Five Takeways for Digital Innovation

china-2This year’s Seventh Annual Responsible Finance Forum (RFFVII) held in Xi’an, China maintained momentum on the topic of Responsible Financial Inclusion and Digital Innovation, with a focus on Asia. Building on prior years’ meetings in Perth (RFFV 2014) and Antalya (RFFVI 2015), this year’s Forum in China:

Here are five takeaways from this year’s Forum in Xi’an, more info can be found here:

1. For providers: responsible finance and risk management are integral especially in a digital world.  Comprehensive practices for responsible finance and risk management, should be implemented in line with the pace of digital transformation, and should be embedded in core operations, systems, policies of both traditional and digital financial services delivery. Providers with committed resources are doing this but more can be done: customer trust is fundamental to survival and growth, more so in digital finance, and in the post crisis context.

2. For regulators and policy: regulation needs to be proportionate to risks so as not to stifle innovation when scaling up financial inclusion. Steps are being taken that are unique to selected markets (UK, US, Malaysia, China), and more can be done in the context of risks against potential loss of funds, effective recourse, data privacy, security and fraud.   Regulatory steps include: KYC tiering for financial institutions that are using innovative technology; for P2Ps, regulatory sandboxes to help contain potential systemic risks.  Consumer initiatives such as US CFPB’s Project Catalyst are also seeking ways to find the balance between innovation and consumer protection.

3. For consumers: digital financial inclusion guidelines and principles can foster a more resilient marketplace. BTCA presented 8 areas which can support consumers and industry where regulation or supervision capacity remains weak and/or are in the making.  Leading providers see this as an ongoing journey that needs to align with business growth. The guidelines are part of a broader set of high level principles.

4. Forging strategic partnerships across key players remain critical for traditional and digital institutions, consumer advocates, researchers, industry, regulation, policy — to advance responsible financial inclusion. Goldman Sachs-IFC partnership as well as GSMA emphasized the role of women in helping to scale financial inclusion; US CFBP highlighted consumer based research and innovation partnerships.

5. G20/Global Partnership for Financial Inclusion (GPFI) will continue to have a global leadership role, and the Responsible Finance Forum partners remained committed to evolve apace with the shifting digital landscape going forward. Stay tuned, RFF in 2017 is planned to be held in Germany.