Page 15 - ITU-T Focus Group Digital Financial Services – Executive Summary

ITU-T Focus Group Digital Financial Services
Executive summary

2.2.2 Collaboration and coordination 25

Effective collaboration and coordination is critical to the development of a safe and enabling DFS ecosystem.
Financial authorities should regularly engage with other public-sector actors (e.g., authorities responsible
for telecommunications, competition, data protection, and taxation), DFS providers, consumer advocates,
DFS technical experts, development partners, and other DFS stakeholders. Whether the topic of concern is
interoperability, third generation mobile (3G) coverage, service quality, fraud mitigation, data privacy, or digital
credit, effective collaboration can help to ensure that policy and regulatory decisions contribute to healthy
DFS ecosystem development.

DFS authorities should establish formal mechanisms for coordination. Mechanisms such as a national
payments council can facilitate a collaborative approach to DFS regulation. Financial and telecommunication
authorities should also consider signing a memorandum of understanding (MoU) or similar agreement to guide
their collaboration to foster the development of a safe and enabling DFS ecosystem. 26

2.2.3 Effective oversight and supervision
DFS authorities should ensure that adequate attention is devoted to DFS oversight and supervision.
Providers should be required to submit regular electronic reports on a variety of DFS-related indicators, such
as QoS, agent activity, transaction volumes, complaints, and fraud. DFS authorities should also use consumer
research methods such as mystery shopping and short message service (SMS)/interactive voice response (IVR)
surveys to complement DFS provider reporting. In addition, central banks in DFS markets with interoperability
arrangements should address interoperability in payment system oversight frameworks.

3 Understanding the DFS demand side (consumers)

3.1 How can DFS benefit poor and unbanked consumers?

Poor and unbanked consumers could benefit from a wide variety of formal financial services. Research
demonstrates that they would welcome affordable, convenient, well-designed and secure services that help
them to smooth consumption, save small sums to cover larger periodic expenses, address income and other
shocks, and borrow for consumption or business purposes.
27
Basic DFS transaction accounts can help poor and unbanked people to address many of these needs. A
typical DFS transaction account can help smooth consumption by enabling consumers to save their low,
irregular income streams without paying monthly maintenance fees and by facilitating receipt of a money
transfer from a distant friend or family member in cases of financial shortfalls. These accounts can also be
used to build small lump sums to cover larger periodic expenses such as school fees, hospital fees, weddings,
or funerals.

In addition, basic DFS transaction accounts can facilitate access to other financial services. As noted earlier,
DFS infrastructures and improved data analytics are enabling providers to cost-effectively offer credit, savings,
insurance, and investment services to poor and unbanked consumers. Customers who want to save beyond the
maximum balance limit of their eMoney account can link their account to a deposit account held by a bank or
similar financial institution. Income shocks, such as loss of a job or death of a breadwinner, can be addressed

25 Cf. Committee on Payments and Market Infrastructures & World Bank Group (2016), Payment Aspects of Financial Inclusion,
Guiding Principle 1, http:// www. bis. org/ cpmi/ publ/ d144. pdf.
26 See ITU FG DFS Report (2016), Regulation in the Digital Financial Services Ecosystem, for an MoU template.
27 See, e.g., Collins et al. (2009), Portfolios of the Poor: How the World’s Poor Live on $2 a Day, http:// www. portfoliosofthepoor.
com/ book. asp.

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