Fintech and Monetary Inclusion and the Case of Bangladesh: Peer-Studying Sequence
Opening Remarks by Deputy Managing Director Antoinette M. Sayeh
September 28, 2022
Thanks very a lot, Alfred. An excellent morning/afternoon/night to everybody, relying on the place you’re. A particular good day to Changyong Rhee who I’m seeing for the primary time since he left the IMF to guide the Financial institution of Korea. And my due to colleagues for arranging this dialogue on fintech and monetary inclusion—a subject that’s turning into a necessary ingredient to constructing a contemporary and resilient financial system.
I ought to start my remarks by recognizing the large strides Asia-Pacific economies have made in digitalization which is pervasive and rising within the area.  Certainly, it stands out by its sheer scale, with web utilization far exceeding numbers in different areas and underpinning widespread e-commerce and fintech. The area can also be on the forefront of digital innovation, making monetary companies and fee methods extra inclusive, extra environment friendly, sooner, and thus cheaper for customers.
And but, gaps in monetary inclusion stay giant—each inside and throughout international locations in Asia and the Pacific. IMF analysis reveals that near half of the grownup inhabitants in low- and middle-income economies within the area nonetheless don’t have a checking account. Lower than 10 p.c of them are capable of borrow from formal monetary establishments. Small and medium enterprises, in addition to farmers, face restricted entry to credit score. They typically depend on casual markets for finance, the place prices are excessive—leaving poor households weak to shocks and poverty traps.
The Asia-Pacific area can also be essentially the most uneven on the planet in the case of the use of fintech. Whereas some international locations are leaders, others lag in essential areas, reminiscent of digital funds, cell cash and cell authorities transfers. Inside international locations, too, there are gaps between the wealthy and poor, and between city and rural areas. There may be additionally work to be carried out on insurance policies round shopper safety, supervisory capability, implementing privateness legal guidelines and offering inclusive insurance coverage.
Transferring geographies now to Africa, which is in the same state of affairs. On the one hand, in lots of African economies, cell money-driven actions have expanded considerably. International locations reminiscent of Kenya with M-Pesa, Zimbabwe with Ecocash, and South Africa with E-wallet have seen noteworthy monetary inclusion outcomes. The truth is, the area has emerged because the world chief in utilizing cell cash accounts with practically 46 p.c of cell cash accounts worldwide.
On the similar time, general entry to and use of economic companies stay low in comparison with different areas. Partly as a result of low ranges of monetary literacy, Africa at this time nonetheless represents the world’s largest share of the unbanked. Greater than half of the inhabitants remains to be excluded from monetary companies—and there may be additionally a large gender hole.
Now from each Africa and Asia-Pacific areas, there are a number of success tales we are able to be taught from. As we’ll hear later at this time, there are international locations that stand out by way of bringing thousands and thousands into the formal monetary community.
In Kenya, for example, due to the widespread adoption of cell monetary companies, monetary inclusion rose from a really low stage of 27 p.c in 2016 to 83 p.c by 2019—a big leap in simply three years. Kenya’s digitalization efforts not solely superior monetary inclusion but it surely has additionally been a key consider its sturdy response to the pandemic.
Let me now flip to Bangladesh, the main target of our occasion at this time. In Bangladesh, monetary inclusion has been a decades-long journey to incorporate segments of the inhabitants that beforehand had restricted entry to formal finance. This journey, which first started with microcredit, has since developed to cowl all facets of economic inclusion—from entry, to utilization, and to high quality.
At this time, using cellphones for monetary transactions is commonplace in Bangladesh. Individuals are accustomed to digital monetary companies, agent banking, branchless banking, and cell cash.
Authorities insurance policies have enabled small and medium-size enterprises and supported ladies entrepreneurs. And advantages have accrued not simply to these in city areas; the agricultural and rural sectors have additionally superior due to insurance policies, reminiscent of flooring on credit score, which are backed by refinancing traces on concessional phrases.
In fact, extra work must be carried out to preserve this momentum, to increase entry much more and to bridge the gender gaps that persist. However I need to commend the Bangladeshi authorities for the wealthy coverage tapestry specified by their newest monetary inclusion technique, which covers vital facets reminiscent of credit score progress in precedence sectors, MSME financing, gender precedence, entry to finance in rural areas, and inexperienced financing.
Bangladesh has invested considerably in digital infrastructure and plenty of new firms have emerged, constructing on that infrastructure, about which you may be listening to extra in the middle of this seminar. Continued emphasis in areas reminiscent of credit score bureaus, asset registration, fee methods, and micro-finance establishments will additional scale back the price of monetary companies. For attaining a few of these, collaborating with the personal sector can be vital however hanging the proper stability between encouraging innovation and making certain monetary stability stays important.
Let me shut by reinforcing the criticality of economic inclusion as a macroeconomic precedence. It’s not simply the best factor to do. Certainly, from a coverage standpoint, it has the potential to scale back inequality and remodel financial progress.
Particularly at a time when public coffers are operating low and governments have to do extra with restricted fiscal house, monetary inclusion—and with it the enlargement of the formal monetary sector—can tremendously enhance the effectiveness of public monetary administration and improve central banks’ capacity to stabilize financial exercise. And right here fintech can play a essential position.
That is additionally why now we have stepped up our dialogue on fintech and digital cash in our annual consultations with nation authorities and this seminar is an instance of our goal to foster peer exchanges on these matters. We additionally supply technical help and coaching to help member international locations as they deal with the event of fintech and cyber dangers.
I’m most happy that now we have colleagues and buddies right here at this time from the Financial institution of Korea, Financial institution of Kenya, Bangladesh Financial institution, Bkash, and the UNDP to focus on monetary inclusion. We’re eager to be taught from their experiences—and to share these experiences past the remit of this seminar.
Thanks very a lot for listening to me so patiently.