Financial technology, or fintech, has the potential to expand financial access in Asia and the Pacific, home to about half of the roughly 1.7 billion people worldwide who have no access to the formal banking and financial system, participants at the Asian Development Bank’s (ADB) Asia Finance Forum heard on November 6.
Remote locations, lack of required identification or collateral, high fees, and services that do not match banking needs are some of the reasons for the financial exclusion of many people in the region.
“Technologies applied in the context of regulatory sandboxes for testing financial innovations, distributed ledger technology such as blockchain, establishing digital IDs through the use of biometrics, and so on have the potential to efficiently address long-standing obstacles and make real progress in expanding financial access,” ADB Vice President for Knowledge Management and Sustainable Development Bambang Susantono said.
The ADB has helped roll out a cloud-based banking pilot in Mindanao, Philippines, and implemented a weather index-based crop insurance pilot project using mobile banking services for more than 9,500 small rice farmers in Bangladesh. It is also working on a digital access tool through the use of a biometric ID system in Papua New Guinea so that people without formal documentation can have access to financial services.
At the same time, the ADB executive emphasized the need for regulators and other financial authorities in Asia and the Pacific to cooperate and coordinate their oversight of fintech.
“We not only need to proactively search for ways to ensure the new technologies are financially inclusive, but we also need to ensure information security, data, consumer protection, and financial stability are at the center of preparation for digital financial services,” Susantono said.