Page 17 - ITU-T Focus Group Digital Financial Services – Executive Summary

ITU-T Focus Group Digital Financial Services
Executive summary

adoption indicated that women constituted only 37 per cent of their registered customers. Women are also
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twice as likely as men to be illiterate, constituting 2/3 of the world’s illiterate adult population. 35

Prevalence in remote areas
Many poor and unbanked consumers reside in remote areas where mobile network availability and access
to agents is limited. Of these, many rely on farming for some or all of their income. There are over 475 million
small farms worldwide, and approximately 1.5 billion people in low-income countries live in smallholder
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households. With their low, irregular incomes and high exposure to income shocks, smallholder farmer
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families could benefit from access to safe, convenient, and affordable services that would enable them to
smooth consumption, save small lump sums, address income shocks, and borrow for consumption or business
purposes. In practice, however, limited mobile and agent network coverage, poor service quality, and literacy
challenges discourage poor and unbanked consumers living in remote areas from adopting DFS.

These literacy, gender, and geographic accessibility issues exacerbate the challenges faced by poor and
unbanked consumers with respect to adoption and usage of DFS. These challenges include: (i) limited
account functionality; (ii) difficulty navigating complicated DFS menus and user interfaces (UIs); (iii) problems
with DFS reliability and safety; (iv) poor disclosure of pricing, fees, and terms and conditions; and (v) data
privacy and protection.

3.2.1 Account functionality

Account functionality is a significant barrier to greater DFS uptake by poor and unbanked consumers.
Today, most low-income consumers consider DFS transaction account functionality to be inadequate for such
accounts to serve as their primary financial tool. For low-income consumers to increase DFS adoption and
usage, they will need to be able to: (i) send funds seamlessly and cost-effectively across different DFS providers
(interoperability); (ii) receive social benefits and other government-to-person (G2P) payments; and (iii) spend
funds digitally without cashing out (merchant payment acceptance).

3.2.1.1 Interoperability
DFS authorities and providers should collaborate to achieve safe and commercially viable DFS interoperability.
Authorities can promote interoperability through engagement with DFS providers and other key stakeholders.
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Financial authorities should take the lead on DFS interoperability strategies and policies, working with other
authorities as required and engaging with providers and other key stakeholders. When working to implement
interoperability, financial authorities should clarify the roles of various public- and private-sector stakeholders,
include all relevant stakeholders in the process, and leverage existing coordination structures where possible.
For their part, DFS providers should bear primary responsibility for interoperability risk management. They
should identify and effectively mitigate relevant risks and ensure that accountability for risk mitigation is
properly addressed in the scheme rules.

3.2.1.2 G2P payments
In addition to working closely with other stakeholders to create a safe and enabling DFS regulatory and
supervisory environment, governments can foster DFS ecosystem growth as users and promoters. Public-

34 GSMA (2016), 2015 State of the Industry Report: Mobile Money, http:// www. gsma. com/ mobilefordevelopment/ wp- content/
uploads/ 2016/ 04/ SOTIR_ 2015. pdf. Note that only 39 per cent of survey respondents reported gender data.
35 UNESCO, Statistics on Literacy, http:// www. unesco. org/ new/ en/ education/ themes/ education- building- blocks/ literacy/ resources/
statistics.
36 Lowder et al. (2014), The Global Distribution of Smallholder and Family Farms, http:// datatopics. worldbank. org/
financialinclusion/ Infographics/ WB_ GlobalFindex_ GlobalInfographic_ 0406_ final. pdf.
37 FAO (2012), Smallholders and Family Farmers, http:// www. fao. org/ fileadmin/ templates/ nr/ sustainability_ pathways/ docs/
Factsheet_ SMALLHOLDERS. pdf.
38 Issues such as the timing of DFS interoperability, the technical and commercial models used, and the role that authorities should
take in encouraging or mandating DFS interoperability depend heavily upon the country context.

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