By IMTFI researcher Anatoly “Jing” Gusto
The last day of January
marked the first day of the Lunar New Year, a celebration and time of renewal
in many Asian cultures. Resolutions
aren’t part of the Lunar New Year tradition, but I have grown to appreciate it
as a reminder that Jan. 1st is not the only day of the year on which to make
resolutions. I would like to offer one, which I hope bankers, mobile money
issuers and financial regulators will consider adopting, which for me was the
key takeaway as a panelist on behalf of IMTFI in last year’s Alliance for
Financial Inclusion (AFI) Global Policy Forum (GPF), held in Kuala Lumpur,
Malaysia. AFI is a network of
central banks and other financial regulatory bodies from nearly 60 developing
countries who exchange knowledge on financial inclusion policies.
Interoperability:
Just Do It
Our panel on “Research Findings in Financial Inclusion” focused
on bringing to policy makers the latest research in the field of financial inclusion.
First to present were Nina Laven and Nurina Merdikawati of INSEAD, who did a
research on payment risks and security.
Their study brought out three related insights: (1) interoperable systems pave the way
for payment security; (2) security is key in building consumer trust; and (3) trust,
in turn, is key to new technology uptake. They found that isolated technology
platforms were not necessarily more secure and that those countries with
interoperable payment systems have a better chance to have a significant level
of consumer adoption for financial services.
From the emphasis on trust, I segued into the need for
technology-driven payment alternatives to be contextualized to local conditions
based on findings from my IMTFI
case study of Green Bank’s text-a-payment loan facility. I explained that integrating
mobile technology into bank services will not necessarily lead to financial
inclusion and encourage savings buildup, particularly if initiatives fail to
address the human and organizational aspects of financial transactions or
rectify problems with interoperability. There was little uptake in the use of
the mobile money that could run in the bank’s platform as it only worked with
mobile phone users subscribed to one specific mobile network operator, limiting
the ability of clients to perform their day-to-day transactions with merchants
or family members subscribed to other telcos.
Finally, Aishwarya Ratan of Innovations for Poverty Action, presented
how IPA’s study on commitment savings in agriculture in Malawi highlighted the need
for a financial environment that fosters diversity in services and delivery
channels and more sensitivity to user types to promote financial inclusion.
The panel discussion highlighted inter-linkages and
complementarities between financial inclusion, security, and diversity in local
context and user types. Overall, I think it emphasized the need for
interoperability in reducing the dependency on cash for payment transactions,
which is integral in enabling inclusive economic development and poverty
alleviation. Alternative modes of payment
and value storage remain second to cash largely because they are missing one
important ingredient, and that is the ability for users to readily transact for
their day-to-day use, anywhere, anytime.
Regulators and private players in the financial and
telecommunications sectors need to think outside the box and find ways for their
respective payment/financial platforms to communicate and interact to expand
their outreach and open up market boundaries. Deepening convergence will be one
of the major driving forces behind the adoption and usage of technology in
financial inclusion but a broader discussion about interoperability needs to
start first.
And I hope it happens in 2014.
Video archives of selected sessions at the 2013 AFI Global Policy Forum are available. Click here to watch.
