Digital Financial Services (DFS) – also known as ‘mobile money’ due to the use of mobile phones as the primary access mechanism to basic financial
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The DFSO Publications sections provides an ongoing collection of relevant DFS commentaries, policy documents and publications.
Digital Financial Services (DFS) – also known as ‘mobile money’ due to the use of mobile phones as the primary access mechanism to basic financial
This paper addresses how to develop and undertake a strategy towards a model cybersecurity risk management approach. We describe within a potential solution – an actionable risk management framework for cybersecurity – which accounts for the presence of several significantly different maturity levels of entities found within the DFS ecosystem.
This report is the second of a two-part study on the phenomenon of de-risking, or what we believe is more aptly described as ‘refusal to supply ser
This study examines and unpacks the concept of ‘de-risking,’ a term now entrenched in the financial ecosystem lexicon to describe the increasing trend of major financial entities refusing to provide services to mostly smaller financial entities in a number of jurisdictions around the world, ostensibly because of regulatory compliance and money laundering risks potentially associated with such interactions.
The emergence into the public discourse in 2009 of the novel peer-to-peer Bitcoin crypto-currency phenomenon caught many regulators unawares. We now know that Bitcoin and its underlying ‘blockchain’ technology represented a transformational vanguard of a new ‘trustless’ method of sharing data and processes and contracting in a decentralized, traceable and secure manner and, in many cases, without the need for intermediaries. The family of blockchains and its analogues are now known as distributed ledger technologies (DLTs).
A successful innovation in addressing the provision of basic financial services and at relatively low cost serving financial inclusion goals is known Digital Financial Services (DFS). It mimics the basic transactional – and mostly non-credit - capabilities of bank accounts, but is provided by banks as well as non-banks such as mobile network operators (MNOs) and third parties known as Digital Financial Services Providers (DFSPs). Access to DFS is (primarily) via low-cost mobile phones, and is sometimes also termed ‘mobile money’ and ‘mobile financial services’ (MFS).
Development of an Actionable Cybersecurity Risk Management Framework for Digital Financial Services in the Developing World: Overall Approach
A successful innovation in addressing the provision of basic financial services and at relatively low cost serving financial inclusion goals is kno
This paper explores how issues and malfeasances relating to cybersecurity and cyber fraud differ based on gender, primarily focusing on women in re
This study pieces these disparate – fintech, banking, big data - strands together to identify and analyze regulatory models available for catalyzing fintech, fintechs and regtech, including the potential need for ancillary regulation that would be a touch-point of both regtech and fintech ecosystems to close any potential regulatory gaps and to ensure regulatory certainty in the use of technologies and the surfeit of data powering both fintechs and regtech.
A stylized ‘crypto-asset’ regulatory framework (‘Framework’) is presented and described below. It is designed to capture the regulatory permutations and implications of the most prevalent and evolving forms of tradable value created through the use of evolving cryptographically-based (‘crypto’) schemes, as well as their stylized position in a financial ecosystem. The most prevalent of these value-based schemes are based on what is now known as distributed ledger technologies (DLTs), with the main type of DLT in use known as ‘blockchain’ technology.
This paper examines blockchain technology, examining methods of implementation, identifying and addressing limitations and misconceptions intended to explain the workings of blockchain technology to organizations and regulators.
Digital Financial Services (DFS) is a relatively recent mobile-centric financial inclusion innovation in developing. Using ubiquitous mobile phones as the means of service access (primarily through 2G narrowband services, with broadband 3G and 4G potentially available), DFS provides the unbanked and underserved - many of whom live in rural areas - with access to basic financial services provided by banks and nonbanks such as mobile network operators and third party DFS providers (DFSPs).
This study looks generally at how regtech is evolving globally and more specifically at how central banks in developing countries are contemplating the use of regtech, the potential use cases, and any impact on financial inclusion.
A model memorandum of understanding (MOU) between the central bank and telecommunications regulatory authority of an individual jurisdiction.
This Focus Note discusses current implementations of eIDs and eKYC and its impact on, access to and provision of DFS.
