This was a great event and I would like to thank you all very much for making this conference such a success. Thanks to every presenter and the people who supported them for their excellent presentations and the great input they provided, and also to all the participants for their interest and contributions. Thanks must also go to the co-organizers and collaborating organizations, particularly ADBI for generously hosting the event, for the effective planning and organization of the event, and for sponsoring so many participants. In addition, special thanks should go to the organizing team and all the helping hands behind the scenes. AFI is most grateful for the opportunity to present ourselves here in Tokyo and we look forward to continuing our collaboration with ADBI, ABAC, FDC, IDB and IFC. 


 

Closing Remarks by Dr. Alfred Hannig, Executive Director of the Alliance for Financial Inclusion (AFI), at the ‘Promoting Financial Inclusion through Innovative Policies’ Workshop, Tokyo, Japan, 3 April 2009

 


This was a great event and I would like to thank you all very much for making this conference such a success. Thanks to every presenter and the people who supported them for their excellent presentations and the great input they provided, and also to all the participants for their interest and contributions. Thanks must also go to the co-organizers and collaborating organizations, particularly ADBI for generously hosting the event, for the effective planning and organization of the event, and for sponsoring so many participants. In addition, special thanks should go to the organizing team and all the helping hands behind the scenes. AFI is most grateful for the opportunity to present ourselves here in Tokyo and we look forward to continuing our collaboration with ADBI, ABAC, FDC, IDB and IFC. 

 

I can conclude with some confidence that the validity of AFI’s vision and objectives has been more than confirmed. So many of you responded enthusiastically to the overall AFI concept and the solutions that were discussed at the event, and we are grateful that most of you, as policy makers, have clearly indicated a willingness to become AFI members. We will continue to work on shaping AFI in a way that allows us to respond effectively to your demands and to deliver our services in the best possible way. Thank you for all the encouragement we received from you in the past days.

 

We intend to hold our first Global Policy Forum on September 14 – 16 in Nairobi, Kenya, hosted by the Central Bank of Kenya, who will be in addition to Bank of Thailand, Bangko Sentral ng Pilipinas, and the Comision Nacional de Bancos y Valores from Mexico, one of our start-up committee members. Let me announce here that G 24 will host a side event at the IMF/WB Spring Meeting on Friday, 24 April for the public introduction of AFI.

The past days have demonstrated that AFI’s six specific policy solutions for financial inclusion are relevant and realistic. A wealth of knowledge relating to these solutions was made available to us during the event and we take this as endorsement to promote them further through the AFI network. We are pleased to note that ABAC has adopted the solutions as an overall strategic framework for the APEC Finance Ministers Initiative.

 

Let me finally just summarize main points from the discussions we had. General takeaways were: Firstly, there is a need to sit down together and make joint efforts to formulate a basic definition of financial inclusion. Secondly, the lack of data on financial inclusion is a big challenge, and we all need to put more emphasis on the design of data collection methodologies and the definition of standards. Thirdly, there was consensus that regulators should focus on the regulation of services based on their specific risk profile, rather than the type of players and providers. Forthly, as with the recent Windsor event, we observed a desire among regulators to communicate closely with the industry, particularly with telcos, in the emerging field of m-banking.

 

As I have said, we feel that the right policy solutions have been selected. In the event’s agent banking session, we emphasized the need to deal with regulatory provisions that can increase the reach to the unbanked, in particular KYC and agency and payment regulations for non-banks. In the m-banking session we became aware of the need to address the delineation between deposit-taking transactions and the receipt of funds for transfer purposes. Personally, I liked the discussion on interoperability as it challenged us to reconsider the accepted views in this area. In the session on diversification on products and providers we had difficulties formulating general conclusions as to the usefulness of the tiered approach, i.e. whether to open special regulatory windows for specialized microfinance institutions that take deposits from the public or not. Questions arose regarding the underlying cost/benefit ratio (length of the process, costs of building the supervisory capacity etc.) and the audience expressed doubts about the need to formulate special laws to open such tiers (compared to the apparently more economical approach of amending existing laws or to issue special decrees). On the other hand, the argument was made that the tiered approach – as in Uganda – could lead to the private sector moving into microfinance. The takeaway from this was that special laws can be useful under special circumstances, but are perhaps not a standard solution.

 

 I was particularly impressed by the lively discussion and great presentations on public bank reform. The key takeaway here was that reforms can become real success stories when these institutions incorporate other innovations such as the use of agents and the introduction of financial identities. In other words, some of the other solutions discussed at this event can catalyze public bank reform. We also had a very stimulating debate on financial identity for the poor. The first takeaway from this was that issues of financial identity tie in with most of the other 5 policy solutions. However, there were also more questions than conclusive answers. There was the hotly debated recommendation to review FATF provisions with regard to becoming more flexible in dealing with basic bank accounts. There was also debate about the feasibility of technologies when working with the poor, such as the use of biometrics. In the end it became quite clear that we are all quite knowledgeable about credit reference on bank customers that already have a bank account. However, financial identity for the poor – i.e. for customers who have no experience of banking systems - remains the real challenge, so understanding this needs to be a priority. We are looking forward to the Indonesian pilot project to assist in this. AFI is also considering setting up a working group to look into these issues, and members from developing countries, such as India, Indonesia, Mexico and the Philippines could participate.

 

In the session on consumer protection, it was with surprise that we noted the amount of responsibility regulators have taken in this field, including financial literacy. There was a range of suggestions for regulations on consumer protection. One was totally legislative, one was a mix of protective measures and education, and the third related to the need to educate people about the financial system. It emerged quite clearly that there is a gap in the level of consumer protection between the client and the provider. This session concluded with us feeling encouraged to continue bringing regulator and client perspectives together.

 

The final session highlighted the role of capacity building in the region and gave some future perspectives on the APEC Finance Ministers Initiative, particularly the value of including issues on SME Finance. Ideas were also contributed by the banking sector, such as the potential applications of the Franchise Banking Model and the role of technology in financial inclusion.

I am sure a lot of your minds are on the crisis. But where there are difficulties, there are also opportunities. And there is not doubt greater financial inclusion presents big opportunities for everyone, not just the poor. There is no doubt greater financial inclusion presents big opportunities for everyone, not just the poor. There are around 3.2 billion people – half of the world’s population – without access to savings accounts, insurance and other financial services. That’s a huge reservoir of untapped economic potential.  As research has shown, greater financial inclusion leads to higher per capita income, bigger personal investments in health, education and small businesses – the source of 90% of job creation. Smart financial inclusion policies can make a big difference and a huge contribution.

 

Thank you again for your active participation and valuable contributions. AFI feels encouraged to continue with the work together with you. See you in Kenya in September.