CFO Shares Digital Innovations and Initiatives by PH Government in Remittance Services in ADB Confere Friday, 27 May :47

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1 CFO Shares Digital Innovations and Initiatives by PH Government in Remittance Services in ADB Confere CFO PRESS RELEASE The panel of experts on remittances: (fr L-R) Sabine Spohn of ADB, Jonathan Capal of DMA Asia Pac Secretary Imelda Nicolas of the Commission on Filipinos Overseas presented some of the pioneering digital-related initiatives by the Philippine Government on Philippine remittance services during the two-day conference on Financial Inclusion in the Digital Economy, organized by the Asian Development Bank, ADB Institute, and Consultative Group to Assist the Poor (CGAP) at the ADB Headquarters, Manila on May 24-25, / 6

2 In her presentation, Sec. Nicolas highlighted the policies and initiatives by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines), which include the 1) Crafting of the National Financial Strategy for Financial Inclusion in the Philippines; 2) Creation of a Web Portal of Philippine banks that offer remittance service from to the Philippines for transparency; 3) Launching of the National Retail Payment System (NRPS) Framework, which fast-tracks the establishment of an effective electronic retail payment system and promote a cash-lite economy; and 4) Support and regulation of the use of new technology to facilitate remittances. She also shared some of the innovative migration and development and remittance-related projects of the CFO which include 1) The establishment of the Remittance for Development Council, a multi-stakeholder policy-recommending and advisory body on remittances, co-chaired by the CFO and the BSP; 2) Launching (in partnership with UNDP, Western Union Foundation, NEDA, Provincial Government of Ilocos Norte and Cooperative Bank of Ilocos Norte) of the Overseas Filipinos Remittances for Development or OF-ReD Project - a Collective Remittance Fund and special loan program to finance the credit needs of new or existing migrant owned enterprises in Ilocos Norte; and 3) Launching of the Philippine Financial Freedom Campaign or PESO Sense, a Financial Education and Entrepreneurship program that utilizes new technology to reach out to all Filipinos, both sender or receiver of remittances. Peso Sense s Facebook page has more than 614,000 followers worldwide, making it among the top 500 Facebook pages of the Philippines. The PESO Sense Mobile App on the other hand, which can be downloaded for free, serves as a payment gateway for Meralco, Maynilad, SSS, PhilHealth, NBI, and PAG-IBIG for overseas Filipinos. She also discussed the controversial case of De-Risking or the closing of remittance operations of some of the Philippine banks or money transfer operators, particularly in Italy (due to issues on money laundering and other financial crimes) and what the government is doing to address this concern. Sec. Nicolas is part of the panel of experts together with Jonathan Capal, Director of DMA Asia Pacific, and Robert Bell, founder of the digital remittance service start-up KlickEx, under the session Catalysts for Financial Inclusion focusing on Remittances. The session which was moderated by Sabine Spohn from ADB, discussed remittance innovations and digital finance, perceived risks in remittance market, and how digital remittances can lower remittances costs. It forms part of the conference that brought together more than 220 policy makers, financial sector supervisors and regulators, financial institutions, FinTech companies and start-ups, academia, as well as financial sector experts worldwide to tackle trends in digital financial inclusion, opportunities and challenges for reaching the un-banked and under-banked; customer-centricity for financial inclusion; and digital business models for accessing financial services; supervision 2 / 6

3 and regulation of digital financial services. The keynote speakers of the conference are Carol Realini, a successful Silicon Valley executive, book author and expert in financial service innovation, and David Brear, Co-Founder and CEO of London-based 11:FS, a financial company assembling the best team of Banking, Insurance and FinTech experts. They said that banking the unbanked is a huge challenge, with 2 billion adults unbanked globally. Digital finance solutions offer great potential for achieving universal access to financial services, and that FinTech solutions will "trickle up" to broader banked community, benefitting all. Other sessions of the conference discussed Customer-centricity for Financial Inclusion, Digital Business Models for Financial Inclusion, Catalysts for Financial Inclusion (Microfinance and Government-to-Person Payments), Supervision and Regulation of Digital Financial Services, Perspectives on Consumer Protection and Emerging Risks in Digital Finance, and Cost and Value of Digital Finance. While it was acknowledged that the Philippines is among the global models in the crafting of a national financial inclusion strategy, and in the creation of some mobile and digital payment system (PayMaya, G-Cash), the country could look into the following exemplary digital innovations and financial inclusion initiatives from other countries: 1. The Pradhan Mantri Jan Dhan Yojana (PMJDY) - One of the largest financial inclusion drive in the world by India s Department of Financial Services with 281 million PMJDY accounts opened. To service these accounts, all villages across the country are mapped to the Service Area of individual bank branches. 2. AEPS-Aadhaar Enable Payment System (India) a bank led model which allows online interoperable financial inclusion transaction (such as deposit, withdrawal, fund transfer) at PoS (Micro ATM) through the Business correspondent of any bank using the Aadhaar authentication. Aadhaar is a 12 digit individual identification number (national ID system) for Indians issued by the Unique Identification Authority of India. Aadhaar number helps Indians access to services like banking, mobile phone connections and other government services. Its biometric identification card system makes it easy for consumers to confirm their identity when opening a bank account. 3 / 6

