Once upon a time, money was moved by hand, then came the possibility to transfer via telegrams. The advent of internet, mobile broadband and mobile devices has now transformed how we move money and pay for items, with technologies such as blockchain and cryptocurrencies set to further disrupt the digital finance sector. A diverse panel, spanning government, the banking sector, tech futurists and the technology industry, ably moderated by David Wen, Chief Scientist and Co-Founder, eCurrency shared perspectives around digital finance now and moving forward.
Key concerns for Azerbaijan are how to expand their digital agenda across borders- as many countries are concentrated within their own borders. Additionally, the government are keen to help their SMEs expand beyond Azerbaijan, according to Kamran Agasi, Director, Innovations Center LLC, Azerbaijan. Government is transforming itself within the public sector to act as a service provider, creating opportunities. Against a backdrop of the fast changing digital economy, regulators face challenges ranging analyzing the long term policy implications to seeking out and maintaining talent.
Fahad Sajid, Senior Solution Consultant, Business Support systems & Digital Financial Services, Huawei explained that the challenges to digital financial inclusion centre around how organizations can best organize and monetize services, developing the right strategies and putting an ecosystem in place which will support digital financial inclusion.
For Louis Blom, CIO, Standard Bank Mobile, Standard Bank, South Africa, it is important to look at the entire ecosystem, from government and regulators regulate digital currencies and pinpoint exactly what role financial institutions should play within this ecosystem. “The trust aspect around currency, government and regulation must be well aligned,” he explained.
Wen, who is also Chairman of the ITU focus group investigating digital fiat currency, explained that digital finance can be arranged like banking itself. “When mobile money is interoperable, and digital cash can go in a wallet, then it becomes viable.” M money should come under the same governance as worked before, ie that of cash transactions.
For Stephen Ibaraki, Social Entrepreneur and Futurist – Chair REDDS Capital, REDDS Venture Capital, there are 2 key issues for digital finance, ai and blockchain. “AI is here today, already everywhere” he told delegates, and can help in a raft of areas from antimony laundering, services, anticipating problems before complaints are even made. For big companies, tapping into these opportunities maybe straightforward, although for SMEs, accessing the tools may not be quite as straightforward, but this will come. Blockchain, however, is “totally disrupting the payment space,” making borrowing much faster and easier, with the potential to enable many transactions a second, scaling across devices. It also, according to Blom, can give crucial details at different stages of financial transactions, such as where people physically reside.
Building confidence in blockchain among users is also key. To do this we should start with something simple, such as contract to transfer for a transaction- as these types of documentation can sometimes take months to transfer. If this were to go into an easily transferable digital format, consumers could directly see the benefit of blockchain solutions, explained Blom.
Various delegates from the audience called for the views of “users on the ground” to be taken into account. According to one delegate, people are not putting money in the banking system. Women in particular may find themselves sold products they don’t understand or don’t want, so they take their money out.
Effective regulation is a key component of digital financial inclusion. It is often the banks who are most highly regulated in the digital finance sector. Wen cited the example of Senegal, where the commercial bank must take care of 6 non-interoperable m-money providers. They must match details and give cash to agents, however the bank does not get anything from the transfer. Banks and m money providers need incentives to work together.
Cooperation is also key, instead of competition. Currently, according to Blom, telcos and banks are competing “at the wrong level”- data should be shared. If banks all agreed on a common standard, the cost would come down. However costs do need to be recouped, so fees may need to be charged. Governments need to step in and give basic rules for cooperation between stakeholders. The banking and telco sides need to communicate more.
Summing up, Wen outlined key concerns moving forward; technological innovation needs to be matched with regulation. Stakeholder dialogue is crucial, and ITU as a standards organization should promote this dialogue, participation at sessions such as these is great.
David Wen, Chief Scientist and Co-Founder, eCurrency
Kamran Agasi, Director, Innovations Center LLC
Louis Blom, CIO: Standard Bank Mobile, Standard Bank
Stephen Ibaraki, Social Entrepreneur and Futurist – Chair REDDS Capital, REDDS Venture Capital
Fahad Sajid, Senior Solution Consultant, Business Support systems & Digital Financial Services, Huawei Technologies