AFI members kick off 2023 Digital Financial Services and Global Standards Proportionality Working Group Meetings in Kuala Lumpur

AFI members from 51 financial regulating institutions gathered in Kuala Lumpur this week to take part in this year’s Digital Financial Services and Global Standards Proportionality Working Group meetings (DFSWG and GSPWG). The highly energetic, cosmopolitan Malaysian capital has proved the ideal setting for exchanging innovative ideas and solutions to financial inclusion policymaking and regulation from over 50 emerging economies.

As the proud host of this year’s DFS and GSPWG meetings, Bank Negara Malaysia (BNM) Assistant Governor, Suhaimi Ali welcomed AFI members to Kuala Lumpur, highlighting the event’s significance for BNM’s own structural policy priorities:

“Recognizing the role of DFS in driving financial inclusion, Bank Negara Malaysia has focused on enabling entry ‘digital-first’ financial service providers to maintain digitalization momentum. In line with the principle of proportionality, we strive to ensure that our regulatory frameworks remain conducive to supporting responsible innovations in a safe and sound manner.”

As a principal member of the AFI network since 2009 and home to AFI’s global headquarters in the heart of Kuala Lumpur, Bank Negara Malaysia is perfectly placed to host this year’s DFS and GSP working groups. Itself a pioneer in developing regulatory frameworks for digital financial services, including e-money, digital banks, and digital payment solutions, BNM is also an avid supporter of sound financial digitization practices, enhanced consumer protection, and robust cyber security measures. 

Offering practical thought leadership and regulatory guidance on crucial policy issues in the form of policy models, frameworks, and toolkits, the four-day event is a chance for AFI members to deepen policy conversations, build member capacity, and identify synergies on topical issues between working groups from across the globe. On the agenda is everything from public-private dialogues with AFI partners Visa, Mastercard, Cello, and Elliptic on how best to strike a policy and regulatory balance between digital currencies and consumer protection, to workshops hosted by private donors like the Bill Melinda Gates Foundation on the role of open finance in financial inclusion.

In his opening remarks, AFI Executive Director, Dr. Alfred Hannig thanked BNM for its hospitality as AFI’s home base over the past eight years, and stressed the significance of the week’s working group meetings in a rapidly digitizing world:

“We all know the unlimited potential of digital financial solutions in advancing global financial inclusion. Especially during times of crisis, like the recent pandemic, when technology became our only way of staying connected. Digital financial solutions have proved capable of financially including millions of people across the globe. But we also know the risks: data exploitation, cybercrime, proliferation financing…. As members of AFI, it is our responsibility to ensure that digital financial solutions and inclusive FinTech help, not harm, the worlds unbanked by complying with the guiding principles set by global standards for financial stability and integrity, as advocated by the GSPWG. I hope that during these four days of uninterrupted learning and knowledge exchange, the vibrancy, energy, and limitless possibility on display here in Kuala Lumpur, will inspire our working group members, together with our partners and relevant stakeholders, to make even greater leaps toward a more innovative, fair, and financially inclusive tomorrow.”

AFI working groups are the primary mechanism for generating and hosting knowledge within the AFI network and provide a platform for knowledge exchange and peer learning that allows policymakers to share and deepen their knowledge of key financial inclusion issues. Nearly 80 percent of AFI’s 83 member institutions form part of at least one of the network’s seven working groups.

Observing its 27^th gathering this week, the DFSWG meeting gave members a chance to exchange insights on global trends and challenges to making digital financial services work to the benefit of the world’s unbanked. The four-day, action-packed agenda included workshops on a host of contentious topics such as the increased supervision of DFS and FinTech data, consumer protection, and the design of more inclusive Open Finance ecosystems, as well as peer reviewing sessions where member countries received input, feedback, and suggestions from WG members on their prospective regulatory or policy documents. On day three members were briefed on the overlap between gender and digital financial services and its potential to benefit women’s global financial inclusion. A bonus session on social media branding provided members with the basic tricks and tools to share and optimize their latest contributions, successes, and impact stories online.

DFSWG Chair, Candy Ngula from the Bank of Namibia, thanked AFI for providing this “amazing platform” for regulators to share experiences and ideas, and “develop future-ready policies and initiatives”. “I have no doubt”, she continued, “that the proceedings will spark high levels of energy and excitement as we converge and have a meeting of great minds committed to bringing forward smart policies to lift more out of poverty and advance financial and digital inclusion.”

As part of the 17^th GSPWG, members have the opportunity to exchange ideas with peers and international experts on the most pressing challenges facing today’s financial regulatory environment. The meeting covered peer reviews and knowledge sharing on a diverse range of contemporary topics including best practices in electronic Know Your Customer (e-KYC) frameworks; advanced cross-border payment systems; improved policy and regulatory approaches towards digital currencies like Bitcoin; the proportionate implementation of new global standards on arms proliferation financing; and the role of financial inclusion in financial integrity and stability frameworks.

In her opening remarks, the Chair of AFI’s GSPWG, Florabelle Santos Madrid from Bangko Sentral ng Pilipinas (BSP) thanked members for their “collective efforts” in contributing to the “useful” recent WG knowledge products, including case studies on inclusive financial integrity from Sri Lanka, Mongolia, Namibia, and Paraguay, as well as reports on the use of e-KYC frameworks during the pandemic from Togo, India, Thailand, Egypt, and Peru. These, she assured, will be paramount in the aftermath of the pandemic as financial inclusion “remains an important pillar of recovery efforts”. Moving forward, she explained, we need to be wary of the “emerging risks” to financial inclusion, such as the “effects of climate change and technological disruptions”.

The meeting is also an opportunity to launch the piloting phase of AFI’s new financial inclusion country assessments – a member service aimed at evaluating the progress made on the in-country implementation of financial inclusion strategies – as well as to review a draft guidance framework on policymaking and regulation of virtual assets and digital currency.

Santos Madrid ended off by expressing her “excitement” to welcome the entire AFI global family in Manila for the 2023 Global Policy Forum this September.

About BNM 

Founded as the nation’s central bank in 1959, Bank Negara Malaysia, is principally entrusted to uphold monetary and financial stability in Malaysia and maintain oversight over the national payment system. Over the years, BNM has played a key role in the development of a comprehensive, efficient, and resilient financial sector, as well as in advancing the country’s financial inclusion agenda by ensuring all economic sectors and segments of society have access to financial services. As a principal member of the AFI global network, BNM has developed 24 Maya Declaration targets, including the implementation of a triennial financial capability and inclusion demand-side survey.

About AFI

AFI is the world’s leading organization on financial inclusion policy and regulation. The global alliance is made up of 83 member institutions including central banks, ministries of finance, and other financial regulators from 75 developing and emerging economies. AFI works on empowering policymakers to increase access and usage of quality financial services for the underserved through formulation, implementation, and global advocacy of sustainable and inclusive policies.

The AFI Resource Centre

AFI working groups are the key source of policy development and trends in financial inclusion and serve as “communities of practice” on key financial inclusion issues. To this end, AFI recently launched the AFI Resource Centre – a web page primarily dedicated to showcasing a non-exhaustive list of high-level financial inclusion documents, policies, and initiatives developed and implemented by member institutions within the AFI network and beyond.