4 3. Ru-Pay (India) - This E-commerce solution developed by National Payments Corporation of India enables 230 million RuPay cardholders to transact online. It facilitates electronic payment at all Indian banks and financial institutions. 4. BASIX Social Enterprise Group (India) - Has been on the forefront of Financial Inclusion since It has served 3.5 million households in 45,000 villages across 27 states. It is also considered A pioneer in Microfinance, Micro-insurance, Rainfall Index Insurance, Micro-Savings, Micro-banking, Livelihood Finance and Branchless banking in India. 5. Alibaba (China) - One of the world's largest e-commerce company, the Alibaba group which is an innovator in microfinance, includes 25 Internet-based businesses that cover business-to-business online marketplaces, retail payment platforms, shopping search engine and data-centric cloud computing services. Alibaba estimates that the trading platform has helped create 2.67 million jobs directly through business growth. 6. Hong Kong Monetary Authority s E-Cheques (Hong Kong) Starting 2015, Hong Kong residents could send electronic cheques through their phones or other internet devices to settle bills, transfer money, and even give lai see during the Lunar New Year. They work the same way as traditional cheques, but without using paper. 7. KlickEx Pacific (New Zealand) - A Polynesian payments system for low value electronic foreign exchange transactions using an interbank smart market retail system. It provides low cost electronic foreign exchange clearing services to clients in the Pacific Islands (Samoa, Tonga or Fiji). Payments can be made between the Pacific Islands and Australia, New Zealand using computer or smartphone. The system also allows users to transfer directly to mobile wallets and Bank accounts. 8. Grundfos and Ericsson (Denmark) They are offering a global solution that addresses some of the main challenges of providing clean water in Africa. Two key problems are addressed: Lack of reliable and sustainable water supply and difficulty paying and collecting revenues in unbanked areas. Ericsson can match Grundfos need of a global solution, providing a payment solution that can scale across multiple geographies. 9. Juntos Finanzas (US) - A mobile communication solution for financial institutions to 4 / 6

5 engage their clients. It works with partners to develop key performance indicators that ensure customer behavior is motivated to drive increased engagement and usage of bank account. It communicates with customers through SMS and adapts the frequency and content of messages based on customers reactions. 10. Walmart-2-Walmart (US) Walmart grocery store is considered one of the leaders in financial inclusion of the poor in the US. In 2014, Walmart launched its cash transfer service between Walmart stores. It brings lower fees and simplicity to the money transfer market. And finally, some of the valuable lessons and recommendations shared by resource speakers, discussants and participants for all the stakeholders involved to achieve financial inclusion in the digital economy, include: 1. Digitisation is key to transformation; invest in in robust infrastructure 2. Explore public-private partnership; all stakeholders need to be aligned towards common goal of financial inclusion 3. Transform financial access to usage 4. Develop consumer protection to guard against abuses and provide redress mechanisms 5. Build a customer-centric organization 6. Ensure transparency in operation 7. Bridge the gap between the financial and mobile solution 5 / 6

6 8. Address barriers to digital financial inclusion such as internet access and digital divide, identity, credit bureaus specific to SMEs 9. Address issues on cyber security (like the COMELEC data hack and the Bangladesh bank heist), cross-border monitoring of new delivery technology, and privacy protection 10. Implement a national ID system (like in India); explore the possibility of digital ID system 11. Develop risk management framework for financial service providers 12. Support improvement of ICT industry regulatory environment, and encourage competition; develop more relaxed standard of KYC compliance; micro-finance entities and other digital start-ups should be regulated proportionately in line with financial system risk Frencel Louie Tingga Commission on Filipinos Overseas Citigold Center 1345, Quirino Ave. Cor. South Superhighway, Manila Tel. no / 6