Page 21 - ITU-T Focus Group Digital Financial Services – Executive Summary

ITU-T Focus Group Digital Financial Services
Executive summary

electronic money (eMoney) or offer DFS. In addition, mobile channels are predominantly used to reach
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poor and unbanked consumers even in markets where MNOs are not directly providing DFS.
The role of FinTech firms continues to grow. FinTech firms play many roles in the DFS ecosystem. Some
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compete with banks and MNOs to directly offer e-Money or other DFS, while others develop DFS platforms
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for them to use. Others serve as aggregators and technology SPs that enable DFS providers to integrate with
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other entities that wish to send money to and/or receive money from other users. FinTechs engaged in data
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analytics use algorithms to analyze user data for purposes such as assessing creditworthiness. eMoney hubs
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are aggregators that connect DFS providers, financial institutions, and other stakeholders to facilitate eMoney
transfer globally. FinTechs are also experimenting with DLT to improve the safety and efficiency of customer
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identification and payments.
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Other regulated financial providers are increasingly engaging with DFS providers. Payment switches are
facilitating DFS interoperability. Microfinance institutions (MFIs) are using DFS platforms and agents to
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facilitate deposits, withdrawals, and loan disbursement and repayment. Insurance companies are partnering
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with DFS providers and FinTech firms to deliver microinsurance services to previously uninsurable clients. 59
4.2 Services offered

Most DFS models offer users the ability to conduct a variety of basic payment-related transaction services.
In most cases, this includes person-to-person (P2P) payments, bill payments, and airtime top-up. Many
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providers offer additional functionality, including: (i) disbursement of salaries or social benefit payments, and
(ii) business-to-business payments. To facilitate payment-related transactions, most DFS providers offer users
the ability to cash-in (add funds to the DFS account), cash-out (withdraw funds), and store small sums on the
DFS account.

As DFS ecosystems mature, providers are offering more sophisticated financial services. These services
include loans, savings, insurance, investments, point of sale (PoS) integration, and linked general purpose
reloadable (GPR) cards. This functionality is enabled by vendors that provide APIs to enable other parties to
access the vendor platform. 61

48 The ITU DFS Glossary defines eMoney as “A record of funds or value available to a consumer stored on a payment device such as
chip, prepaid cards, mobile phones or on computer systems as a nontraditional account with a banking or non-banking entity.”
49 Depending upon the country, authorization may be granted for provision of e-money, mobile money, mobile financial services,
mobile payment, or other digital financial services.
50 FinTech firms use software and modern technology to provide or facilitate access to financial services. See ITU FG DFS Technical
Report (2017), DFS Glossary. See also FinTech Weekly, FinTech Definition, https:// www. fintechweekly. com/ fintech- definition.
51 E.g., Zoona, http:// www. ilovezoona. com/ .
52 For a detailed discussion of DFS platforms, see ITU FGDFS Technical Report (2017), DFS Vendor Platform Features
53 See McKay & Pillai (2016), Aggregators: The Secret Sauce to Digital Financial Expansion, http:// www. cgap. org/ blog/ aggregators-
secret- sauce- digital- financial- expansion
54 See, e.g., Costa et al. (2016), Big Data, Small Credit: The Digital Revolution and Its Impact on Emerging Market Consumers, http://
www. mitpressjournals. org/ doi/ pdf/ 10. 1162/ inov_ a_ 00240
55 See generally Nika Naghavi (2016), Sending and Receiving Remittances with Mobile Money: Customer Benefits and the Potential
to Drive Down Cost, http:// www. gsma. com/ mobilefordevelopment/ programme/ mobile- money/ sending- receiving- remittances-
mobile- money- customer- benefits- potential- drive- cost
56 See, e.g., de Koker & Watts (2016), Protecting Digital Financial Data: What Standard-Setters Can Do, http:// www. cgap. org/ blog/
protecting- digital- financial- data- what- standard- setters- can- do
57 E.g., Bindo & Hasnain (2015), Choosing a Technical Model for A2A Interoperability: Lessons from Tanzania and Pakistan, http://
www. gsma. com/ mobilefordevelopment/ wp- content/ uploads/ 2016/ 01/ 2015_ GSMA_ Choosing- a- technical- model- for- A2A-
interoperability_ Lessons- from- Tanzania- and- Pakistan. pdf.
58 See Hanouch & Rotman (2013), Microfinance and Mobile Banking: Blurring the Lines?, http:// www. cgap. org/ sites/ default/ files/
Focus- Note- Microfinance- and- Mobile- Banking- August- 2013. pdf.
59 See GSMA (2016), 2015 Mobile Insurance, Savings & Credit Report, http:// www. gsma. com/ mobilefordevelopment/ wp- content/
uploads/ 2016/ 08/ Mobile- Insurance- Savings- Credit- Report- 2015. pdf.
60 For a discussion of the evolution of stored value accounts, particularly with respect to redeemable and non-redeemable accounts
held on mobile phones, see ITU (2017), Technology Evolution & Innovation in Digital Financial Services (forthcoming).
61 See ITU (2017), DFS Vendor Platform Features.

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