Public-private sector dialogue advancing financial inclusion through digital financial services in Russia

Mikhail Mamuta and John Owens

AFI and the Central Bank of Russia workshop “Digital Financial Services: Promoting Financial Inclusion” panel is pictured in Moscow in October 2014.

Learning from legislative and regulatory practices in countries which have successfully launched new digital financial service approaches, as well as maintaining an open dialogue with the private sector are essential for countries wishing to harness digital financial services to advance financial inclusion. This was the theme of the recent Alliance for Financial Inclusion (AFI) and Central Bank of Russia (CBR) workshop entitled “Digital Financial Services: Promoting Financial Inclusion” held in Moscow in October 2014.

The workshop focused on these key issues:

  • Digital financial service trends in Russia and around the world;
  • The example of M-Pesa in Kenya and Romania to support digital financial services;
  • Risk mitigation and management for digital financial services;
  • Which players are ready to offer digital financial services in Russia? How to handle consumer protection issues.

The participants included representatives from both domestic and international private sector players, such as the QIWI bank, MTS, GSMA, Vodafone, Ericsson, the E-Money Association of Russia, the ADELA Financial Retail Group, Money Man, and Zaimo.  The Association of Russian Banks as well as senior representatives from the CBR, the Central Bank of Kenya and the Russian State Duma (Parliament) also took part.

Both from a global peer learning and from a public-private dialogue perspective, this seminar was a great example for Russia and other countries to learn from. For many of the participants, it was the first time to hear about successful examples from other countries that are implementing digital financial service solutions to address financial inclusion, most notably from Kenya. In terms of e-money and payment kiosks, Russia offers a leading example of providing a unique form of branchless banking services. At the same time, it was clear that Russia could learn from other countries, especially with regard to harnessing the mobile channel to provide financial services. A lesser known lesson from Kenya that really helped to lay the foundation that ultimately led to the digital financial inclusion success in the country was the fact that they had early on adopted the UN guidelines on electronic signatures and on electronic receipts which were important factors that made the adoption of remote account opening and mobile payments a reality. Requiring people to come in to physically sign for a bank account or to require paper receipts for transactions are definitely issues that still need to be addressed in order to fast track the use of digital technology to support financial inclusion in markets like Russia.

Central Bank of Russia First Deputy Governor Sergey Shvetsov.

Central Bank of Russia First Deputy Governor Sergey Shvetsov.

From a risk mitigation and management perspective, it was clear that CBR is keenly aware of cyber crime and digital fraud. New developments in mobile technologies, especially linked to tokenization and biometrics, can in fact make mobile payment solutions much more secure than traditional credit/debit card services as well as online banking. Consumer protection from both a regulatory and the private sector perspective were also discussed and the relevance of the recent AFI guideline note “Mobile Financial Services: Consumer Protection in MFS” were useful for all the participants attending the event.

The seminar helped to consolidate different actors working toward digital financial inclusion development in Russia. The private sector, including banks, microfinance players and mobile network operators, gained a better understanding about the importance of cooperation and interoperability to provide better services to existing as well as new financial service customers.

Based on the positive feedback and the results of the seminar, CBR Governor Elvira S. Nabiullina has now approved the development of a three-year road map for the growth of digital financial services in Russia that will coordinate and improve the regulatory and supervisory aspects of new digital financial service providers and their services. A regional peer learning initiative that will incorporate knowledge exchange and cross-border cooperation on digital financial services in the Europe and Central Asia region may be one of the next steps that Russia and others in the region can work on to both learn from global as well as regional experiences. Regional knowledge exchange that can assist in coordinating digital financial service policies and regulations can also play a key role in supporting important cross border payments, something that is seen as essential in lowering the cost and supporting more accessible remittances as well as support for trade opportunities for SMEs in the region.

Part Two
Part Three
Part Four

Mikhail Mamuta is the Head of Directorate General on Microfinance and Financial Inclusion at the Central Bank of Russia and the Chair of the Alliance for Financial Inclusion Digital Financial Services Working Group.

John Owens is a Senior Policy Advisor at the Alliance for Financial Inclusion. Follow him on Twitter: @jvowens

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