After two years of extensive consultation, the ITU Focus Group on Digital Financial Services (DFS) has concluded its work with the publication of 85 policy recommendations and 28 supporting thematic reports. The Focus Group brought together more than 60 organizations from over 30 countries to drive greater financial inclusion for the estimated 2 billion people around the world who remain unbanked.

Commenting on the success of the Focus Group, ITU Secretary-General Houlin Zhao said: "Governments around the world face many similar challenges in their efforts to deliver fully integrated digital financial services.  Until now solutions have largely been developed in isolation. This is the first time an organization has sought to develop a comprehensive set of practical and integrated guidelines drawing on expertise from across the financial service and telecommunication/ICT sectors."

He adds: "By reviewing and assessing international best practices we have developed a practical toolkit that can be adapted to local needs. We hope it will help drive greater access and opportunity through the delivery of more affordable, accessible, secure, transparent and robust digital financial services for consumers and merchants in emerging markets."

The 85 policy recommendations offer guidance in areas such as digital liquidity, consumer protection to enhance DFS usage, data privacy, digital identity and e-KYC (Know Your Customer), as well as interoperability and fair access to the communication channel. Some of its core suggestions include:

• Policymakers and regulators should support the growth of an open ecosystem for DFS that promotes innovation and ensures robust competition
• Regulators should standardize definitions of fraud types and require standardized, electronic and timely fraud reporting from providers
• Access criteria for interoperability schemes should be clear, objective, publicly disclosed and allow new participants, banks and authorized /regulated non-banks to join
• Policymakers should promote initiatives and incentives that encourage merchants and other payment acceptors (e.g. utilities, farmers, government entities ) to accept electronic payments
• Regulators should standardize digital identity registration, and ensure interoperability between DFS operators and service providers relying on digital identity
• DFS operators should build in customer privacy measures, compliant with current or anticipated national legislation
  
  Full details on the recommendations can be found here.

Sacha Polverini, Chairman of the Focus Group, said: "While the work of the Focus Group is complete, we now need to move from theory to implementation. The work we have done has resulted in a set of very operational policy recommendations. Their value will be dependent on their systematic application in markets that need guidance and support. We are now reviewing the opportunity to progress a new global initiative which we hope to announce in April 2017".

ITU and the Bill & Melinda Gates Foundation are organizing a Workshop on Digital Financial Services and Financial Inclusion in Washington DC, US, 19 April 2017, hosted by the World Bank. The workshop will highlight the key findings of the Focus Group and provide an overview of future initiatives and events to support the implementation of the recommendations issued by the Focus Group.

 Notes to the Editor

In 2014, ITU established a dedicated Focus Group incorporating 60 organizations from some 30 countries. The Focus Group's four thematic working groups covered: DFS ecosystem; Technology, Innovation and Competition; Interoperability; and Consumer Experience & Protection.

The group's goal was to develop guidelines, principles and toolkits based on international best practices, which will be adapted and implemented by countries looking to capitalize on digital and mobile technologies in their efforts to increase access to basic financial services for people that today remain at the margin of society.

17 of the position papers were published in December 2016.  The remaining eleven are now available online.

• Identity and Authentication presents an overview of the current and projected state of digital identity and authentication, as it applies to the DFS sector. The paper explores the relationship between legal and digital identity. Coherent identity systems are key to DFS delivery in emerging markets.
• Digital Financial Services and User Agreements in Africa:  A Consumer Protection Review looks into the protections afforded to consumers by DFS user agreements and explains the findings from an analysis of DFS user agreements in nine African countries.
• Competition Aspects of Digital Financial Services analyzes the main competition issues in DFS, providing specific examples of certain countries' efforts to address these issues as well as best practices that countries could adopt to tackle DFS competition.
• Distributed Ledger Technologies & Financial Inclusion highlights issues pertinent to the consideration of blockchain as a Shared Ledger Technology (SLT). Blockchain, if applied correctly, can make several important contributions to DFS in areas including security and identification.
• DFS Glossary provides definitions of terms related to DFS, such as 'Digital Financial Services', 'eMoney', 'agent' or 'mCommerce'. It aims to become a standard reference terminology for DFS, introducing greater uniformity in the terminology used across the DFS ecosystem.
• The Regulator's Perspective on the Right Timing for Inducing Interoperability provides insights on the role of the regulator in inducing interoperability and considers the case of five countries and the role played by the regulator in facilitating interoperability.
• Security Aspects of DFS considers the roles played by respective stakeholders in the DFS ecosystem with regard to DFS security. It examines security risks and vulnerabilities and offers recommendations to mitigate them, highlighting the security of DFS transactions as essential to building trust in DFS.
• Mobile Handset Report analyzes the prices and specifications of basic phones, feature phones and smartphones and related user preferences in DFS markets. The study indicates that basic and feature phones are dominating most DFS markets and that the move towards smartphones is relatively slow.
• Technology evolution & innovation in digital financial services provides a sample of the types of technologies used in DFS and how this set of technologies has evolved. The ability of DFS providers to keep pace with enabling technology is shown to be a key determinant of DFS providers' ability to offer their services globally and at scale.
• DFS Vendor Platform Features examines the features and associated benefits of different DFS vendor platforms.
• Focus Group Digital Financial Services recommendations and Draft Executive Summary provide policy guidance and best practices for regulators, policymakers and DFS operators to overcome the challenges they face to bridge the financial inclusion gap.