Page 106 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

2 Methodology

A questionnaire was distributed among representatives from authorities of 18 countries attending the DFS
Focus Group WG on Interoperability, eight from Asia, seven from Africa, and three from South America.
Whenever possible, both the telecommunication and the financial regulators received the questionnaire.

Four regulators and one payment infrastructure answered the survey and their answers are reported on the
next section. The questions are available in the Annex and addressed the areas summarized below:

• Mandate of the regulator
DFS, especially mobile financial services, rely on the telecom infrastructure, as well as the financial
infrastructure. In some jurisdictions, it might not be clear what the powers and responsibilities of the
telecommunication regulator and financial regulators are when it comes to DFS, resulting in the question
of: Which regulator would be responsible for addressing DFS interoperability? The possible overlap
and conflict of regulations and jurisdictions is an additional potential risk to the effectiveness of the
regulations, which Benson and Loftesness (2012) cite as crucial for the success or failure of the flourishing
of a sustainable interoperable market. It is important to take the country-specific legal and regulatory
framework into consideration when trying to understand the rationale for local decisions.
• Relevant market

While the focus is on DFS, and specifically digital payments, the same electronic payment instrument (e.g.
payment cards or mobile money) can be used for very different payment use cases. It is important to note
that even within certain use cases, e.g. a person-to-person transfer, the challenges might be very different.
For example, achieving interoperability in international remittances is typically considered to be even
more complicated than interoperability for domestic remittances. Unique environmental conditions make
it difficult to draw policy conclusions based on the experience of other markets. However, considering
other markets’ experiences is still considered important, even if it is not possible to draw generalized
policy conclusions from them. It is important to consider the country-specific market environment if
regulators consider taking action on interoperability.
• State of interoperability

The regulator’s perception about the current state of interoperability within the relevant state is key to
understanding any decision made regarding this aspect. How important is interoperability considered
for the country’s financial system? How has the current level of interoperability of existing systems
been achieved? Why does the regulator consider the current state of interoperability insufficient? It is
important that the regulator is transparent on these aspects, so that its actions are predictable.

• Desirable outcome
Regulators’ actions to facilitate interoperability will obviously be taken with specific intentions, but the
outcome may not always be the one expected. While authorities are typically cautious when it comes
to admitting and/or discussing setbacks, a lot can be learnt from these lessons, and potential mistakes
could ideally be avoided. Outcomes of regulatory interventions should be evaluated.
In the next section, the approach chosen by the five respondents for these areas is presented.

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