The purpose of this study is to provide a fresh perspective specifically on the role of regulators who have competition-related competencies over some or all of the components of DFS, for example the financial and telecommunications components.
This study is part of a series by the author on the role of the primary regulators in the DFS ecosystem, intended to systemize each of their roles.
This brief primer on DFS expands on these issues and demonstrates how technological, regulatory and commercial components interact to form the DFS ecosystem.
Overall, the purpose of the paper is to provide a fresh perspective on the role of the NTA in relation to the success and growth of DFS and to systemize the understanding of the role of NTAs within the context of DFS.
This focus note describes the state of DFS use in humanitarian crises responses, available DFS solutions, and strategies to achieve both humanitarian and financial inclusion goals and common barriers to address for successful deployment.
This Focus Note reviews the status of the financial ecosystem and the shift from a restrictive to an enabling environment, primarily focusing on current supporting policies, laws, regulations and governmental initiatives.
We review the emergence of a novel regulatory innovation called a ‘regulatory sandbox,’ designed to incubate innovation in the financial sector in a relaxed, but safeguarded regulatory environment. It also provides a symbiotic environment for innovators to test new technologies and for regulators to understand their implications for the financial sector and consumer protection. We assess that for these countries, establishing thematic regulatory sandboxes which focus on specific national financial and developmental priorities - such as remittances - rather than spanning multiple national agendas may be preferred as a more efficient use of scarce resources.
This report examines the impact of electronic B2B payments on the development of the DFSs ecosystem in developing countries. We look at the requirements of businesses, at the benefits of using electronic payments, and the trends affecting this market. In a section called “Second Order Benefits”, we look at how the use of electronic B2B payments may accelerate the adoption of eMoney and electronic payments in general. We conclude with recognizing some of the barriers to adoption of B2B payments, and outlining some considerations for policy makers.
This paper examines ways in which bulk payments have been made in the past and look at ways in which this has improved over recent years. We also analyse the remaining challenges which have stymied bulk payment rollouts in many countries.
This report considers the implications of PSI interlinking and international interoperability for central bank oversight policy, and elaborates on a set of principles that complement those developed in the companion report. The principles cover some critical institutional aspects which underpin the establishment of international interoperability agreements, as well as the planning and implementation stages of the agreements, and their sustainability.
The scope of the principles provided in this report extends to several aspects of payment system oversight and interoperability. Besides an opening principle covering the general area of risk identification, monitoring, and management, the other principles are specifically designed to address legal, operational, and financial aspects of interoperability, as well as issues relating to their governance, access, efficiency, and effectiveness.
Even if eMoney within value chains will not materially impact digital liquidity, eMoney is still valuable. Some benefits are direct, such as lower cash handling costs. Other benefits are indirect, such as improving access to credit through transaction histories. In some cases, eMoney is part of a much larger solution with broad benefits, such as subsidy programs that improve food security. The justification for eMoney should not and does not need to rest on digital liquidity alone. What are the implications for strategists and policy makers? For those focused on driving eMoney adoption and achieving digital liquidity, it is important to remember that value chains are just one use case for furthering adoption and digital liquidity. Accordingly, strategists and policy makers should evaluate a range of use cases and evaluate how value chains fit into the roadmap.
This paper specifically explores whether data generated by BoP businesses accepting e-money can be helpful in achieving digital liquidity, which may in turn provide additional incentive for BoP merchants to accept digital payments.
Postal operators have a long tradition of offering financial services. This report explores the current and potential role of postal networks in the emerging digital financial services (DFSs) ecosystem. The report investigates five separate models by which today’s postal networks are involved in the ecosystem: two as support services, and three as direct providers of DFSs. This report also covers three new ways for posts to be involved in the ecosystem: as a Mobile Network Operator (MNO), an interoperability platform, and as an eCommerce facilitator.
The main purpose of this report is therefore to discuss access-to-payment-infrastructures issues around the world, and how these can affect the development of safe, efficient, interoperable and financially inclusive payment services.
