Advancing Inclusive Policy Frameworks
This panel, convened at the Singapore FinTech Festival 2024, focused on the evolving landscape of inclusive financial policies, highlighting the role of digital finance in expanding financial access, while addressing the challenges and risks associated with its growth. Key topics included the importance of ensuring sustainable inclusion, managing risks such as over-indebtedness and cyber threats, and the role of education and regulation in promoting responsible financial practices.
1. Building inclusive financial systems:
- Effective policies must focus on increasing digital access and inclusion for all sectors, especially vulnerable groups such as SMEs and individuals in underserved areas. This requires developing robust digital infrastructures and payment systems that cater to diverse needs, with a focus on affordability and accessibility.
- A central part of inclusive financial policy is ensuring that the digital transition is accompanied by educational initiatives that improve financial literacy. By integrating these policies into education systems, societies can build a more financially literate population, which helps people make informed decisions in a digital-first world.
2. Managing risks of over-indebtedness and financial health
- While financial inclusion has expanded access to credit, there is an increased risk of over-indebtedness. Policies must ensure that financial services are not just accessible but also sustainable. This includes implementing responsible lending regulations that focus on affordability and protecting consumers from falling into debt traps.
- In addition to responsible lending, developing systems for credit scoring based on digital footprints can provide a way to evaluate risk more accurately and ensure that consumers can borrow within their means.
3. Cybersecurity and fraud prevention in inclusive finance
- As digital finance grows, so does the threat of cyber fraud. Policymakers must prioritise the development of comprehensive cybersecurity frameworks to protect consumers and financial institutions. This includes the creation of real-time fraud detection systems within financial networks and requiring financial institutions to enhance their own fraud prevention measures.
- Consumer education plays a crucial role in minimising fraud risks. Financial literacy initiatives must include information about digital security and how consumers can protect themselves from scams and cyber threats.
4. Collaborative efforts and regulatory frameworks
- Inclusive financial policies require coordinated efforts between policymakers, regulators, financial institutions, and fintechs. By working together, these entities can create a secure and accessible digital finance ecosystem.
- Central banks must integrate fintech solutions into their regulatory frameworks, ensuring that innovation does not outpace necessary safeguards.
- Ongoing collaboration is essential to create policies that address both the opportunities and challenges presented by digital finance, ensuring that growth in financial inclusion is matched with responsible and secure financial practices.
Inclusive financial policies must go beyond expanding access to ensure that the benefits of financial inclusion are sustainable and equitable. This involves building digital infrastructures, regulating responsible lending, protecting consumers from fraud, and integrating financial literacy into education. By addressing these challenges, we can create a financial system that is not only inclusive but also resilient and secure for all.
Speakers:
- Barnabás Virág, Deputy Governor, Central Bank of Hungary
- Dr. Daranee Saeju, Assistant Governor, Bank of Thailand
- Dr. Maxwell Opoku-Afari, Deputy Governor, Bank of Ghana
Moderator:
- Foo Chek-Tchung, Executive Director, Public Policy, Global Finance & Technology Network (GFTN)