E-Financial
Digital Financial Services And The Need for Global Dialogue
The world is a growing and dynamic place. Despite the obvious challenges, it is generally becoming a richer and more prosperous place to live in with more people being lifted out of poverty than ever before.
For people in low- and middle-income countries, digital financial services (DFS) can be a pathway to move and remain out of poverty.
The commercial benefits are increasingly documented with studies showing that the costs of payment transactions can be reduced up to 90% if they are performed through digital channels.
Digital technology can address one of the main obstacles that have been keeping these services out of reach for so many, the fact that they are too expensive for people whose transactions are worth a fraction of a dollar.
However, despite the growing penetration of mobile devices (including smartphones) and continuous technological innovation, an estimated 2 billion people worldwide still remain unbanked.
While everyone has a frequent need to transact to buy products and services, the ability to access or utilize formal financial services, particularly in developing countries, is undermined by numerous legal, cultural, commercial and financial issues, not to mention in many cases the lack of reliable national ID schemes which makes it extremely difficult for poor people to even open a basic account. There is therefore much more that both the public and the private sectors can do together to exploit the potential DFS can offer to bring the most vulnerable segments of the world’s population into formal financial services.
ITU Facilitating The Discussion
At the macro level there is an urgent need to develop mechanisms to operationalize best practices and policy recommendations to allow regulators, operators and providers in the telecom and financial services sectors supporting the DFS industry to grow organically and reach a larger number of low-income people in a sustainable way.
The ITU, through its Focus Group on DFS and the Global Dialogue, is facilitating a discussion between the telecoms and financial services regulators and operators.
There is a strong need for framed collaboration between the two in addition to a clear understanding of the laws and responsibilities.
What Works?
On the regulatory side, having the right rules in place is key to attract medium and long-term investments, provide legal certainty, avoid arbitrage and allow service providers to scale their business without compromising the security, stability and integrity of the financial system. The telecommunications industry has not been slow to act.
However, in many countries new players find it difficult to navigate an environment which is heavily regulated and where for many years only traditional financial players could operate.
Commercially, there needs to be fair competition to guarantee an open, level playing field for the different stakeholders involved in the process.
A better understanding of how the telecommunications and financial services regulators can work better together in a fast evolving market place is important if any system is to be successful. Examples of effective inter-authority cooperation comes, for instance, from East Africa (i.e. Tanzania, Kenya and Uganda) where regulators have been working hand-in-hand to address issues such as consumer protection, interoperability, security of the network where competences are somehow shared or overlapping.
With mobile numbers suddenly becoming bank accounts, customers are increasingly confused about roles and responsibilities if services are disrupted or where to direct their complaints in case of litigation.
Samples of Success
There are numerous examples of success stories we can draw upon. In 2013, the Mexican government managed, for instance, to save an estimated USD 1.27 billion per year, or 3.3 per cent of its total expenditure, on wages, pensions and social transfers. How? By digitizing and centralizing its payments to all government workers.
Another example is represented by M-KOPA which has provided solar electricity to more than 330 000 homes in three African countries. Each solar home system can be repaid in small daily instalments on their cell phones. Innovations like these that elegantly solve urgent problems will make financial services attractive enough that people are willing to assume the risk of leaving the cash-based economy they know and trust.
Digital credit— small loans that can be accessed instantly over mobile devices—are increasingly offered in low-income countries, particularly in sub-Saharan Africa. One of the first to reach scale in a short period of time is M-Shwari, a savings and loan product launched in Kenya in 2012, and now exported into neighbouring countries.
The product is being used by millions of people, a large percentage of whom are below the poverty line, and thus unserved by credit providers, also because of a lack of credit history.
By using alternative data – airtime, credit top up, number of P2P transfers etc. it is now possible to develop alternative scoring systems that have showed a high level of predictability.
The above examples show how technology is stimulating new applications and innovating business models even though scalability and profitability remain major challenges.
Public-Private Cooperation
No one size suits all. Countries can learn from each other and adapt measures to a national context, but the measures can’t be duplicated without being adapted to local needs.
The Focus Group is providing a toolkit that can be tailored accordingly.
From now to the beginning of January 2017, when our remit will conclude, we will be publishing a series of deliverables which will include a set of recommendations that a broad range of stakeholders can utilize. Our objective is to help accelerate the work being done around the world by local policy and decision makers, influencers and providers of technical assistance on digital financial inclusion.
Sacha Polverini (@sacha279) joined the Bill & Melinda Gates Foundation’s Financial Services for the Poor (FSP) team in December 2012 as Senior Program Officer – Regulation and Policy. A graduate of University L.U.I.S.S Guido Carli in Rome, Sacha holds a Master’s degree in European Political Studies from the Universite’ Libre de Bruxelles. In addition he has completed the post-graduate management program at Solvay Business School, Ecole de Commerce de Solvay, Brussels.
Nigeria Police Force has arrested two suspects over a N713.9 million fraud linked to a breach involving a third-party banking platform.
