Page 9 - ITU-T Focus Group Digital Financial Services – Recommendations

ITU-T Focus Group Digital Financial Services
Recommendations

2 DFS Ecosystem recommendations

Title of recommendation Regulations promoting an open ecosystem of DFS providers

Working Group Ecosystem

Audience for recommendation DFS regulators

Policy makers and regulators should support the growth of an open ecosystem for DFS that promotes innovation
and ensures robust competition.

• Regulators should enable multiple regulated financial services providers (banks and non-banks alike) to
compete or partner to offer a range of responsible, secure financial services. Openness of access by many
providers will encourage competition, promote innovation, and reduce prices. Regulators must keep in
mind the need to ensure the safety and soundness of the ecosystem.
• Policy makers and regulators are encouraged to take a proactive approach to establishing clear goals and
regulations related to the DFS marketplace, and to recognize the limitations in market actions, given the
need for players to cooperate with each other in order to achieve the goals of financial inclusion. Policy
makers are further encouraged to use a broad range of tools, including formal and informal convenings,
and work with industry bodies and financial inclusion policy groups to achieve their goals. In the likely
event that multiple regulatory authorities in a country are involved in some way in the regulation of
DFS, regulators are encouraged to collaborate by establishing memoranda of understanding (MOU)
between and among these groups or through a National Payments Council or like body, to ensure clarity
on responsibilities. This approach and a template for an MOU are included in the Focus Group published
report, “Regulation in the Digital Financial Services Ecosystem”.

• Regulators should cooperate to ensure a service-based approach to DFS regulation, so that bank and
non-bank regulated DFS providers are subject to similar regulations and therefore similar rights and
obligations as other DFS providers, while recognizing the challenges of managing different channels.
• Regulators should take actions to ensure adequate market oversight of DFS providers. Regulators should
require companies under their regulatory jurisdiction to report on activities, transaction volumes,
fraud, and other regulated activities, and should use analyses of this data to guide future actions. Active
monitoring of regulatory compliance is specifically encouraged to enable a broader and more open DFS
ecosystem. The use of electronic reporting mechanisms is strongly encouraged.

• Policy makers and regulators should consider actions to make it easier for consumers to switch DFS
providers without incurring undue costs or difficulties.

• Policy makers and regulators should encourage DFS providers and DFS provider support services (including
processors, aggregators, payments switches, etc.) to make use of standards-based APIs to encourage the
development of the open ecosystem.
• Regulators are encouraged to require that DFS providers, particularly those not from a traditional financial
services sector, to manage risks with a dedicated focus on that task, and to hire skilled and experienced
employees to manage risk.

3