Page 13 - ITU-T Focus Group Digital Financial Services – Executive Summary

ITU-T Focus Group Digital Financial Services
Executive summary

2 Understanding the DFS enabling environment (regulators and
policymakers)

2.1 Which actors are responsible for DFS policy, regulation, and supervision?

Financial regulators and policymakers (hereinafter, “authorities”) assume primary responsibility for DFS
policy development, regulation, and supervision. In most countries, the central bank is primarily responsible
for regulation and supervision, though some countries have established a separate entity for financial
supervision. Financial authorities also typically assume primary responsibility for developing financial inclusion
policies and strategies in coordination with other public- and private-sector stakeholders.
Telecommunication authorities are playing an increasingly prominent role in DFS policy development. As
the role of mobile network operators (MNOs) and their subsidiaries in driving DFS development has grown,
there has been increasing recognition of the need for financial authorities to engage with telecommunication
authorities. The mandate of telecommunication authorities is particularly relevant with respect to issues such
as quality of service (QoS), data privacy and security, consumer protection, interoperability, and access to
telecommunication bearer channels such as Unstructured Supplementary Service Data (USSD).

Other relevant regulatory actors include competition, data privacy, consumer protection, and tax authorities.
In some countries, competition authorities are asked to weigh in on issues such as access to agent networks
or business-critical technology such as the USSD channel. For example, in 2014, the Competition Authority
of Kenya ordered Safaricom to eliminate exclusivity agreements with their eMoney agents. With respect
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to data privacy, developing countries are increasingly adopting laws governing data privacy and protection
and establishing data privacy regulatory bodies that regulate DFS providers. In Ghana, for example, the Data
Protection Act requires all “data controllers” (which are defined to include DFS providers) to register with the
Data Protection Commission. Some countries have national consumer protection authorities with broad
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mandates that cover DFS and other financial services. In Perú, for example, the National Institute for the Defense
of Competition and Intellectual Property (INDECOPI) assumes primary responsibility for resolution of disputes
between financial institutions and consumers. Tax authorities also play an important role; tax incentives can
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promote adoption of electronic payments, while taxes on DFS and/or mobile devices (sometimes considered
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luxury goods) could impact the achievement of national financial inclusion objectives. 20
The cross-cutting nature of DFS regulation and supervision can create uncertainty. In particular, many
financial and telecommunication authorities highlighted the challenges of delineating responsibilities with
respect to DFS regulation and supervision. Therefore, one of the objectives of the Focus Group was to develop
tools to help authorities clarify the roles and responsibilities of the various regulatory actors.

2.2 Challenges and solutions

DFS authorities need to create an enabling DFS environment for financial inclusion. To do so, they need to
develop policies and regulations that foster innovation, promote competitive markets, and enable the efficient
and sustainable provision of high-quality financial services. 21

At the same time, authorities need to effectively mitigate risk. They need to ensure that consumers –
particularly those who are poor and economically vulnerable – are protected from unfair or deceptive practices

16 Mazer et al. (2014), Agents for Everyone: Removing Agent Exclusivity in Kenya & Uganda, http:// www. cgap. org/ blog/ agents-
everyone- removing- agent- exclusivity- kenya- uganda.
17 See https:// www. dataprotection. org. gh/ registration.
18 See SBS & CGAP (2010), Financial Inclusion and Consumer Protection in Peru: The Branchless Banking Business, Art. 2.1.
19 E.g., Sung et al. (2017), Can Tax Incentives for Electronic Payment Reduce the Shadow Economy? http:// documents. worldbank.
org/ curated/ en/ 105841483990962599/ pdf/ WPS7936. pdf.
20 E.g., Sung et al. (2017), Can Tax Incentives for Electronic Payment Reduce the Shadow Economy? http:// documents. worldbank.
org/ curated/ en/ 105841483990962599/ pdf/ WPS7936. pdf.
21 Cf. Committee on Payments and Market Infrastructures & World Bank Group (2016), Payment Aspects of Financial Inclusion,
Guiding Principle 2, http:// www. bis. org/ cpmi/ publ/ d144. pdf.

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