The police in a statement signed by Anthony Okon Placid, Force Public Relations Officer Force Headquarters, Abuja said the case followed a complaint by a financial institution which reported unauthorised debits on customers’ accounts, leading to an investigation by the Police Special Fraud Unit (PSFU).
Acting on the complaint, operatives of the PSFU deployed advanced investigative and digital forensic techniques, revealing that fifteen customers’ accounts had been compromised.
The funds were subsequently channelled through a network of accounts in a coordinated laundering scheme.
The operation led to the arrest of two suspects, Oguntoyinbo Olawale and Kazeem Omokayode.
Further investigations established that the suspects conspired with one Linda, a Chinese national currently at large, to use personal identification details, including Bank Verification Number (BVN), National Identification Number (NIN), and other credentials, to open multiple bank accounts across various financial institutions. These accounts were then used to receive, conceal, and launder illicit proceeds.
The suspects in custody are to be arraigned before a court of competent jurisdiction, while efforts are ongoing to apprehend other members of the syndicate still at large.
Olatunji Disu, Inspector-General of Police (IGP), commended officers of the Police Special Fraud Unit for their efforts and reaffirmed the commitment of the Nigeria Police Force to combating financial and cyber-enabled crimes.
Tulupay, a fintech infrastructure firm, has announced the prelaunch of its pan-African Financial Operating System (FOS) aimed at improving interoperability across the continent’s fragmented financial ecosystem.
The company said the platform is designed to connect banks, mobile money operators, digital wallets and blockchain networks through a unified system, with the goal of easing cross-border payments, remittances and trade.
Founder, Felix Achibiri, said Africa’s financial landscape remains constrained by disconnected payment rails and high transaction costs, particularly for cross-border transfers. He noted that the new system seeks to provide a single infrastructure that links traditional financial services with emerging digital platforms.
“As cross-border transfers remain slow and expensive, and as more African central banks move toward CBDCs, the need for a unifying, interoperable operating system has never been more urgent,” he said.
According to the firm, the FOS will integrate multiple financial services, including payments, remittances, asset trading and investment, into one framework accessible to individuals, businesses and institutions.
Key components of the system include, Tulu Switch, a payments interoperability hub that enables transactions across different financial platforms through a single application interface, and Tulu Identity, a digital identity and compliance layer designed to streamline customer verification and regulatory processes.
It also plans to roll out Tulu Gateway, a trade platform aimed at supporting cross-border commerce through the digitisation of trade documents and automated settlement, as well as Tulu Wallet, which allows users to manage both fiat and digital currencies in one place.
The company added that the platform would support asset tokenisation and provide exchange infrastructure for trading digital and tokenised assets, alongside a blockchain network intended to serve as the backbone for transactions and settlement.
The announcement follows approval by the Securities and Exchange Commission (SEC) for Tulupay to participate in its fintech incubation programme, a step towards securing licences for digital asset custody, tokenisation and exchange services.
Achibiri said improving interoperability and reducing transaction costs would be critical to unlocking intra-African trade, particularly under the African Continental Free Trade Area (AfCFTA).
The firm said it is currently conducting pilot programmes with financial institutions, regulators and other partners ahead of a full rollout.
First City Monument Bank has opened applications for a new round of its SheVentures programme, offering zero-interest loans of up to ₦10 million to women entrepreneurs to improve access to working capital and support business growth.
FCMB
The bank said the initiative was designed to address financing challenges faced by women-led businesses, which continue to encounter high borrowing costs and limited access to affordable credit despite accounting for a significant portion of Nigeria’s small and medium-sized enterprises (SMEs).
Under the scheme, eligible applicants can access loans ranging from ₦500,000 to ₦5 million under the general category, while sector-specific businesses can obtain between ₦5 million and ₦10 million.
According to the bank, the funding is capped at up to 50 per cent of an applicant’s average monthly turnover.
The facility comes with a zero per cent interest rate, with all charges incorporated into a transparent pricing structure. Repayment is spread over four or six months to allow businesses align obligations with their cash flow cycles.
Managing Director and Chief Executive Officer of FCMB, Yemisi Edun, said the intervention reflects the bank’s commitment to inclusive growth and economic empowerment.
“Inclusive growth requires access to capital and the right conditions for businesses to deploy that capital effectively. Women-led enterprises are critical to economic activity, yet they face structural barriers. This intervention aims to help close that gap by providing financing that supports job creation, business expansion, and long-term sustainability for women entrepreneurs,” Edun said.
Also speaking, Group Head, SheVentures and Impact Segments at FCMB, Nnenna Jacob-Ogogo, said access to affordable finance remained a major challenge for women entrepreneurs.
“By removing the cost barrier and offering quick, flexible funding, this zero-interest loan is designed to safeguard existing jobs, enable businesses to invest in growth initiatives, and foster resilience in challenging economic conditions,” she said.
FCMB noted that beyond access to funding, SheVentures also provides broader business support services aimed at strengthening women-led enterprises, encouraging innovation and improving competitiveness.
The bank said applications for the zero-interest loans are now open to qualified women entrepreneurs across the country.
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