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ITU tackles financial inclusion for 2 billion people. ITU focus group on Digital Financial Services hosts telco and financial services regulators from across the globe in Kuala Lumpur


Geneva, 15 September 2015 – Almost a year after its launch, the ITU Focus Group on Digital Financial Services (DFS) for Financial Inclusion is preparing to host its third global meeting to discuss how the international telecommunications and financial services communities can work together to tackle one of the world’s most challenging social and economic issues: access to formal financial services by the world’s poorest two billion people.

Across Asia, governments are experimenting with innovative ways to promote access to formal financial services, from using mobile technology for remittances to allowing retail stores to take deposits in rural and remote areas.

The Focus Group, incorporating 60 organizations from some 30 countries, aims to bridge the gap between telecommunications and financial services regulators, and the private and public sectors. Representatives from across the DFS ecosystem will pragmatically address some of the major issues currently preventing DFS from serving the unbanked.

Four working groups have been established, led by a balanced composition of regulatory authorities, operators and consumer protection organizations. They are developing a set of operational recommendations, tools and solutions that will fast track policy reform to support numerous developing countries in implementing the financial inclusion strategy and promoting DFS at scale. Initial findings will be discussed in Kuala Lumpur from 30 September to 2 October and at the next meeting in Geneva in December. Final reportsand guidelines are expected to be published late in 2016.

“By leveraging the rapid growth of existing mobile networks and the use of cell phones, the majority of cash transactions can be shifted into digital form,”said Sacha Polverini, Chairman of the Focus Group and Senior Programme Officer for the Bill & Melinda Gates Foundation. “Innovative digital payment systems can reduce transaction costs up to 90 per cent, giving financial institutions, mobile network operators and a new set of service providers the ability to create innovative new financial products tailored to the needs of the poor.”

Regulation is a key factor. However, payment service providers have found it challenging to launch and scale services for the unbanked.The Asia Pacific region is still home to an estimated 1.2 billion people who do not have access to a bank account or formal financial services, with a majority of these coming fromChina and Indonesia.

Numerous countries in the region have made public commitments under the Maya Declarationto adopt innovative channels – mainly DFS – to increase access to basic financial services by the poor. This is also the case of Indonesia which recently implemented new regulation on both mobile money and branchless banking. However, despite the high level of mobile penetration and two regulatory authorities – BI and OJK – actively engaged in finding innovative solutions to increase the rate of financial inclusion, the DFS potential remains almost untapped in the country with only 0.4% of the adult population having a mobile account.

“Given the important role that mobile can play in addressing DFS, ITU is in a unique position to bring together both telecommunicationsand financial service regulators and industry from around the world to develop a common international framework that generates better understanding and provides practical solutions” said ITU Secretary-General Houlin Zhao.

After Kuala Lumpur the Focus Group will hold its next meeting in Geneva from 15-17 December 2015 when in-depth discussions are expected to take place. The meeting in Geneva will be preceded by a one-day workshop on Digital Financial Services and Financial Inclusion.

 

About ITU

ITU is the leading United Nations agency for information and communication technologies, driving innovation in ICTs together with 193 Member States and a membership of over 700 private sector entities and academic institutions. Established in 1865, ITU celebrates its 150th anniversary in 2015 as the intergovernmental body responsible for coordinating the shared global use of the radio spectrum, promoting international cooperation in assigning satellite orbits, improving communication infrastructure in the developing world, and establishing the worldwide standards that foster seamless interconnection of a vast range of communications systems. From broadband networks to cutting-edge wireless technologies, aeronautical and maritime navigation, radio astronomy, oceanographic and satellite-based earth monitoring as well as converging fixed-mobile phone, Internet and broadcasting technologies, ITU is committed to connecting the world. www.itu.int

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