## sfapicea ## Source details **Canonical URL:** [sfapicea](https://www.imf.org/-/media/files/publications/dp/2019/english/sfapicea.pdf) ## Other formats - [Markdown version](/-/media/files/publications/dp/2019/english/sfapicea.pdf.md) - [Structured JSON version](/-/media/files/publications/dp/2019/english/sfapicea.pdf.json) --- ### Executive Summary — Overview, Benefits, and Strategic Priorities - Purpose: provide policymakers with actionable ideas on leveraging fintech to enhance financial inclusion and stem weakening correspondent banking relationships. - Draws on: the Bali Fintech Agenda (IMF and World Bank 2018) and IMF research on financial inclusion (Loukoianova and others 2018). - Potential benefits: - Alleviate structural impediments: geographic remoteness and dispersion, small scale, limited infrastructure, fragile correspondent banking relationships. - Complement efforts to: promote financial inclusion; enhance financial sector development; increase inclusive growth potential; reduce poverty. - Boost macroeconomic resilience and support the United Nations 2030 Agenda for Sustainable Development by increasing access to finance and insurance. - Four priority fintech application areas: - Innovative payment systems; - Identification requirements; - Credit sharing information; - Risk assessment and management. - Preconditions for sustainable adoption: - Robust general and information technology infrastructure; - Reliable electricity, internet, and cellular network coverage; - An enabling market environment and a sound regulatory framework. - Regional approach recommended through: - an innovation hub or a sandbox; - technological platforms; - regional networks; - collaboration and knowledge sharing. - Policy emphasis: follow the Bali Fintech Agenda’s elements, notably to: 1. Embrace fintech for low-income countries, small states, and the underserved. 2. Enable foundational infrastructures and favorable policy environments. 3. Foster fintech to improve inclusion and market development. 4. Safeguard financial integrity and AML/CFT compliance. 5. Modernize legal frameworks for clarity on fintech activities. - Implementation emphasis: - Integrate fintech into national/regional financial inclusion strategies covering the entire population and bridging the digital divide (women, low-income households, remote communities). - Evaluate technologies with development partners before implementation. - Consider a regional regulatory sandbox and innovation hub to test and scale viable digital financial products and services. ### Introduction — Current Landscape, Connectivity, and Infrastructure Needs - Financial structure and inclusion: - Financial systems often dominated by a small number of banks. - Access to technology is low but growing fast; low digital and financial literacy hamper demand-side inclusion. - 2016 digital access snapshot: - Approximately 75 mobile phone subscriptions for every 100 people. - 30 percent of the population on average had access to the internet. - Internet access examples: Fiji and Tonga had 50 percent; Papua New Guinea had 9.6 percent. - Samoa: internet access rose from 7 to 29 percent during 2010–16. - Subscriber penetration grew from 17 to 40 percent during 2008–14. - Mobile penetration: Fiji and Samoa >65 percent; Micronesia and Kiribati <17 percent. - Connectivity revolution drivers: - Roughly 99 percent of global internet traffic goes through undersea fiber-optic cables. - All but one of the 8 out of 10 countries without cable internet access in 2014 were in the Pacific; all but one are expected to establish a connection by 2020. - Palau: cost of a cable project represents over 8 percent of GDP. - Key infrastructure prerequisites: - Continuous reliable electricity; off-grid areas may require solar-charging and portable solar-enabled payment devices. - Broadband connectivity (3G/4G/5G) for advanced smartphone fintech; 2G and USSD remain important. - Example costs/notes: 20 kiosks ≈ US$30,000; private blockchain solutions can operate on 2G networks (example: IDbox). - Role of cable and satellite: - Submarine fiber-optic cables facilitate inclusion; satellite remains important for remote areas and contingency (example: Tonga cable outage in January 2019 left the country without internet for at least three days). - Policymakers should balance cable vs satellite investments by bandwidth needs and reliability. ### Fintech Applications — Payments, Identity, Credit, and Market Models - Payments and settlements: - Cash in circulation in Pacific island countries is 80 percent of GDP and has remained constant since the early 2000s. - Digital retail, interbank, and international payments can reduce transaction costs and travel needs for citizens and government. - Mobile money and mobile payments: - Mobile money monetizes prepaid phone credit, relies on SIM identification and cell phone ubiquity, and can extend to virtual savings and short-term credit (example: M-Pesa → M-Shwari). - Fiji: nearly 1.2 million mobile money transactions in 2017, representing 0.8 percent of GDP, with average year-over-year growth in number of transactions exceeding 150 percent between 2014 and 2017. - Tonga and Samoa: total value transacted reached 2.8 and 1.1 percent of GDP, respectively. - Mobile payments combine smartphone apps with bank accounts; SIM and QR-code identification reduce hardware costs. - Interbank and regional payment systems: - Benefits of regional integration: digitized clearing reduces transaction times; reduces correspondent-bank settlement costs and risks; common protocol eases regional innovation and AML/CFT harmonization. - World Bank’s PAPRI aims to develop a multifunctional payment utility rolled out to Samoa, Solomon Islands, Tonga, and Vanuatu (under development). - Impediment: need for payment system legislation in all participating jurisdictions. - Cross-border payments and remittances: - International remittances average about 10 percent of GDP in the Pacific. - Country examples: Tonga >30 percent of GDP in remittances; Samoa >15 percent of GDP in remittances. - High remittance costs reflect AML/CFT compliance expenses and small transaction sizes. - Fintech opportunities: digital identification, digitization, and distributed ledger technology can reduce costs and improve verification; caution advised due to cyber risks and early-stage blockchain maturity. - Identity verification and KYC: - About 20 percent of the Pacific population is unregistered (WBG 2017a). - Digital IDs, supported by domestic legislation and good design, can facilitate identification and inclusion. - Regional KYC utility: consider early cost-benefit analysis and donor support; follow World Bank guiding principles emphasizing inclusion, secure