Page 21 - ITU-T Focus Group Digital Financial Services – Recommendations

ITU-T Focus Group Digital Financial Services
Recommendations

Title of recommendation Role of authorities in interoperability
Working Group Interoperability

Audience for recommendation Authorities

Authorities, acting in their catalyst role, should engage market participants and other stakeholders in order to
promote discussions and guidance over the path towards interoperability. Scope, extent and timing of regulatory
interventions, if any, need to be carefully considered and take into consideration the views of market partici-
pants and key stakeholders.

Authorities should provide an enabling environment that balances the legitimate interest of the providers
in capitalizing their investments as first movers against the overall public policy objectives. It is imperative
that regulatory interventions are carefully considered so as to support the overall policy objective and avoid
market distortion. Mandating interoperability at an early stage may reduce the incentives for firms to enter
a new market and compete. On the other hand offering a proprietary solution can help innovative service
providers to exploit their first-mover advantage, but might create path dependence and lock users into their
service. Therefore, the absence of moral suasion or regulatory intervention may lead to inefficiencies and may
leave some communities unserved.

Market participants and key stakeholders must be heard before regulation is imposed, to avoid that
regulation has the unintended side effect of adversely affecting market development. Regulation should
be limited in those aspects the market cannot agree on and/or realize, since authorities as neutral entities can
mediate between various, often competing interests of different market participants.
Where the regulators and market is unable to establish interoperability from the beginning at minimum
the focus should be on ensuring that interoperability is technologically feasible. At the same time regulators
should ensure that they have both the necessary information and regulatory power to intervene when there
is evidence that a dominant position is being exploited. To make such interoperability feasible, there need
to be effective oversight arrangements that look at system-wide, cross-system, and infrastructure-level
interoperability. Requiring infrastructure-level and system-wide interoperability and disallowing exclusivity
arrangements can set the stage for cross-system interoperability in the future.

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