The new report from the World Bank focuses on new digital technologies, particularly fintech.

The report “payment aspects of financial inclusion in the fintech era,” discusses the opportunities and challenges that come with using fintech to promote financial inclusion. Issued by the Committee on Payments and Market Infrastructures (CPMI) and the World Bank, the report connects fintech innovation with financial inclusion. (BIS)

Financial inclusion: The benefits of fintech

Fintech can advance this objective in several ways. These are through demolishing entry barriers, more efficient services, and better design of accounts and payment products. Most importantly, people from all walks of life can use fintech to enhance their financial well-being.

Yet, fintech is not a panacea

“Technological innovation has made major inroads into financial services, which has implications for payments and their key role for financial inclusion. While fintech can support improved access to safe transaction accounts and encourage their frequent use, it is not a panacea and some risks need to be managed”, according to Sir Jon Cunliffe, Chair of the Committee on Payments and Market Infrastructures and Deputy Governor for Financial Stability of the Bank of England.

Fintechs must consider the risks involved. Systems should be operationally robust, offer safe custody of customer assets, and protect users’ data and privacy.

The 2016 PAFI report is the basis for the new report

A report titled “Payment aspects of financial inclusion (PAFI)” was issued by the CPMI and the World Bank in 2016. Though it remains relevant to fintechs, it was technologically neutral.

It forms the basis for the new report, which confirms that fintech can promote financial inclusion and usage.

“Incorporating fintech into the PAFI framework will help firms and policymakers extend payments services to the poor, the first step for expanding access to other important services, such as credit and insurance,” said Ceyla Pazarbasioglu, Vice President for Equitable Growth, Finance, and Institutions (EFI), World Bank Group.

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