance (IIF) and Turkish G20 Presidency on 8-9 February 2015 co-hosted the conference “The G20 agenda under the Turkish Presidency.” The event convened several hundred participants from across the IIF’s global membership of financial institutions, together with delegations from the G20 and B20 (a working group comprising business leaders from the G20 countries). The Alliance for Financial Inclusion (AFI) was privileged to be invited to take part in this important event in recognition of AFI’s role as a key G20 Implementing Partner with a special mandate for outreach to non-G20 developing countries as well as the Network’s recently launched Public-Private Dialogue (PPD) platform. The Undersecretariat of Treasury has been a member institution of AFI since 2013 and is taking a leading role in establishing Turkey’s agenda for the G20 in the year of its presidency.

A backdrop to the conference was the rise of Turkey itself, as outlined by the Central Bank of Turkey Governor Erdem Başçı in his keynote speech from a country a little over a decade ago in receipt of IMF financial assistance to being a contributor to the global safety net and leader of the global economic agenda. In keeping with its global role, Turkey detailed the intention of its G20 Presidency to build on Istanbul’s history as a melting pot of cultures and a centre of globalization in order to deepen the dialogue between developed and developing countries. A key focus of Turkey’s Presidency will therefore be strengthening the outreach of the G20 with developing countries, as Ali Babacan, Deputy Prime Minister of Turkey, posited: “We will ask the G20: are we taking into account the potential and opportunities of low income developing countries (LIDCs)? Are decisions at the G20 table really taking care of the rest of the world?”

The importance of financial inclusion to the agenda of the G20 was highlighted throughout the conference. As set out by Tim Adams, CEO of the IIF, in his opening remarks, “We need to bring into the system the 2.5 billion that are excluded, we need a different mind-set of how we use technology to bring people into the formal financial sector.” And in a featured Q&A session, Governor Alexandre Tombini of the Banco Central do Brasil (BCB) described how in only 10 years all 5,500 municipalities of Brazil had been provided with financial access points compared to only 20 percent in 2002 utilizing digital payments and agent networks: “…at the frontier where technology meets banking the potential for deeper financial inclusion is huge…the Turkish Presidency is right to push for this agenda”.

The potential to utilize technology to achieve rapid growth in financial inclusion was reinforced in a session moderated by AFI Executive Director Alfred Hannig on financial inclusion and new technologies, featuring private sector participation Mr. Hakan Ates, President & CEO of DenizBank; Mr. Jay Collins, Vice Chairman of Citibank; Mr. Jose Manuel Gonzalez-Paramo, Member of the Board of BBVA, and Mr. Javier Perez, President of MasterCard Europe. Mr. Hannig opened the session with examples of financial inclusion successes in Tanzania, Kenya Paraguay and Bangladesh. Mr. Ates described how DenizBank’s Fastpay model is enabling many of the 42 percent of Turkey’s population without a bank account to make payments and could provide the basis in the future for the development of a national digital wallet. Surveying the global picture, Mr. Collins outlined the progress that has been made since 2012 in policy coordination among central banks; widespread adoption of a digital philosophy, developing cross-border digital remittances and implementing tiered KYC requirements proportionate to risk. Nevertheless, challenges remained to take “digital ecosystems” to scale in many countries. Mr Gonzalez-Paramo noted that part of the answer lay in low-cost solutions to the specific needs of people on low incomes, going beyond payments and digital wallets alone. “If you don’t have agents on the ground, you are doomed to fail,” he emphasized. Mr. Perez concurred that “inclusive global growth is not sustainable without including the under-privileged” and pointed out that even the advanced economies need to have strategies for financial inclusion, with 93 million adults in Europe still lacking bank accounts.

The panel discussion reinforced the importance of open and systematic public-private dialogue for financial inclusion. Welcoming the launch by AFI of the PPD platform at the World Economic Forum (WEF) in Davos in January, the panelists called for a change of mind-set among governments in engaging with the private sector and joint working by the public and private sectors to achieve common financial inclusion goals. According to the panelists, governments could catalyze the progress of financial inclusion by using digital channels for government welfare payments, expanding digital identities wherever possible, and using their convening power to align all the key actors under a common vision. As Mr. Collins stated, “Financial ecosystems are like a symphony orchestra, strategies need to be aligned and government must play the role of conductor.” The panel also welcomed the support of the Turkish Presidency in championing financial inclusion in the G20, calling for continued proactive leadership and cooperation among countries.

The conference additionally featured sessions on growth and inequality; private sector support for infrastructure investment; funding the SME sector; financial globalization; and the regulatory reform agenda, before concluding with a joint working lunch with the B20. Financial inclusion will continue to be center stage in Turkey’s G20 agenda, as it holds a specially convened workshop on SME finance in June 2015 and hosts the Global Partnership for Financial Inclusion’s (GPFI’s) annual forum and plenary meetings in September.