identification, and governance. - Examples/pilots: Aadhaar (India, ~1.2 billion users); Papua New Guinea’s IDbox pilot; Samoa biometric integration; decentralized KYC concepts (example: CordaKYC). - Credit information and alternative data: - Credit registries are absent or underdeveloped; lack of data constrains lending and increases nonperforming loan risk. - Alternative data sources: mobile phone and utility payment records, tax registries, mobile money history, digital footprints, psychometric data (use cautiously). - Digital-credit examples: Konfio, Capital Float, Tala, MicroMoney. - Policy design: develop fintech-enabled registries/bureaus, allow secure sharing of digitized consumer data, protect consumers against breaches and misuse, consider PSD2/GDPR frameworks where relevant. ### Regulatory, Market, and Capacity Recommendations - Regulatory approaches: - Consider regulatory and industry sandboxes, innovation hubs, or special flexible legislation for controlled, time-bound testing under regulator oversight. - Sandboxes can help identify regulatory gaps but are resource intensive and voluntary; some regulatory questions may be solved without live testing. - Innovation hubs/offices provide nonbinding guidance and facilitate cooperation; success factors include executive support and staff technical competency. - Capacity building: - Build fintech skills among regulators via knowledge exchange, innovation hubs, and global networks (example: Global Financial Innovation Network). - Association of Financial Supervisors of Pacific Countries (AFSPC) could drive capacity building, collaboration models, training curricula, and act as a single counterparty on regional correspondent banking issues. - Market and competition policy: - Foster incentives, universal access to IT/infrastructure, collaboration models, and joint investment structures to lower entry barriers and avoid market concentration. - Trust legislation can enable bank–MNO collaboration for transfer payments routed through the banking system. - Demand-side measures: - Include digital and financial literacy in national/regional financial inclusion strategies. - Consider monetary incentives for active users and participating merchants to drive adoption. - Subsidize internet access or set up internet hubs for low-income households; integrate basic finance/digital education into school curricula. - Technology design and interoperability: - Build identity and payment systems on open standards with system-designed controls and privacy protections. - Design interoperable platforms to increase efficiency, reduce barriers to entry, and create critical mass for innovations. - Consider a regional know-your-customer facility supported by Australia and New Zealand. ### Risks, Constraints, and Mitigation Strategies - Infrastructure constraints: - Uneven electricity and connectivity; many Pacific countries require capital investment for reliable infrastructure. - Recommend satellite backup for remote areas and contingency for cable outages; adopt metrics for availability, quality, pricing. - Diversify energy sources (solar, tidal, wind) to ensure continuous supply and meet climate goals. - Cybersecurity and data protection: - Cybersecurity, data protection/privacy, and fraud are top risks (PIRI 2018 survey results). - API and cloud use introduce cyber risks; biometrics pose irrevocable-data risks. - Mitigation: require system-designed transparency and data governance controls; integrate AML/CFT into digital products; build regulatory oversight and technical capacity; pursue regional cooperation and development partner assistance. - Operational risks: - Power outages, lack of interoperability, single-platform single points of failure, skills gaps, and algorithmic bias. - Mitigation: backup systems and incident response plans; alternative power sources; interoperable and open-source platforms; third-party liability clauses in contracts; partner with universities or skilled partners. - Market risks: - Unequal access distorts competition, risk of concentration, high cost of entry/maintenance, low digital literacy, and risk of overindebtedness. - Example metric: 14 percent of digital borrowers were repaying multiple digital loans at the time of a cited survey (Figure 12). - Policy responses: promote competition, standardization, interoperability, equal infrastructure access, and collaborative business models. ### Conclusions and Implementation Roadmap - Strategic conclusions: - Pacific island countries can leapfrog into fintech to support inclusion and growth if they select feasible, commercially viable technologies and mitigate risks. - Fintech should be integral to national financial inclusion strategies and paired with public-private efforts to enhance literacy and adoption. - Digital IDs and mobile/digital payment systems can increase transparency, efficiency, and access to government services when backed by legal frameworks. - Near-term steps: - Conduct feasibility study for a regional regulatory sandbox and/or innovation hub. - Facilitate creation of robust interoperable technological platforms for banks, MNOs, and other institutions. - Establish a full-time, cross-functional team across government and regulatory agencies to monitor initiatives from the sandbox/hub. - Create a supervisory and oversight framework balancing risks and efficiency. - Build networks with development partners, standard-setting bodies, and supervisors; develop competition legislation and a financial/digital literacy strategy. - Medium-term goals: - Ensure reliable electricity, internet, and cellular coverage. - Focus on simple, affordable retail payment applications. - Establish favorable market incentives and build capacity via regional universities, associations, research institutions, and development partners. - Technology characteristics to consider: - Feature phones on 2G expected to represent over 50 percent of connections in 2020 (GSMA 2015). - USSD remains a critical enabler for mobile payments. - Smartphones enable NFC, Bluetooth, and mobile wallets; biometric identity, AI/ML, APIs, cloud architectures, and distributed ledger technology each bring trade-offs in security, scalability, and control. - Case study highlight — Papua New Guinea pilots: - Population context: about 8 million, 72 percent rural or remote; 65 percent of population unbanked; 80 percent off-grid; >75 percent use SMS-capable phones. - IDbox pilot: solar-powered biometric device with private blockchain—viable design but scalability and transaction-speed limitations; reliance on a single maintainer was a major risk. - Digital Access Rights tool: NFC-based prototype piloted with further trials expected through the end of 2019. - Infrastructure and