Digital Financial Inclusion: Implications for Customers, Regulators, Supervisors, and Standard-Setting Bodies

This brief aims to provide national and global policy makers with a clear picture of the rapid development of digital financial services for the poor and the need for their attention and informed understanding. It proposes a concise definition of digital financial inclusion and summarizes the impact on financially excluded and underserved populations. It also outlines the new and shifting risks of digital financial inclusion models that are significant to regulators, supervisors, and standard-setting bodies (SSBs). The brief concludes with observations on digital financial inclusion issues on the policy-making horizon. Key issues include:

• When products are bundled, regulation and supervision becomes more complicated, requiring coordination among regulators;
• If a consumer using a digital innovation suffers a loss, liability can be unclear due to the multiple parties involved in service delivery: both agents and third-party providers of communications and technology services;
• Digital financial inclusion requires significant cross-sectoral coordination and communication among regulators and supervisors both at the country-level and the global level of SSBs and other international bodies;
• Financial identity for poor people when services are delivered digitally carries the potential for both inclusion and anti-money laundering/combating the financing of terrorism (AML/CFT) gains, but also raises privacy and fraud risks.