Page 188 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

B MARKET ACCESS

4 Market access and licensing

4.1 Overview

The entry ticket to the DFS ecosystem is the legal and regulatory consent to do so. This qualifier has been
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deemed to be a measure of whether a market has ‘an enabling environment’ for entities to provide a suite of, at
a minimum, transactional DFS stored value accounts. However, since the dawn of the DFS ecosystem, various
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jurisdictions have applied different methodologies for allowing access to the DFS market. The permutations
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usually seen include:
• Closed: Where only banks can provide transactional DFS services and where MNOs and non-banks,
for example, may only provide ancillary services. Or there may be a ban on MNOs investing in MFS
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companies. 43
• Semi-closed: Where banks and non-banks can provide transactional DFS services, but MNOs cannot. 44

• Bank-based: A type of cooperative model, where an MNO can provide transactional DFS services but
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only in partnership with a bank or via its investment as a shareholder in a bank subsidiary.
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• Open: An open market access framework where all banks and non-banks may provide almost equal
transactional DFS services on almost equal market access terms. 47
• Conditional: These may encompass the following:

– The regulator allows a non-bank to create a specialized financial service , or even banking entity ,
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49
to undertake transactional DFS business, albeit in a restricted manner.
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– Where the MNO has special conditions related to USSD access provision attached to its DFS licensing
authorization. 51
Services are now available in 93 countries via 271 providers, with each jurisdiction applying variations of
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these regulatory frameworks.

39 In many jurisdictions this is permission to issue electronic money services (or equivalent). This is also called ‘mobile financial
services’ or ‘branchless banking’ in some jurisdictions.
40 di Castri, S (2013) Mobile Money: Enabling Regulatory Solutions, available at https:// goo. gl/ ur9AKN
41 These are stylized classifications of market access to DFS. Often the terms of art used to describe market access to DFS is classi-
fied just as bank-based (or led) or MNO-based (or led). Ibid.
42 For example, in Pakistan.
43 For example as in Bangladesh.
44 For example in in Nigeria.
45 This has also been termed ‘bank-led’.
46 For example, in Indonesia and Mexico.
47 For example, in Kenya and Sri Lanka.
48 For example in Jordan.
49 The new Payments Bank framework in India is essentially bank-based, allowing for a new specialized banking entity.
50 For example, in Colombia and India. The entity may have restrictions on the provision of credit to its customers.
51 For example, in Nepal and in the proposed draft ‘MFS’ Guidelines in Bangladesh.
52 GSMA (2016b) 2015 State of the Industry Report Mobile Money, available at https:// goo. gl/ XwJPDG. The GSMA does not count
bank based DFS deployments where an existing bank account is needed and mobile is simply a new channel

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