Page 16 - ITU-T Focus Group Digital Financial Services – Executive Summary

ITU-T Focus Group Digital Financial Services
Executive summary

through life or disability microinsurance that is delivered through linkages with DFS transaction accounts.
Customers can also use DFS-enabled credit services to borrow for consumption or business purposes. 28

To promote DFS uptake by poor and unbanked consumers, the following elements need to be properly
addressed:

• Design and value proposition: As noted earlier, poor and unbanked consumers seek services that help
them to address their needs, including consumption smoothing, saving small lump sums, addressing
income shocks, and borrowing for consumption or business purposes.
• Convenience: Services should be accessible locally (and remotely, if possible). In addition, consumers
should be able to conduct transactions and access stored funds outside of traditional banking business
hours, and providers should ensure adequate liquidity management infrastructure so that funds are
accessible upon demand. 29

• Safety: Consumers need to have confidence that funds entrusted to a DFS provider will be available for
reimbursement upon demand.

• Affordability: Services should be affordable, and fees should be designed in a manner that makes sense for
low-income consumers. Monthly account maintenance fees are particularly unsuitable for DFS transaction
accounts, as most customers maintain very low balances on these accounts. 30

3.2 Challenges and solutions

Many poor and unbanked consumers share certain characteristics that impact their ability and propensity
to adopt DFS. Some of the characteristics that should be carefully considered by DFS providers and authorities
include: (i) low education and literacy levels (including digital literacy); (ii) gender-related disparities in access
to and familiarity with formal financial services and mobile phones; and (iii) prevalence in remote areas.
Education and literacy

Most poor and unbanked consumers have low levels of formal education. Some are included in the 17 per
cent of the world’s adult population that is illiterate, while many others have little or no formal education,
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which impacts literacy, numeracy, and digital literacy.
Gender-related disparities

Poor women face particular challenges accessing DFS. In the developing world, women are less likely to be
32
financially included, with 59 per cent of men and only 50 per cent of women owning an account as of 2014.
33
DFS adoption may actually be extending this gap, as respondents to a 2015 GSMA survey on mobile money

28 For more information on mobile savings, insurance, and credit services, see GSMA (2015), 2015 Mobile Insurance, Savings &
Credit Report, http:// www. gsma. com/ mobilefordevelopment/ wp- content/ uploads/ 2016/ 08/ Mobile- Insurance- Savings- Credit-
Report- 2015. pdf.
29 Cf. Committee on Payments and Market Infrastructures & World Bank Group (2016), Payment Aspects of Financial Inclusion,
Guiding Principle 5, http:// www. bis. org/ cpmi/ publ/ d144. pdf
30 As of June 2015, the median balance of a mobile money account was USD 4.70. GSMA (2015), 2015 Mobile Insurance, Savings
& Credit Report, http:// www. gsma. com/ mobilefordevelopment/ wp- content/ uploads/ 2016/ 08/ Mobile- Insurance- Savings- Credit-
Report- 2015. pdf
31 United Nations Educational, Scientific and Cultural Organization (UNESCO), Statistics on Literacy, http:// www. unesco. org/ new/ en/
education/ themes/ education- building- blocks/ literacy/ resources/ statistics.
32 See generally Leora Klapper (2015), Digital Financial Solutions to Advance Women’s Economic Participation, http:// www. uncdf.
org/ sites/ default/ files/ documents/ womens_ economic_ participation_ report_ 16_ november_ 2015. pdf.
33 World Bank, Global Findex Infographic, http:// datatopics. worldbank. org/ financialinclusion/ Infographics/ WB_ GlobalFindex_
GlobalInfographic_ 0406_ final. pdf.

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