A recent report entitled “Payment aspects of financial inclusion in the fintech era,” from the Bank for International Settlement’s (BIS) Committee on Payments and Market Infrastructures (CPMI) and the World Bank Group, takes a look at some of the ways the payments sector can facilitate financial inclusion while also being mindful of the potential hazards facing players venturing into that area.
"Incorporating fintech into the [Payment Aspects of Financial Inclusion] framework will help firms and policymakers extend payments services to the poor, the first step for expanding access to other important services, such as credit and insurance," said Ceyla Pazarbasioglu, vice president for Equitable Growth, Finance and Institutions (EFI) at World Bank Group. According to the BIS, the report is designed to provide a framework to promote the use of “transaction accounts” and investigates the role of innovation toward that end.
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According to the report, there are a number of challenges fintechs must compete with in order to effectively develop financial inclusion, including protecting customer funds, “operational and cyber resilience,” market concentration, digital exclusion and “data protection and privacy.”
“Technological innovation has made major inroads into financial services, which has implications for payments and their key role for financial inclusion. While fintech can support improved access to safe transaction accounts and encourage their frequent use, it is not a panacea and there are risks that need to be managed,” said Sir Jon Cunliffe, chair of the Committee on Payments and Market Infrastructures and deputy governor for financial stability at the Bank of England.
The recent report is based on guidance from a 2016 study on Payment Aspects of Financial Inclusion, also from the CPMI and World Bank. That study investigated public and private sector stakeholders and made recommendations for countries interested in implementing those principles. “This was done in a technology-neutral and holistic way and remains relevant in the fintech era,” according to the groups.
Inclusive Fintech 50 Looks to Reward Those Spreading Financial Opportunity
The Inclusive Fintech 50 is a competition aiming to “identify, assess, and select 50 early-stage fintechs driving financial inclusion,” according to its organizers.
Fintechs offering solutions in insurance, credit, infrastructure, payments and remittances, personal financial management and savings to those in underserved segments are encouraged to apply. Applicants may be B2B, B2C or B2B2C.
Winners will be announced in the fall, followed by a white paper and global launch and regional showcase with selected winners later this year.
