Page 35 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

1 Introduction

The Ecosystem Working Group of the ITU DFS Focus Group was tasked with providing a comprehensive listing
of the regulatory issues in the ecosystem. This is a very important part of the ecosystem, as regulations may
enable or thwart a healthy digital financial services ecosystem and therefore the potential to realize the goals
of financial inclusion.

This report categorizes the issues and highlights the financial inclusion perspectives of each topic. The group
also considered the issues of managing the regulatory environment, particularly given the intersecting domains
of financial and telecommunications regulation.

Note that the interconnections and effects of one regulation on another were considered outside of scope
but should be considered within a country context. Furthermore, the effects of specific country contexts or
conditions were not considered in this report.

2 Categories of Regulation

We have categorized regulations related to digital financial services and financial inclusion across 6 categories,
including: Agents, Consumer Protection, Market Access, Payment Systems, Risk Management, Other.

2.1 Category 1: Agents
• Governing agent exclusivity (across all digital financial service providers)

– Financial Inclusion Perspective: exclusivity may create barriers to access, vis-à-vis non-interoperable
networks. However, allowing exclusivity, for a short period of time, may serve as an incentive to first
movers.
• Authorization of agents by the financial services regulatory authority(ies)
– Financial Inclusion Perspective: authorization can be burdensome and may limit agent network
development. However, guidelines may need to be issued for proper identification and notification
of agents to the regulatory authority to help enable appropriate tracking and monitoring.
• Identifying requirements and restrictions around who can operate and serve as an agent, including
security requirements
– Financial Inclusion Perspective: if few limitations are placed on who can serve as an agent, it may
allow greater access of services by the unbanked.

2.2 Category 2: Consumer Protection

• Governing the ease of switching between alternative service providers
– Financial Inclusion Perspective: promoting ease of switching may allow end users, particularly the
unbanked, the power of choice. Heavy termination fees should likely be avoided.
• Outlining end user privacy of payments and transactions, including governing the use of end user data
by entities (both formal and informal) other than the end user
– Financial Inclusion Perspective: allowing access to end user data may allow for improved products/
services, but may be used incorrectly, resulting in invasive advertising (e.g. spamming), and aggressive
selling. These tradeoffs should be top of mind as regulators determine the appropriate level of privacy.

• Determining information transparency, including those related to fees

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