Forum Highlights Importance of Global Standards to Advance Responsible Digital Finance
The fifth annual Responsible Finance Forum took place on August 28-29, 2014 in Perth, Australia, convening over 100 industry, government and private sector leaders to discuss how digital financial services can be delivered in a transparent, fair and safe manner. Focusing exclusively on the use of technology to provide financial services and products for the poor, the Forum enabled participants to share specific approaches that private and public sector actors can take to address emerging risks from the expansion of digital financial services.
Participants noted that unreliability of digital financial services and inadequate customer recourse mechanisms can dampen the trust in such services among the poor and thus limit their uptake and usage. Results from a global survey taken ahead of the Forum revealed that a majority of respondents believed that global principles, standards and codes of conduct for responsible digital finance are needed. There was broad consensus among the participants at the Responsible Finance Forum to explore the development of such guidance as part of a multi-year global dialogue among all stakeholders.
“Digital technology offers tremendous opportunities to expand access to formal financial services. But it is important to also consider and address its risks in order to ensure that it benefits the customers, especially the poor,” said Peer Stein, Director, Finance & Markets Global Practice of the World Bank Group.
Over 2.5 billion adults worldwide lack access to formal financial services and digital finance is widely recognized for its potential to significantly expand financial inclusion and thereby improve the livelihoods of the poor. While the use of digital technology, such as mobile money or electronic payments, can improve access to formal financial services for the unbanked, these new business models and delivery channels can also carry new risks for consumers and small businesses. Against this backdrop, the discussions at the Responsible Finance Forum focused on risks with particular relevance to digital financial services, including breaches of data protection, fraud, and inadequate consumer recourse, among others that pose challenges for both financial service providers and regulators.
“Low-income consumers can be particularly vulnerable to the risks that arise when financial products and services are delivered digitally,” said Katharine McKee, Senior Policy Advisor at CGAP. “If not addressed, risks such as fraud or opaque prices can undermine the confidence of consumers and limit the uptake and usage of digital financial services.”
“The Responsible Finance Forum provided a starting point from which to develop umbrella principles to advance responsible digital finance. These high-level principles could inform more specific standards and codes for financial services providers, mobile network operators, and technology companies providing services, as well as influence policies and regulations of financial and telecommunications regulators,” stated Beth Porter, Policy Advisor, BTCA/UNCDF.
“The Forum was an important milestone in bringing digital finance to the forefront of responsible finance and reinforcing the importance of the private sector for fostering innovation for responsible financial inclusion,” said Susanne Dorasil, Head of the Economic Policy and Financial Sector Division at the German Federal Ministry for Economic Cooperation and Development (BMZ).
The Forum also marked the launch of the live web-platform, a one stop shop for sharing and accessing knowledge, discussing and collaborating on responsible finance. The RFF Platform will provide a central space for stakeholders and practitioners to advance responsible finance and move towards the goal of full finance inclusion by 2020, responsibly.
The Responsible Finance Forum V was followed by the G20 Global Partnership for Financial Inclusion (GPFI) Plenary and Forum on September 1-2, 2014, in Perth, where digital finance continued to be discussed.
Organizers of the Responsible Finance Forum included BMZ/GIZ, Better Than Cash Alliance, CGAP, the Bill & Melinda Gates Foundation, IFC, Netherlands Ministry of Finance, The MasterCard Foundation, the United Nations Capital Development Fund (UNCDF) and the World Bank Group.
This news content was configured by WebWire editorial staff. Linking is permitted.