Thursday, June 27, 2019 /04:30PM / By Tobias Adrian and Ceyla Pazarbasioglu, IMFBlog /
Header Image Credit: LISA DUCRET/DPA/PICTURE-ALLIANCE/NEWSCOM
From artificial intelligence to mobile applications, technology helps to increase your access to secure and efficient financial products and services.
Since fintech offers the chance to boost economic growth and expand financial inclusion in all countries, the IMF and World Bank surveyed central banks, finance ministries, and other relevant agencies in 189 countries on a range of topics and received 96 responses.
A new paper details the results of the survey alongside findings from other regional studies, and also identifies areas for international cooperation—including roles for the IMF and World Bank—and in which further work is needed by governments, international organizations, and standard-setting bodies.
Foremost in all countries’ minds is cybersecurity.
Some
interesting and startling trends emerged in the survey: foremost in all
countries’ minds is cybersecurity.
Awareness of cyber risks is high across countries and most jurisdictions have frameworks in place to protect financial systems. Most jurisdictions—79% of those with higher incomes according to the survey results—identified cyber risks in fintech as a problem for the financial sector.
But
evidence from the survey suggests that only a third of jurisdictions have
analyzed the technological interdependencies between networks, systems, or
processes within the financial sector or looked at concentration risks among
big technology providers that could threaten financial infrastructure. A high
proportion—83 percent of high-income countries—report some monitoring of cyber
risks related to third-party service providers, but only half of lower-income
jurisdictions have specified minimum requirements.
In China, the massive scale of its markets and a regulatory “light touch” in the early years supported fintech development, with China emerging as a global leader. In India, large-scale adoption of mobile payments and increase in money transfers have driven growth in the mobile payments.
But
the region’s use of fintech exhibits large gaps between the rich and poor, men
and women, and rural and urban areas.
The
region leads the world in mobile money accounts per capita (both registered and
active accounts), mobile money outlets, and volume of mobile money
transactions. Close to 10 percent of GDP in transactions are occurring through
mobile money, compared with just 7 percent of GDP in Asia and less than 2
percent of GDP in other regions. Across Africa, the adoption and use of
technology in the provision of financial services is changing the way in which
financial service providers operate and deliver products and services to their
customers.
Given
high mobile phone and internet access, the potential is high for fintech to
improve access to, and usage of, payments and other financial services in
Europe. The modernization of the EU’s data policy frameworks has helped to
clarify rights and obligations in the data economy, which is an issue that many
countries must address. However, there are important regional differences in
the adoption of digital finance, the prevalence of cash-based payments, account
ownership and usage, and savings and credit in the region. For example, a
considerable gap also exists between the United Kingdom and the rest of
Europe—that country being significantly ahead of the rest of Europe both in
terms of fintech innovation and investment.
The
survey reveals wide-ranging views of countries on central bank digital
currencies. About 20 percent of respondents said they are exploring the
possibility of issuing such currencies. But even then, work is in early stages;
only four pilots were reported. The main reasons cited in favor of issuing
digital currencies are lowering costs, increasing efficiency of monetary policy
implementation, countering competition from cryptocurrencies, ensuring
contestability of the payment market, and offering a risk-free payment
instrument to the public.
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