legislative timelines noted for submarine cables and payments modernization across Pacific countries (examples and years listed in source materials). ### Appendix 3 — Existing Efforts, Constraints, and Priority Actions - Selected applications in the region: - Mobile money, e-wallets, fintech for utility bill payments, mobile insurance, digital identity pilots (e.g., IDbox, Digital Access Rights). - Ecosystem actors: - Demand: government, financial providers (incl. non-banks), underserved populations, merchants, mobile devices/apps, tech firms, MNOs. - Supply: MNO infrastructure, DFS systems. - Constraints: electric grid, remoteness costs, lack of incentives and regulatory frameworks, affordability, digital/financial literacy, credit history, technical skills, interoperability, commercial viability, identity verification. - Enablers: innovation incubation, regulatory sandboxes, access to data, regional public/private coordination, capital (VC, IFIs), interoperability, collaboration between banks/MTOs/MNOs, fintech talent development, customer trust. - Key priority actions: - Build resilient enabling infrastructure (electricity, telecommunications). - Promote technological adoption via interoperability and merchant participation; implement simple, affordable retail payment systems. - Share knowledge and collaborate regionally; build capacity through training; improve financial and digital literacy; develop fintech talent; increase access to financially relevant data. *Source: Executive Summary, Strategy for Fintech Applications in the Pacific Island Countries* ### Executive Summary ������������������������������������������������������������������������������������������������������ ### Executive Summary ### Overview and purpose - The spread of innovative financial technologies (fintech) has been progressing rapidly, introducing opportunities for Pacific island countries. - Objective: provide policymakers with actionable ideas on leveraging fintech solutions to enhance financial inclusion and stem the weakening of correspondent banking relationships. - The paper draws on the Bali Fintech Agenda (IMF and World Bank 2018) and IMF research on financial inclusion (Loukoianova and others 2018). - The paper responds to the Samoa Commitment for the Pacific Islands by providing background analysis and a potential action plan to leverage information technology to support development and financial inclusion. ### Potential benefits of fintech for Pacific island countries - Fintech could alleviate structural impediments and persistent challenges, including geographic remoteness and dispersion, small scale, limited infrastructure, and fragile correspondent banking relationships. - Fintech solutions can complement existing efforts to: - promote financial inclusion; - enhance financial sector development; - increase inclusive growth potential; and - reduce poverty. - Innovative technologies can boost macroeconomic resilience and help achieve the United Nations 2030 Agenda for Sustainable Development by increasing access to finance and insurance for households and small businesses. ### Four priority areas for fintech applications - The paper identifies four areas that can support efforts to expand financial inclusion: - Innovative payment systems; - Identification requirements; - Credit sharing information; and - Risk assessment and management. ### Preconditions for sustainable adoption - Necessary preconditions include: - a robust general and information technology infrastructure; - reliable electricity, internet, and cellular network coverage across countries; - an enabling market environment; and - a sound regulatory framework. - Physical infrastructure may benefit from public-private partnerships to absorb costs. - Countries should consider costs and risks when selecting technologies that are feasible and commercially viable. - Sustainable adoption requires policymakers to: - provide a favorable market and regulatory infrastructure; - promote a level playing field and encourage collaboration among market participants; - identify and close regulatory gaps; and - enhance financial and digital literacy. ### Regional approach and cooperation - A regional approach could help overcome capacity and scalability constraints through: - an innovation hub or a sandbox; - technological platforms; - regional networks; and - collaboration and knowledge sharing. - Digital platforms can accelerate adoption of a regional know-your-customer facility and regionally linked payment and settlement arrangements as outlined under the Samoa Commitment. - Effective collaboration with development partners, including the IMF, provides opportunities to benefit from knowledge exchange and the experience of peers. ### Policy guidance from the Bali Fintech Agenda emphasized - The Bali Fintech Agenda proposes 12 elements policymakers should consider and is particularly relevant given its emphasis on regional and international cooperation to: 1. Embrace the promise of fintech, particularly in low-income countries, small states, and for the underserved. 2. Enable new technologies by facilitating foundational infrastructures, fostering open and affordable access, and ensuring a favorable policy environment. 3. Foster fintech to promote financial inclusion and develop financial markets by overcoming challenges related to reach, customer information, and commercial viability, and by improving infrastructure. 4. Safeguard the integrity of financial systems by identifying, understanding, and mitigating the risks of criminal misuse of fintech, and by using technologies to strengthen compliance with AML/CFT measures. 5. Modernize legal frameworks to provide clarity and certainty regarding key legal aspects of fintech activities. ### Strategic recommendations and implementation emphasis - Fintech solutions should be part of a national or regional financial inclusion strategy that: - covers the entire population; - bridges the digital divide, especially for women, low-income households, and geographically remote communities. - Countries should evaluate new technologies with development partners before implementation to ensure sustainable adoption and to assess risks. - A regional regulatory sandbox and innovation hub could help policymakers and regulators maximize technology benefits while mitigating potential risks and assessing viability of digital financial products and services. *Source: Executive Summary, Strategy for Fintech Applications in the Pacific Island Countries* ### Introduction ### Introduction ### Overview of financial development and inclusion - The financial system in Pacific island countries is typically dominated by a small number of banks. - All countries in the region need to