Responsible Financial Inclusion and Digital Innovation: Focus on Asia
26 May 2016
Xi'an City, China
Technology and data are transforming financial services. We increasingly leave a big digital footprint fueled by a sharp increase in the usage of mobile phones, online payment systems and social media. Financial institutions and fintech companies are tapping into this large array of real-time digital data to gain valuable insights and extend services to poor and under-served populations who were previously overlooked. But how can banks and alternative lenders provide financial services to the poor in the digital era while preventing abusive lending practices?
The Responsible Finance Forum brought together over 100 regulators, donors, financial institutions and digital service providers from the public and private sectors in Xian, China to tackle this big question.
“In the evolving digital landscape, managing risk for customers as well as financial institutions is a top priority for us as we scale up to reach the underserved " said Momina Aijazuddin, head of Microfinance in IFC's Financial Institutions Group, International Finance Corporation. “We all stand to gain from more transparent, inclusive, and equitable financial systems".
“There is no doubt that innovative uses of digital technologies and big data have expanded financial inclusion. But they have also raised questions about customer protection, data privacy and ownership, fraud and the potential for abuse of big data,” said Wolfgang Bücker, Head of Sector Program Financial Sector Development at GIZ.
This year’s Responsible Finance Forum event comes at a time when several major peer-to-peer lenders around the world have come under scrutiny from regulators. China’s peer-to-peer lending market has become the largest in the world, fueled by innovations in digital finance and an increase in the supply of retail investors. The government introduced its first major internet finance guidance policy last year to strengthen consumer protection and curb mismanagement and fraud. The new regulations also call on providers to share their customers’ credit information data with the national registry.
“As a regulator, we are interested in educating and protecting customers while letting private sector innovation in digital financial services flourish,” said Dr Sun Tianqi, the Deputy Director-General of the Financial Consumer Protection Bureau of the People’s Bank of China. “The G20 Chinese Presidency has also identified responsible digital finance as a priority area this year.”
The Responsible Finance Forum was jointly organized by the International Finance Corporation and the German government (GIZ/ BMZ) in collaboration with its global partner community – Better Than Cash Alliance (BTCA), the Consultative Group to Assist the Poor (CGAP), United Nations Capital Development Fund (UNCDF) and the World Bank Group. The event was supported by the People’s Bank of China, which currently holds the Presidency of the G20 Global Partnership for Financial Inclusion.
The Forum covered the following themes:
> Evolving Digital Landscape: Managing Risks and Protecting Consumers
> Finovation, Customization and Big Data – Opportunities and Risks
> Opportunities & Risks of Alternative Market Based Finance
> Responsible Digital Payments: Guidelines in Action
> Partnerships for Impact in Responsible Digital Finance
The list of presenters included: David Liu from Creditease, Doug Pearce from World Bank Group, Jenny Chang from Shanghai F-road Commercial Services, Hong Zhao from BaiRong Financial Information Services/100credit.com and Sun Tao from Ant Financials.