The G20 Principles for Innovative Financial Inclusion consist of nine core principles for promoting financial inclusion, based on experience and best practice, which form the basis of the G20’s Financial Inclusion Action Plan. A new Bringing the Principles to Life report, published by the Alliance for Financial Inclusion (AFI) in its capacity as implementing partner of the G20 Global Partnership for Financial Inclusion (GPFI), describes how 11 countries on five continents have successfully applied the principles, and the lessons they have learned in doing so.
One of the obstacles to more effective financial inclusion is that the international standards that guide the delivery of financial services were originally conceived for developed countries. Yet the practical realities in developing countries, which are home to an estimated 90% of the world’s financially excluded, are very different. This report highlights how international standards and their application can be improved to accommodate these differences, based on an analysis of five countries.
Conscious of Brazil’s turbulent past yet with a strong mandate for greater financial inclusion, Brazil’s financial supervisors have had to strike a balance between caution and the need to facilitate technological and product innovation to support financial inclusion. ‘Proportionality’ and ‘coordination’ have been critical to the success achieved so far.
The absence of clear guidance on how to implement international principles to the particular financial inclusion challenges faced by Kenya has meant that the country’s regulators have tended to attach greater value to guidance from regional bodies such as ESAAMLC and the EAC.
The greatest challenge that Mexico’s regulatory authorities face in expanding financial inclusion is complying with the Financial Action Task Force’s (FATF) principles for combating money laundering. More generally, the country’s regulators feel that the relationship international standard setting bodies’ principles and financial inclusion is not always obvious.
The Philippines is arguably one of the most successful countries in terms of applying risk-based and proportionate assessment, often through test-and-learn approaches. However, the country’s regulators would like standard setting bodies to provide greater clarity on the optimum balance and to explicitly address test-and-learn approaches in international standards.
South Africa’s regulators generally believe that standard setting bodies’ (SSBs) principles are flexible enough to accommodate financial inclusion policies. One possible reason for their confidence is that many of the regulators have had prominent roles within their respective SSBs, giving them a useful, first-hand perspective. Nevertheless, there is room for improvement in how standards are assessed.
Global Partnership for Financial Inclusion (GPFI) is an inclusive platform for all G20 countries, interested non-G20 countries and relevant stakeholders to carry forward work on financial inclusion, including implementation of the Financial Inclusion Action Plan, endorsed at the G20 Summit in South Korea.