Page 324 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

There are three aspects of payment ecosystems that, for the purpose of this analysis, we assume will become
widespread over the next ten years. Assuming they will be solved, countries could structure more efficient
bulk payment programs. Those three aspects are:
Reliable and widespread biometric identification

Governments and bulk payment programs have already begun to incorporate fingerprint IDs and even iris
scans into national IDs around the world. Since many poor people lack any other documentation, providing
poor people with biometric IDs has become a building block for a bulk payments ecosystem. One study found
that 230 programs in more than 80 countries are now deploying biometric information and payment systems. 24
The Aadhaar program in India, for example, has collected biometric information on millions of people and
assigned each person a unique identification number that corresponds to a government registry that includes
the majority of Indian citizens. This identification number has already begun to enable payments through
mobile wallet payment solutions like Oxigen. 25

Though biometrics can help collect addressing information on nearly anyone, this data can be difficult to
collect reliably. Machines that collect fingerprints and iris scans need to be kept clean, and field workers may
require technical training. Once biometric data is collected, systems integrators are often needed to ensure
the quality and accuracy of the data.

The consulting firm, Accenture, for example, has developed software for Biometric Identity Management
Systems (BIMS) that eliminates duplicate entries from biometric databases, including face, finger, and iris.
The Government of India uses Accenture for authentication in the Aadhaar program. The United Nations High
Commissioner for Refugees also contracted with Accenture to create the Unique Identity Service Platform
(UISP), a biometric identity management system for registering refugees. UISP integrates various biometric
26
technology vendors into a single system that creates registries of refugees.
Over the next ten years, biometric national identification will be far more widespread. As technology improves,
the collection of biometric information will be cheaper and easier for national governments. This information
will also be used to make national payment systems more efficient.

Pervasive digital wallets reaching banked and unbanked customers

Digital wallets are already commonplace in many countries. At least 19 markets already have more digital
money accounts than bank accounts, and the number of registered accounts grew by 47 per cent last year. 27
The number of registered digital wallets will likely continue to grow in the coming years as governments and
mobile operators invest in digital money markets outreach.
To solve this issue, payment networks will likely have to incorporate merchants into any digital money system.
Until digital money is widely accepted by merchants, beneficiaries will likely “cash out” any money transferred
into their accounts. Making sure that cash is available to beneficiaries is one of the biggest logistical issues in
cash transfers.

Once digital money is widely accepted, beneficiaries will be more likely to leave value inside of their digital
wallets. This “digital liquidity” will allow all payment systems to operate more efficiently. Solving this problem
will also make the job of payment providers much easier, by reducing the amount they have to spend on
transporting cash to beneficiaries.

This analysis assumes that digital wallets will gain popularity over the next ten years. It also assumes that digital
networks and electricity will be sufficient to handle pervasive digital wallets.

24 Muralidharan, Niehaus, and Sukhtankar. UC San Diego. 2015.
25 Oxigen Website: https:// www. oxigenwallet. com/
26 UNHCR: Identity management system uses biometrics to better serve refugees. Accenture. https:// www. accenture. com/ us- en/
success- unhcr- innovative- identity- management- system. aspx
27 2015 State of the industry report mobile money. GSMA. February, 2016.

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