DigitalFinancialServices_SK Mishrcvva.pdf
- 1. SK Mishra, Principal Advisor (F&EA), TRAI
- 2. Digital Financial Services The broad range of financial services accessed and delivered through digital channels, including payments, credit, savings, remittances and insurance. The digital financial services (DFS) concept includes mobile financial services (MFS). In this context, the term “digital channels” refers to the internet, mobile phones (both smart phones and digital feature phones), ATMs, POS terminals, NFC-enabled devices, chips, electronically enabled cards, biometric devices, tablets, phablets and any other digital system. DFS models usually employ agents and the networks of other third-party intermediaries to improve accessibility and lower the overall service delivery cost.
- 3. Mobile financial services The use of a mobile phone to access financial services and execute financial transactions. This includes both transactional services, such as transferring funds to make a mobile payment, and non-transactional services, such as viewing financial information. Mobile financial services include mobile banking (M-Banking), mobile payments (m-payments), mobile money, mobile insurance, mobile credit and mobile savings.
- 4. Expands the delivery of basic financial services to the poor through innovative technologies like mobile-phone-enabled solutions, electronic money models and digital payment platforms. Drastically drives down costs for customers and service providers, opening the door to remote and underserved populations. Information and communication technologies (ICTs) form the backbone of today’s digital economy Financial regulators around the world have realized the tremendous role DFS can play for financial inclusion and seek to unlock this potential by creating enabling environments for digital financial services. Why DFS
- 5. Interoperability Technology impact on ecosystem Regulatory Dialogue Consumer Risks Security Issues User Friendly Critical Success Factors
- 6. Central Banks /Banking Regulator ICT and other Regulators Mobile Money Operators Payment Service Providers DFS Platform Providers Standards Development Bodies Banks Governments/Public Policy makers Customers
- 7. Effective and regular coordination and interactions; sharing of knowledge, experience, and resources; exploration of synergies; identification of possible regulatory overlaps; and development of means of collaborative approaches to policy and regulations. Moreover, there is also a need for enhancing collaboration between national government agencies , and regional and global organizations
- 8. Creating an enabling environment that encourages viability for the market participants in a market led approach, while staying focussed on the end objective of financial inclusion for all. Driving a balanced approach between Anti Money Laundering/ Terrorist Financing versus consumer convenience around Know Your Customer (KYC) norms and processes. State, regulators and central banks have a vital role in making financial inclusion pervasive and viable. Major challenges to be addressed are :-
- 9. Ensuring a level playing field across the multiple and very diverse market participants. Striving for consumer protection and safety. Driving interoperability between players, systems and technologies. Promoting a market driven (a) balancing of demand and supply and (b) product pricing, but suitably intervening, if required. In other words- a light touch regulation
- 10. Digital financial services involve a range of technologies and market factors, and thus regulatory issues relating to the fields of telecommunications, financial and competition. This is not surprising, as the subject concerns financial services provided by competing financial services providers over telecommunications networks operated by competing MNOs, and where the MNOs are sometimes also the financial services providers. As a result, sometimes these fields are tightly interlinked, as is the case where network effects in telecommunications markets and in financial markets reinforce one another and prevent competition
- 11. The financial regulators and TRAI- the ICT regulator as well as the Government of India, act in tandem, proactively to facilitate promotion of DFS to take the banking and other financial services to the poor and ensure financial inclusion. Aadhar –Digital Identity solution USSD based mobile financial solutions Direct Carrier Billing/Mobile wallets/Payment banks JAM Trinity (Janadhan, Aadhar, Mobile) Less cash society