In recent years the development of national payments systems, in particular of retail payments, has being geared in many countries to increasing the overall efficiency of payments and to the promotion and achievement of financial inclusion objectives. Development of digital financial services (and in general the shift from cash and paper-based instruments to electronic) and the expansion of the networks of service delivery/customer access points to bring financial services closer to where people live and transact have been regarded as critical tools for the achievement of financial inclusion and overall efficiency objectives.... Wide-reaching objectives are highly complex and difficult to attain. Experience shows that these objectives are very often only achievable with the deliberate, collaborative and organized actions by a broad range of stakeholders from the public and private sectors, typically implemented through cooperation fora.
The status and characteristics of 48 national identity programs and initiatives in 43 developing countries were reviewed, including an evaluation of how these programs are being connected to—or used for— service provision.
This Report provides an analysis of some of the challenges, and provides insight into some of the solutions in merchant payments. The first section of the report defines and describes the merchant payments value chain. This section also provides a definitive categorization of merchant segments, and recognizes that the needs of each merchant segment are quite distinct. Various economic models for the provision of merchant acceptance are defined and discussed, and policy considerations for regulators are noted. The second section of the report looks at various business models and structures used by providers of merchant services, and includes an extensive list of those services that are currently in the market.
This Report summarizes the Quality of Service (QoS) and Quality of Experience (QoE) aspects of Digital Financial Services (DFS) as concluded by the ITU-T Focus Group on Digital Financial Services (FG DFS). The report details that persisting problems with the KPIs basic functionalities of a mobile network need to be resolved by the stakeholders in the interest of any mobile service and are therefore out of scope of QoS-for-DFS-considerations.
This paper outlines the categories of regulation, defines the corresponding sub-issues or topics and highlights the financial inclusion of each topic. Key categories include agents, consumer protection, market access, payments systems, risk management and other related issues.
This report is a synthesis of existing research, legal provisions, guidelines, and other related resources related to consumer protection for digital financial services. The report identifies four common themes that policy makers or regulators may want to consider when developing laws, regulations, or guidelines related to DFS.
This Report defines the Digital Financial Services ecosystem and describes the players and their roles within the Ecosystem.
As social networks mature, they continually add commercial services such as person-to-person (P2P) payments, shopping at physical stores, and ‘conversational commerce’ via chat applications. At this point in time, however, this social networking and commercial revolution has largely skipped the bottom of the pyramid (BoP). In general, while social networks are present in most developing countries and view the BoP as a big opportunity, the poor are not participating – primarily due to low Internet adoption. But, increasing Internet adoption will not open the social networking floodgate. Feature phones, the primary device used by the poor, limit the social network value proposition.
This report explores these questions and, with the help of data from the Helix Institute, InterMedia, and the Groupe Spécial Mobile Association (GSMA), provides an analytical perspective on the pros and cons of the OTC to arrive at conclusions and key considerations which move the industry forward.
This Technical Report to the ITU-T Focus Group on Digital Financial Services (DFS) presents an overview of the current and projected state of digital identity and authentication, as it applies to the DFS sector. It is intended to be read in the context of Recommendations ITU-T X.1252, ITU-T X.1253, and ITU-T X.1254, which address the wider issues around the management of identity in data networks.
This report considers the stakeholders involved within the DFS ecosystem and examines the security vulnerabilities and recommendations to mitigate risks for each of them. Using criteria set out by the Recommendation ITU-T X.805 standard, security criteria are considered in light of existing and emerging attacks. Recommendations are given for each stakeholder environment.
This report provides insights and concepts shared by vendors and customers of DFS platforms who participated in the ITU Focus Group Digital Financial Services and also captures all the functions, features and access options required to deploy and manage a mobile money ecosystem. It defines how potential interoperability can be supported – both with third parties and other mobile money operators. It also provides a reference modular architecture that supports the creation of complex account structures and services.
This glossary is a compilation of terms commonly used in the area of digital financial services and an explanation of what these terms mean. The terms are grouped by category, rather than alphabetically, into 7 main categories.
This report explains the findings from an analysis of DFS user agreements in nine African countries and attempts to understand the overall consumer experience and whether or not there is a disconnect between contract provisions and the legal and regulatory provisions governing DFS. It highlights key findings, and makes a number of recommendations for action by the appropriate regulator in the various markets examined.