improve financial inclusion; access to technology is low but growing fast. - Low digital and financial literacy in the Pacific hamper financial inclusion on the demand side and may respond well to both technological and nontechnological solutions. - In 2016: - Approximately 75 mobile phone subscriptions for every 100 people. - 30 percent of the population on average had access to the internet. - Internet access differed across Pacific island countries: Fiji and Tonga had 50 percent internet access, while Papua New Guinea had 9.6 percent. - Samoa: share of the population with internet access increased from 7 to 29 percent during 2010–16. - Subscriber penetration rate in Pacific island countries grew from 17 to 40 percent during 2008–14. - Mobile penetration examples: - Fiji and Samoa: penetration rate of more than 65 percent. - Micronesia and Kiribati: penetration rate still below 17 percent. - Despite slow progress, the Pacific is on the cusp of a connectivity revolution driven by submarine cable installation and moves from satellite to cable connections. - Roughly 99 percent of global internet traffic goes through undersea fiber-optic cables. - All but one of the 8 out of 10 countries without cable internet access in 2014 were in the Pacific; all but one are expected to establish a connection by 2020. - In Palau the cost of the cable project represents over 8 percent of GDP. ### Technological and general infrastructure requirements - Key infrastructure prerequisites: - Continuous and reliable access to electricity; off-grid areas may require solar-charging solutions and portable solar-enabled payment devices. - Broadband connectivity (3G/4G/5G) for more sophisticated smartphone-enabled fintech applications; 2G-based services and USSD-enabled payment applications remain important in many countries. - Examples and cost notes: - The cost of 20 kiosks runs about US$30,000. - Private blockchain solutions can operate on 2G networks (example: IDbox). - Role of cable and satellite: - Submarine fiber-optic cables will facilitate fintech inclusion; higher-generation broadband developing rapidly in Kiribati, Solomon Islands, Tuvalu, and Vanuatu. - Satellite remains important for remote areas without a viable cable business case and as contingency for cable outages (example: Tonga cable outage in January 2019 left the country without internet for at least three days before satellite connections were established). - Policymakers should balance investments in cable and satellite according to bandwidth needs in high-density areas and satellite reliability in remote areas or as backup. - Table 1 (territories without Fiber Optic Internet) notes (as listed in the source): - Pacific: Timor-L’Este (under discussion); Solomon Islands (2019:Q4); Kiribati (end-2019); Cook Islands (2019); Nauru (end-2019); Tuvalu (2022); Norfolk Island; Niue (2019); Tokelau (2020); Pitcairn Islands. - Rest of the World: Eritrea; Western Sahara; Saint Helena (2020); Falkland Islands; Ascension Island; Antarctica; Cocos Islands; South Georgia & Sandwich Islands. ### How technology can enhance financial systems - Mobile network operators (MNOs) are well suited for high-volume, low-cost transactions because their business model does not require physical bank branches and ATMs. - Complementary relationships: - MNOs can help banks serve markets they might otherwise exit. - Banks provide established financial infrastructure, lending channels, and market intelligence that benefit MNOs. - Collaboration could catalyze knowledge sharing, technology-induced efficiency gains, overcome capacity constraints, improve regulatory compliance, and safeguard asset quality. - Higher-bandwidth networks would enable governments and banks to harness: - Tax collection improvements, government transfers, trade financing, land registries, biometric identification, big-data credit assessment, and blockchain-enabled mobile wallets. - 2G connectivity, despite limitations, can still be transformative for the unbanked through mobile and blockchain solutions adapted to low-bandwidth environments. ### Regulatory and market environment prerequisites - Sustainable technological adoption requires: - Adequate infrastructure. - A sound regulatory and market environment. - Effective collaboration among stakeholders (telecommunications companies, banks, financial supervisors, international development partners). - Regulatory quality varies across the Pacific: - Tuvalu has large gaps in financial institutions’ regulation and supervisory mechanisms. - Cook Islands’ supervisory framework achieved substantial results in its 2018 assessment according to Financial Action Task Force standards. - Flexible regulatory approaches recommended: - Regulatory and industry sandboxes, innovation hubs, or special flexible legislation to create controlled environments for live, time-bound testing under regulator oversight. - Such approaches could encourage regional harmonization of standards and leapfrogging into new technologies. - Example: Central Bank of Kenya and Communications Authority of Kenya adopted a “test-and-learn” approach combining sound regulation with innovation. - Capacity-building priorities: - Build skills and knowledge of fintech among regulators through knowledge exchange, innovation hubs, and coordination among regional and international standard-setting bodies. - The Association of Financial Supervisors of Pacific Countries (AFSPC) could drive capacity building, develop collaboration models and training curricula, and participate in global networks (example: Global Financial Innovation Network). - AFSPC could serve as a single counterparty for international banks on regional correspondent banking issues and explore technology solutions. ### Strategic framework and market recommendations - Digital strategies at the country level: - Should provide a blueprint for fintech-enabled payment solutions and reference required legislation and regulations for consumer and data privacy protection, AML/CFT, and bankruptcy. - Should provide an operating framework for banks, telecommunications companies, and MNOs and identify main beneficiaries (e.g., small businesses, citizens in remote areas). - Market and competition policies: - Policies and laws should foster the right incentive structures, guarantee universal access to information technology and infrastructure, and promote collaboration models. - Consider incentivizing joint investment structures to foster collaboration between entrants and incumbents (example: Safaricom’s investment in mobile networks aligned with M-Pesa expansion). - Trust legislation can enable collaboration between banks and MNOs to facilitate transfer payments through the banking system. - Demand-side incentives: - Policymakers and the private sector could offer monetary incentives for active users and participating stores/businesses to drive adoption (example reference: Licandro 2018). - Technology platforms and interoperability: - Develop identity and payment systems built on open standards with system-designed controls and privacy protection to build trust. - Consider a regional know-your-customer facility supported by Australia and New Zealand. - Technological platforms can define research priorities and action plans for fintech-enabled inclusion; development partners or public-private partnerships could secure capital investment for a regional platform with a fee-based structure to mobilize ongoing funding. - Platforms should be designed to be interoperable to increase efficiency, reduce barriers to entry, and generate the critical mass for new technologies. - Payment system roles: - Payment systems enabled by mobile networks and money transfer operators can play a critical role in providing digital financial services. *Source: "Introduction" from the provided IMF content unit.* ### Introduction ### Introduction ### Fintech and payment systems in Pacific island countries - Mobile network payment platforms are better suited to handle a high volume of low-value financial transactions (GSMA 2011). - Commercial banks in Pacific island countries focus on providing a low volume of high-value financial products and services, partly because of constrained lending capacity due to a lack of collateral and limited lending opportunities. - Money transfer operators could serve as payment kiosks or branches for mobile network operators. - Digital financial service providers such as mobile network operators or other technology companies can help build trust in digital financial services and catalyze an expanded role for the banking sector. - Example of a successful complementary model: M-Pesa’s collaborative relationship with traditional financial institutions, such as the relationship between commercial and microfinance banks and the telecom company Safaricom (Gupta and others 2017). ### Banking sector governance and risk management - The banking sector should: - develop effective governance structures; - establish information technology and other risk management procedures; - adapt its business model to the entry of telecommunications and mobile operators into the payment system. - Banks should adjust due diligence approaches and risk management strategies to identify, manage, and monitor risks associated with fintech solutions. - Third-party risk for services outsourced to telecommunications and mobile operators should be mitigated through contracts, service agreements, and audit rights. - Outsourced services should be held to the same control standards as internal operations (BIS 2018). ### Digital and financial literacy - Promoting digital and financial literacy of households would increase trust in technological solutions and build financial resilience. - Pacific regulators have identified low literacy and lack of trust as the main challenges to financial inclusion (Figure 4). - Actions and examples: - Include financial and digital literacy as a core element of national or regional financial inclusion strategies. - Use public-private partnerships to deliver literacy programs (example: Safaricom’s agent network in Kenya helped consumers resolve questions and taught customers how to use mobile money services) (GSMA 2011a). - India’s National Digital Literacy Scheme aims to improve people’s digital literacy skills and drive inclusion of rural communities in the global digital economy (NDLM 2016). - Solomon Islands planning to integrate basic financial and digital education into the core school curriculum (PFIP 2016). - Australia and New Zealand Banking Group deployed MoneyMinded, an online education program supporting adults in building money management skills. - To ensure equitable benefits of fintech adoption: - Assess coverage of adoption across public services. - Consider subsidizing internet access for low-income households or setting up internet hubs (A4AI 2018). - Incorporate vocational training and start-up funding options for local software and application development into employment strategies. - Promote start-ups through regional incubator approaches in collaboration with universities in Australia and New Zealand and the University of the South Pacific. - Seek bilateral and multilateral development partner support for seed money and employment and study exchange programs. - Anticipated outcomes: build trust in technology, develop a tech-savvy generation, and lay foundations for a stronger, more competitive, and technology-driven economy. - Figure 4. Challenges to Financial Inclusion (N = 7) - Rugged geography - Low literacy - Cultural issues - Lack of trust - Limited physical infra. - Limited digital infra. *Source: PIRI 2018 survey results.* ### Innovative regulatory approaches: innovation hubs, offices, and sandboxes - Innovation hubs and offices: - Offer a dedicated point of contact and support to digital financial service providers for fintech-related issues. - Provide nonbinding guidance on conformity of innovative financial products, services, and business models with licensing and registration requirements and supervisory expectations (ESAs 2018). - Can facilitate cooperation between regulators and innovators, enhance knowledge of technology-enabled financial inclusion, and reduce regulatory uncertainty (UNSGSA and CCAF 2019). - Establishment is relatively easy but requires staff technical capacity and early engagement with innovators. - Key success factors: secure executive support, build staff technical competency, define eligibility criteria aligned with strategic objectives, and engage the innovation community early (UNSGSA and CCAF 2019). - Partnering with universities and Samoan students in Australia and New Zealand could support these efforts. - Regulatory sandboxes: - Defined as voluntary regulatory programs where digital financial service providers can simulate and test innovative financial products, services, and business models in a controlled environment. - Benefits: enable regulators to address potential risks without stifling innovation; participants can develop cost-efficient market-ready products and help shape new legislation; regulators can identify regulatory gaps in a controlled setting (IMF 2017). - Limitations and costs: - Resource intensive to establish and maintain. - Determining eligibility criteria, exit strategies, and simplifying administrative procedures can be complex. - Need interested digital financial service providers; sandboxes are voluntary (UNCDF 2018). - Early lessons show many regulatory questions