The interoperability of digital financial services (DFS) and access to DFS transaction data have been identified as ‘frontier issues’ for authorities overseeing competition policy.
This assertion found broad support among participants in a capacity building event for regulators held within the first symposium of the Financial Inclusion Global Initiative (FIGI) which kicked-off today in Bangalore, India.
Today also hosted meetings of FIGI’s three working groups on electronic payment acceptance; the relationship between digital ID and financial inclusion; and security and trust in digital financial services. Tune-in online tomorrow to learn the meetings’ results.
Prominent on the agenda of the capacity building event were challenges to DFS market competition and the value of the PAFI guiding principles in assisting regulatory efforts to create enabling environments for digital payment. Participants also played out a simulated cyber attack, building greater understanding of potential DFS security vulnerabilities.
“Market dominance, and associated potential for the abuse of market power, remains the dominant issue in debates around competition policy,” said Rory Macmillan, Founding Partner of law firm Macmillan Keck. But interoperability and access to DFS transaction data may soon catch up.
Regulators continue to debate the appropriate timing of efforts to introduce interoperability, how exactly this interoperability should be effected, and whether or not interoperability is even desirable in certain markets.
There is an argument to support broader access to digital transaction data, a move with potential to improve assessments of creditworthiness. Questions remain as to how broad this access to transaction data should be and related requirements with respect to data portability and credit reporting.
India’s experience in encouraging digital payment attracted significant attention.
“Without political will, we cannot move forward. To make progress on digital financial inclusion, we need to have three things in place: a problem, a solution and political will to match the two,” said Vijay Chugh of the International Finance Corporation, World Bank Group.
Chugh’s view is that India has now achieved this.
It took just 8 years to give all 1.3 billion citizens an Aadhaar unique biometric ID. Last year India removed 85 per cent of currency from circulation. India is a leading case study of political commitment to digital transformation.
India’s Aadhaar biometric ID and associated policy reforms underpin the country’s new Unified Payment Interface, an initiative to accelerate the creation of digital transaction accounts, encourage the interoperability of digital wallets, and digitalize the Indian government’s payment of social security benefits.
Learn more about FIGI
FIGI is a three-year programme of collective action led by ITU, the World Bank Group and CPMI, with support from the Bill & Melinda Gates Foundation. The initiative is designed to advance research in digital finance and accelerate digital financial inclusion in developing countries.
Learn more about the structure and strategy of FIGI and the motivations for its establishment in an interview with Bilel Jamoussi, Chief of the Study Groups Department, ITU Standardization Bureau.