BigTech crucial to staving off “further exclusion”

Digital finance is supporting individuals, small businesses and governments amid the global economic downturn by enabling financial services, e-commerce, social assistance and greater collaboration between public sector stakeholders, speakers said during a webinar held exclusively for AFI working group members.

In addition to contactless and remote payments, digital infrastructure is enabling governments to rapidly disburse financial relief to vulnerable populations, AFI Executive Director Dr. Alfred Hannig said on 14 May.  Dr. Hannig noted that digital payments and services were also helping maintain the supply and delivery of essential goods and keeping small businesses afloat during the pandemic and movement restrictions in most parts of the AFI network.

“BigTechs and digital platforms are mitigating growing unemployment, dwindling income levels, economic downturn and cascading impact on the world’s vulnerable population particularly women, rural population, informal sectors and MSMEs,” AFI Executive Director told over 200 participants from nearly 60 countries. He delivered the opening remarks during a two-hour webinar on “COVID-19 and the Role of BigTechs and Digital Platforms in Response and Recovery”, which centered around presentations by six speakers from the network and private sector.

Dr. Hannig added that by enabling fast, accurate and immediate responses to the ongoing crisis, new technological innovations were helping keep global economies running and providing buffers for those at greatest risk of slipping further into poverty.

Outlining some of the measures being adopted across the AFI network to mitigate the negative impacts of COVID-19 was Digital Financial Services Working Group (DFSWG) Co-Chair Ehab Nasr from Central Bank of Egypt. He noted how the central bank was encouraging the widespread use of digital payments, including doubling the transaction limit on contactless payments and raising the daily limits on mobile wallets and prepaid cards.

Helping ensure that these gains would be sustained in the long-term, he added that the central bank was using awareness raising campaigns to fostering digital literacy by spotlighting the benefits of electronic payments, including the use of e-cards and e-wallets.

During his presentation, Nasr called on fellow regulators to pursue greater collaboration with their peers, saying that “it is not only regulators that have to work on regulation, but they also should pursue dialogue between different regulators from the same country”.

“Sandboxes will be very efficient in applying regulations in certain products before issuing them to the market,” he added.

While several speakers spoke of new opportunities, others also acknowledged the possible risks of “going digital”, including to personal data and fraud and the potential to leave those behind who lacked access to basic formal identification.

Bank Al Maghrib’s Hakima El Alami, for example, noted that Morocco’s central bank had taken mitigating steps, including increased vigilance, strengthened monitoring functions within the central bank and oversight in systems and means of payment.

“It is necessary for central banks to have close collaboration with all stakeholders … and set up strong oversight that allows us to mitigate the risks, including risk of cybersecurity and fraud, that could stop or have negative impacts on financial inclusion,” she said.

Central Bank of Russia’s Mikhail Mamuta added that regulation must be developed that focuses on online services, digital infrastructure, digital consumer protection, personal data and cybercrime.

He added that while we do not yet fully understand how the pandemic will shape consumers and the wider economy, it is clear that “digitalization and services will become online more and more”.

Professor Olayinka David-West from Nigeria’s Lagos Business School noted that regulators were well-placed to face such emerging challenges. She added that the fallout from COVID-19 had provided “an opportunity to stress test our financial infrastructure, to look at our financial structures critically and ask if financial flows are digital, secure, accessible, safe and secure”.

She ended her remarks by reiterating that the success of digital ecosystems will be defined by consumer confidence.

“Regulators need to focus on building trust in the ecosystem, especially for the consumers and this entails consumer protection, market conduct as well as cybersecurity. And once there is trust, all these digital flows will work harmoniously,” Professor David-West said.

Shi Piao from China’s Ant Financial gave an in-depth account into the various ways that the technology provider was bringing financial services to the unserved, underserved and small businesses. In addition to providing online training and enhanced credit lines to small businesses, the company had launched a popular open platform that was helping bring digital services to millions.

“Within a week, more than 1,200 developers across China had created over 180 programs to produce various contactless services that 600 million people have already used,” she said.

Omolola Oladunjoye from Jumia, Nigeria’s largest online retailer, noted that the crisis had created a dramatic shift in consumer spending. This, she added, had resulted in many producers adapting their manufacturing towards essential items, such as masks and hand sanitisers.

Underscoring the importance of digital platforms, Oladunjoye urged regulators to better understand ecommerce and its benefits.

“Enabling infrastructure is what really supports ecommerce, such as affordable broadband as well as standardization and regulations, so that there is no abuse in the sector”.

AFI’s Ghiyazuddin Mohammad, Senior Policy Manager for Digital Financial Services,  opened the session, which was moderated by Adeyemi Omotoso, AFI’s Policy Specialist for FinTech.

Dr. Hannig brought his remarks to a close by calling on “regulators, market actors and other stakeholders to leverage digital technologies in a responsible and safe manner as we reach out to vulnerable segments of the society such as the poor, women, forcibly displaced persons and MSMEs”.

“Further exclusion is not an option”, AFI’s Executive Director underlined.

This was the third in a series of networkwide webinars on AFI’s COVID-19 Policy Response to mitigate the impacts of the pandemic. The previous two, which presented AFI’s COVID-19 Policy Response and response measures for MSMEs, respectively, were also attended by close to 200 participants each.

AFI COVID-19 Policy Response aims to deliver systematic, effective and coordinated policy responses to help AFI members mitigate the effects of COVID-19 on financial inclusion policy implementation, especially for micro, small and medium enterprises and the most vulnerable segments of the population.

AFI’s DFS workstream is partially supported by AFI’s Funding Partners.