raised in sandboxes could be resolved without live testing environments; costs could outweigh benefits (UNSGSA and CCAF 2019). ### Feasibility assessment and institutional support - A feasibility assessment focused on capacity and strategic objectives would help Pacific island countries determine an adequate regulatory approach. - The feasibility study should include an actionable timeline and cost-benefit analysis to guide the fintech regulatory journey and distill associated resource implications. - Regulatory programs could be linked to a distinct financial inclusion objective in national strategies to allow better measurement and monitoring of program performance (UNCDF 2018). - Example goal: fintech applications serving populations in outer islands or remote areas. - High-level institutional support is needed for any innovative regulatory program: - Secure support from central bank governors and designate a full-time, cross-functional team from different government and regulatory agencies. - This group should lead the feasibility assessment and encourage growth of fintech associations and regional networks. - Activities could include organizing fintech challenges and competitions in partnership with development agencies, private sector participants, and universities in Australia and New Zealand. *Source: PIRI 2018 survey results.* ### Introduction ### Introduction ### Payments and Settlements - The Pacific region has deficiencies in its cash-dominated payment infrastructure that can be alleviated through the adoption of improved financial technology. - Digital retail, interbank, and international payments would reduce transaction costs for households, businesses, and the government, particularly costs associated with traveling between islands to physically make payments. - Cash in circulation in Pacific island countries is 80 percent of GDP, slightly higher than the world average, and has remained constant at this level since the early 2000s. - Survey-based data indicate most people in the Pacific use cash for most transactions (PIRI 2017), followed by paper checks for larger transactions. - Face-to-face cash transactions and checks are a substantial impediment to commerce in a geographically dispersed region; government transfers, salaries, and tax payments often require travel to the capital. ### Fintech Solutions for the Pacific — Overview - Technological models that could improve payment system efficiency include: - Mobile money - Mobile payments - Modernizations of interbank settlement systems - Regional solutions - Blockchain applications for international remittances - These models should be designed to withstand risks, including those related to financial integrity and fraud, with effective AML/CFT and consumer protection measures. ### Mobile Money - Mobile money monetizes prepaid phone credit, allowing instant transfers driven by relatively simple technology; it relies on SIM identification and near ubiquity of cell phone access. - Mobile money has scaled rapidly in some emerging markets (example evidence noted in text). - Mobile money can extend beyond transfers to virtual savings and short-term credit (example: M-Pesa → M-Shwari). - M-Shwari uses a tiered risk-based KYC system with multiple identity-verification mechanisms using Safaricom records and official government registries. - Use cases in the Pacific: - Fiji: nearly 1.2 million mobile money transactions in 2017, representing 0.8 percent of GDP, with average year-over-year growth in number of transactions exceeding 150 percent between 2014 and 2017. - Tonga and Samoa: total value transacted reached 2.8 and 1.1 percent of GDP, respectively. ### Mobile Payments - Mobile payments use bank accounts to complete transfers (prominent in China), combining smartphone technology with conventional bank accounts. - Identification via SIM cards and QR-code scanning permit merchant acceptance with low hardware costs. - Online money transfer services (example structure similar to Paypal) create platforms for initiating financial transfers previously requiring in-person bank visits. ### Interbank Payments - The traditional interbank payment system in the Pacific typically uses correspondent banks; some check settlement services are manual or central-bank organized. - National-level formal payment systems exist (examples in text: FIJI-CLEAR, KATS). - Benefits of a regionally integrated payment system: - Digitizing clearing reduces transaction times. - Minimizing correspondent-bank settlements lowers costs and correspondent-banking risks. - A common protocol eases integration of innovations across the region and supports common AML/CFT standards for remittances. - A regionally integrated system could enable a low-cost, efficient real-time gross settlement system. - The World Bank’s Pacific Payments, Remittances and Securities Settlement Initiative (PAPRI) aims to develop a multifunctional payment utility to act as both an automated transfer system and a central securities depository, rolled out to Samoa, the Solomon Islands, Tonga, and Vanuatu (under development). - Impediments to regional approaches include the need for payment system legislation in all participating jurisdictions. ### Cross-Border Payments and Remittances - International remittances average about 10 percent of GDP in the Pacific region. - For some countries remittances are especially critical: - Tonga: more than 30 percent of GDP in remittances - Samoa: more than 15 percent of GDP in remittances - Perceived high remittance costs in the Pacific stem in part from expensive AML/CFT compliance and small transaction sizes. - AML/CFT compliance needs include identity verification, monitoring suspicious transactions, and reporting; small money transfer operators face high compliance costs that may be passed to customers or force exit. - Challenges: - Formal identification is not always available. - Bank accounts are often used by several people. - AML/CFT legal frameworks can be deficient; financial intelligence units’ analysis capacity is often underdeveloped; AML/CFT supervisory frameworks still have frequent significant gaps. - Correspondent banks charge more for payments to the region or withdraw from remittance business. - Fintech opportunities: - Greater use of digital identification and digitalization can improve identity verification, record keeping, verification, and tracking. - Distributed ledger technology can “disintermediate” payment processes, lowering costs related to traditional intermediaries. - Examples cited: Circle (blockchain-based person-to-person cross-border payments without commission or FX surcharges), Abra and Coins.ph (crypto-asset wallets in the Philippines), Mojaloop (open-source mobile payment platform by the Bill and Melinda Gates Foundation). - Caution: blockchain is early-stage; policymakers should weigh benefits against cyber risks and ensure financial integrity is mitigated. ### Identity Verification Requirements - AML/CFT requires adequate identification of customers and beneficiaries; about 20 percent of the Pacific population is unregistered (WBG 2017a). - Digital IDs, if supported by domestic legislation and good design, can facilitate customer identification and increase financial inclusion. - A regional know-your-customer (KYC) utility could be considered subject to an early cost-benefit analysis and donor support; World Bank guiding principles (WBG 2016) emphasize inclusion, robust secure identification, and sound governance. - Identification/authentication technologies and pilots: - Aadhaar (India): encrypted databases and biometric verification (fingerprints and iris scans), used by about 1.2 billion people. - Papua New Guinea: experimented with blockchain and cell phones via IDbox (low-cost solar-powered device recording/encrypting personal identification via fingerprints and mobile numbers); scalability concerns led to exploring Near Field Communication solutions. - Samoa: biometric identity data to be integrated into a decentralized platform with a native biometric identity system and payment solution with a multicurrency wallet; partner remittance institutions can electronically ascertain customer identity. - Decentralized KYC utilities (blockchain-based) can allow easier access to customer credit information and operational efficiencies (example: CordaKYC). - Even with decentralized KYC, banks and financial service providers must still ensure compliance with AML/CFT obligations. ### Credit Scoring and Information Sharing - Credit registries in most Pacific island countries are absent or underdeveloped; data on adults covered by registries/bureaus in the region is unavailable (WBG 2018). - Lack of high-quality credit information obstructs banks’ due diligence and lending decisions, increasing exposure to nonperforming loans and lowering lending capacity. - Current reliance on government-guaranteed loan programs transfers credit risk to the government and adds contingent liabilities; guarantee funds tend to underprice risk. - Technological solutions enable collection of existing and alternative data for credit modeling: - Alternative data: mobile phone and utility payment records, tax and corporate registries, mobile money payment history, criminal records. - Digital footprints and psychometric data can be used cautiously due to bias risks. - Examples of digital-credit approaches: - Konfio: big data from electronic invoices and tax filings for rapid credit assessment. - Capital Float: social media and government Aadhaar data to extend collateral-free business loans. - Tala: identity and credit risk assessment using phone-based data signals. - MicroMoney: collects about 10,000 customer big-data parameters to generate encrypted digital profiles stored in a blockchain credit bureau. - Policy design recommendations for credit information: - Develop fintech-enabled credit registries or bureaus using alternative data. - Allow secure sharing of digitized consumer data with banks and licensed nonbank providers. - Regional bureau regulators should permit data collection and sharing while protecting consumers against data breaches, misuse, and fraud. - Use models such as PSD2 and GDPR (European examples) as frameworks for data sharing and protection where relevant. ### Risks, Constraints, and Mitigation Strategy — Overview - Implementation of fintech faces risks and constraints that should inform risk mitigation strategy; risks include country-specific infrastructure limitations and exogenous cyber risks. - Policymakers should conduct comprehensive risk assessments to decide on absorption, control, or mitigation measures. ### Infrastructure Constraints - Uneven and underdeveloped general and information-technology infrastructure may hinder fintech development. - Reliable electricity is essential; continuous access can be difficult in remote areas and outer islands. - Cellular network and internet connectivity are challenging due to rugged geography and vulnerability to natural disasters. - Capital investment required for reliable infrastructure; many Pacific countries have secured undersea fiber-optic cables. - To improve coverage in remote areas, consider satellite coverage and backup satellite facilities for cable outages. - Policymakers should define local goals (availability, quality, pricing) and adopt metrics to measure progress. - Diversifying energy sources (solar, tidal, wind) can ensure continuous electricity supply and help meet climate mitigation targets. - Consider technology solutions that do not need power or internet (examples referenced: IDbox, Digital Access Rights tool). ### Cybersecurity Risks - Cybersecurity, data protection and privacy, and fraud are identified as the most critical risks from fintech (PIRI 2018 survey results). - Cyber risks from API usage and cloud infrastructure can be alleviated via strong cyber policy controls and auditing practices. - Blockchain offers resilience but third-party application vulnerabilities and smart-contract exploits have occurred. - Biometric data security remains a work in progress; biometric data can be intercepted without owners’ consent. - Regulators and institutions in Pacific island countries face knowledge gaps, particularly in cybersecurity and technological tools for regulation and supervision, which could weaken capacity to confront attacks and fraud. - Mitigation measures include: - Require digital financial service providers to offer system-designed transparency, controls, and data governance/protection mechanisms. - Build AML/CFT measures into digital financial products to protect consumers and reduce compliance monitoring costs. - Develop technology-neutral, interconnected, interoperable systems under regulatory oversight to increase transparency and resilience. - Build capacity to implement international AML/CFT standards and monitor digital financial service providers. - Pursue regional approaches (e.g., Association of Financial Supervisors of Pacific Countries) and seek development partner assistance. - Engage with Australia and New Zealand to support development of an open, free, and secure internet. ### Operational Risks - Operational disruptions include: - Power outages after natural disasters interrupting data sharing services and fintech platforms. - Lack of interoperability between applications hampering effectiveness. - Single-platform approaches risk single points of failure. - Skills gaps for developing and maintaining algorithmic models and code; risk of algorithmic bias. - Mitigation recommendations: - Require backup systems, incident response plans, and regular operational failure plans. - Use alternative power sources (backup generators). - Build interoperable platforms and consider open-source software to avoid vendor lock-in and support community maintenance. - Include contractually binding third-party liability clauses when outsourcing. - Partner with universities or skilled partners to work with larger datasets and reduce algorithmic bias. ### Market Risks - Key market risks: - Unequal access to infrastructure, which distorts competition and inhibits innovation. - Risk of market concentration favoring large industry players and proprietary software. - High cost of entry and maintenance due to geography discourages new entrants. - Demand-side barriers: poor financial and digital literacy, lack of trust in technology. - Risk of overindebtedness from greater availability of digital loans; 14 percent of digital borrowers were repaying multiple digital loans at the time of a cited survey (Figure 12). - Policy recommendations: - Design policy frameworks to promote competition, innovation, consumer choice, standardization, interoperability, and equal access to key infrastructure. - Encourage collaboration between established financial institutions and new entrants to develop complementary business models and interoperable solutions. - Lower entry barriers to offset elevated maintenance and production costs. ### Conclusions and Policy Recommendations - Pacific island countries can potentially leapfrog into innovative fintech technologies that support financial inclusion and growth but must select feasible and commercially viable technologies and mitigate associated risks. - Fintech should be integral to national financial inclusion strategies. - Public and private sectors should collaborate to enhance technological and financial literacy and enable adoption of advanced technological solutions. - Key potential benefits: - Mobile money and digital payment systems promote transparency, cost and time efficiency, and improved oversight in the financial sector; they can reduce reliance on physical bank branches, ATMs, and cash. - Digital IDs can facilitate identification, enhance due diligence in loan approval processes, reduce reliance on paper documentation, and unlock access to payment systems and vital government services if supported by appropriate legal frameworks. *Source: IMF — "Introduction" (sfapicea - Introduction).* ### Conclusion ### Conclusion ### Policy recommendations and strategic priorities - For credit and information sharing, technological solutions could support the collection and sharing of consumer financial information and behavior and underpin the development of credit bureaus and registries. - Data on consumer behavior and payment history from financial institutions and alternative sources, including social media and mobile phones, can be consolidated into a single database and used for credit modeling purposes. - Digital financial profiles can be built based on this data. - Technological adoption requires policymakers to provide the appropriate supporting physical and regulatory infrastructure. - Physical infrastructure could benefit from public-private partnerships. - Countries should continue investing in undersea fiber-optic cables to enable 4G and 5G cellular networks. - Other physical infrastructure could be developed jointly by the private sector, the authorities, and donor partners to reap the most benefits from existing and emerging financial sector fintech solutions at the lowest cost. - Countries could also focus on technological solutions that operate under existing infrastructure conditions. - A regional approach to fintech applications for financial inclusion and regulatory frameworks is essential to overcome capacity and scalability constraints. - Regional initiatives such as innovation hubs, regulatory sandboxes, and technological platforms would avoid duplication and harmonize policy and regulatory standards. - The regional approach would enable a two-way knowledge exchange between regulators and digital financial service providers and set the stage for the regional know-your-customer utility introduced at the 2018 South Pacific Central Bank Governors’ Meeting. - Authorities should support regional approaches to social innovation and grass-roots experimentation, targeting solutions designed to reach remote areas. - Regional incubators, capacity building with universities and donor partners, and support for local start-ups will help further the adoption of technologies for financial inclusion. - Affordable access to technological solutions and enhanced digital and financial literacy will promote adoption on the demand side. - Including financial and digital literacy in the financial inclusion strategy and in the national school curriculum is central to building trust in the technology. - Pairing with private sector stakeholders and development partners can help showcase the benefits and value of the technological solutions. - Effective collaboration with development partners, including international financial institutions, provides opportunities to benefit from knowledge exchange and the experience of peers. - The IMF is positioning itself to provide targeted technical assistance, capacity building, and training on emerging fintech issues and can provide analytical support on fintech through coverage during Article IV consultations, where relevant to the macroeconomy. - The wider network of donors, including the World Bank, Asian Development Bank, and bilateral development partners, have substantial and growing expertise on fintech issues and can support Pacific island countries’ efforts to develop effective fintech policies and regulations and may facilitate implementation of specific fintech projects, where appropriate. ### Near-Term Steps - Conduct a feasibility study for the establishment of a regional regulatory sandbox and/or innovation hub. - Facilitate creation of robust interoperable technological platforms for banks, mobile network operators, and other institutions. - Establish a full-time, cross-functional team from different government and regulatory agencies across Pacific island countries to monitor and evaluate initiatives implemented through the regulatory sandbox and/or innovation hub. - Create a supervisory and oversight framework that balances the risks and efficiency of fintech solutions. - Build networks and collaboration models with regional and international development partners, standard-setting bodies, and supervisors. - Develop legislation to ensure competition and a level playing field for all market participants. - