15 Oct 2019

Financial service providers have an important and ever-increasing role in emerging digital identity ecosystems. The authors investigate the potential positive impacts digital identities can have on underserved markets and how financial institutions can help to responsibly and inclusively grow digital identities by adopting the latest emerging technologies.

Financial institutions are well positioned to act as trusted, regulated players that can provide the building blocks for responsible digital identity initiatives by empowering individuals to control and extract value from their digital identities in a secure and inclusive manner. Financial institutions, as trusted data custodians and veteran risk managers and are well positioned to be at the forefront of protecting client privacy and ensuring financial well-being.

Originally posed on IIF’s website

A2ii: 10 YEARS ON

09 Oct 2019

In the 10 years since the Access to Insurance Initiative (A2ii) was established in 2009, the world has seen some good news. By 2011, the 1990 poverty rate had been cut in half, achieving the first Millennium Development Goal (MDG) ahead of schedule. There have been remarkable improvements in health outcomes. Education and literacy also made progress, overall as well as with reduced gender disparity in some cases.1 More people now have access to financial services: In 2017, the World Bank reported that 69 per cent of adults worldwide now have an account, up from 62 per cent in 2014 and 51 per cent in 2011. The world today is also more con- nected than ever before: over 3.2 billion people have access to and use the Internet, 1.8 billion do so via mobile, while 9 billion have access to a mobile connection, almost doubling from a decade ago.2

The insurance sector, after entering the decade with negative growth in the aftermath of the global financial crisis, is growing again, with much of the momentum coming from emerging markets. Attention is now on strengthening resilience, closing the protection gap and technological innovation, with a particular focus on harnessing the potential of technology while managing the arising risks. Insurance, having lived in the shadow of the banking and payments sectors, is now increasingly emerging as an incubator for innovation in its own right. In tandem with these developments, the focus of insurance supervisors3 is also shifting from post-crisis recovery and standard-setting towards innovation and emerging risks.

Yet for all the steps forward, disparities remain. While extreme poverty is declining, the world is not on track towards achieving ending extreme poverty by 2030. A fraction of the population in some advanced economies are still extremely poor8 . A large proportion of the developing market workforce remains in the agricultural and informal sector, but social protection mechanisms for them remain inadequate9 . Technology and connectivity are also advancing at an unequal pace, and therefore not all countries and groups equally benefit. In many markets, access to private insurance is still a luxury from which the most financially vulnerable remain underserved or excluded. Consumer trust in insurance is low in upper and lower-income jurisdictions alike. A gap persists between developed and emerging market insurance penetration levels, as well as locally between income segments, rural and urban areas, men and women.

By the early 2000s, some pioneering supervisors were taking steps to address the protection gap between rich and poor. By 2009, India, China, the Philippines, Taiwan, Peru and Mexico already had microinsurance regulation in place. The A2ii was established in the same year, borne out of the recognition that it was important to support supervisors around the world in making regulation and supervision more supportive of inclusive insurance, while complying with global standards. The year 2012 saw the International Association of Insurance Supervisors (IAIS) publish the landmark Application Paper: Regulation and Supervision Supporting Inclusive Insurance that carved a path forward for inclusive insurance regulation. Today, 23 have regulatory provisions aimed at fostering inclusive insurance and another 25 are currently developing inclusive insurance regulations. Access to insurance is now front-of-mind for the insurance regulatory community.
The year 2019 marks the 10-year anniversary of the A2ii’s founding. In 2016, the A2ii published a document looking back at how the substance of inclusive insurance regulation has evolved over a decade. This publication takes another step back to reflect, and ask: What forces of change have shaped inclusive insurance regulations in the past 10 years? What has this meant for inclusive insurance and regulatory practices surrounding inclusive insurance? What has the regulatory community achieved, and how can history guide us as we forge ahead?

Above taken from Introduction, and originally published on A2ii’s website


09 Oct 2019

The purpose of this disaster risk toolkit is to provide practical guidance on how to choose which disaster risk finance instruments for which circumstance. The main audience is policymakers in developing countries who are responsible for disaster risk management, at national, regional and local levels. It is also intended to assist the development and humanitarian community who support developing country policymakers in disaster risk management and who, sometimes, either implicitly or explicitly, also hold some of the risks associated with disasters in these countries. It is structured as a series of steps that those actors who hold risk, and the partners who support them in this role, can follow to better understand, reduce and manage these risks, and finance activities accordingly. The steps are as follows:

  • Step 1: Risk audit
  • Step 2: Determining disaster risk management actions
  • Step 3: Understanding the dimensions of the financing need
  • Step 4: Selecting disaster risk financing instruments
  • Step 5: Combining disaster risk financing instruments to create a disaster risk finance strategy

To practically illustrate these steps, the final section of the paper presents a hypothetical case study of an urban environment in South East Asia and shows how these steps might be followed and the possible implications that may result.

Published on PreventionWeb’s website


09 Oct 2019

The private and public sectors are increasingly leveraging new technologies to deliver collaborative approaches for financial service providers (FSPs) to meet customer due diligence (CDD) requirements. These include sharing data and elements of compliance functions on a level that was previously unthinkable. By pooling resources, these collaborative approaches have the potential to lower CDD costs and increase the effectiveness of anti-money laundering and counter financing of terrorism (AML/CFT) measures. This in turn would make it more feasible for FSPs to serve low-income customers with limited financial histories or those who are members of higher crime risk groups, such as those living in or fleeing conflict.

CGAP has developed a typology to help policy makers and financial service providers evaluate different collaborative approaches of customer due diligence.

Originally posted on CGAP’s website


30 Sep 2019

Research on the impact of financial services on the lives of low-income people provides valuable insights. However, these studies tend to focus on microcredit or a single financial product, such as savings or mobile money. As a result, an overly simplistic and product-focused story has emerged. Recognizing the need for a more nuanced and clearer impact narrative, this Focus Note synthesizes evidence since 2014 and highlights three overarching insights:

  1. Financial services improve resilience both by facilitating recovery from shocks and encouraging investments that are riskier but potentially more profitable in the longer term.
  2. Women’s control and ownership of financial services can improve their bargaining power in the household and enable positive outcomes, such as increasing their participation in the labor force.
  3. Emerging evidence suggests that financial inclusion can contribute to increased economic growth and reduced poverty.

Other findings demonstrate that expanding access to basic accounts alone is unlikely to result in detectable welfare benefits, while digitizing financial services shows promising effects on poverty but also introduces potential risks (e.g., weakening of social networks). Going forward, more information is needed on context and customer demographics to better understand who benefits from certain financial services and how and under what circumstances financial inclusion may not be beneficial.


30 Sep 2019

African governments are at the forefront of efforts to harness digital technologies to build more inclusive economies. Double-digit growth in mobile phone ownership in the first half of this decade has triggered a surge of innovative digital tools and services across the continent. However, the benefits of the digital age are not being shared equally. Women—especially those living in poor and marginalized communities—are most likely to be on the wrong side of a persistent digital divide. This year, the Group of Seven (G7) outlined an agenda to fight inequality. As part of this agenda, the G7 Partnership for Women’s Digital Financial Inclusion in Africa will support African governments, central banks, and financial institutions in their efforts to build more inclusive, sustainable, and responsible digital financial systems, ensuring that 400 million more African adults are financially included—nearly 60 percent of whom are women. Essential to efforts to expand digital financial inclusion to women in Africa are five pillars that fall into three categories: infrastructure, regulation, and planning.

Originally posted on Bill and Melinda Gates Foundation’s website


15 Aug 2019

This paper marks the launch of a new IMF series, Fintech Notes. Building on years of IMF staff work, it will explore pressing topics in the digital economy and be issued periodically. The series will carry work by IMF staff and will seek to provide insight into the intersection of technology and the global economy. The Rise of Digital Money analyses how technology companies are stepping up competition to large banks and credit card companies. Digital forms of money are increasingly in the wallets of consumers as well as in the minds of policymakers. Cash and bank deposits are battling with so-called e-money, electronically stored monetary value denominated in, and pegged to, a currency like the euro or the dollar. This paper identifies the benefits and risks and highlights regulatory issues that are likely to emerge with a broader adoption of stablecoins. The paper also highlights the risks associated with e-money: potential creation of new monopolies; threats to weaker currencies; concerns about consumer protection and financial stability; and the risk of fostering illegal activities, among others.

Originally published on IMF’s website


15 Aug 2019

Digital Financial Services have progressed rapidly since the first mobile-money services in East Africa a decade ago. Their early success in Kenya and Tanzania sent telecom firms, banks, technology firms, and development institutions scrambling to launch similar services. Yet many or most of these new services found only limited success of their own. The process delivered valuable lessons to the industry, however, including insights about scale, effective engagement models, the importance of adopting new technologies and rethinking corporate cultures, and the need for new digital financial services and products.


12 Aug 2019

As populations age and birth rates decline in many parts of the world, digital solutions have an important role to play in ensuring financial well-being for older adults. Globally, the number of people aged 60 years or over has more than doubled since 1980, and the share of older adults is projected to double again by 2050.

This paper, jointly released by the Better Than Cash Alliance and the World Bank, summarizes and analyzes the financial challenges faced by older adults. It outlines ways that digital technology can alleviate these hardships and shows worldwide variation in the share of adults who save for old age and have pensions. The paper finds that the proportion of adults who have digital technology and use digital financial services dwindles with age, potentially in ways that are detrimental to their financial well-being.

In the G20 Fukuoka policy priorities on aging and financial inclusion, low digital capability was highlighted as a leading cause of financial exclusion among older adults.

This report aims to provide insights, particularly to policymakers, financial and mobile service providers, insurers and business associations interested in developing and distributing financial products to help people of all ages prepare for and manage old age. The paper draws on data from the World Bank’s Global Findex database, the Gallup World Poll and secondary studies, and should be read in conjunction with the G20’s Fukuoka policy priorities.

Above originally published on BTCA’s website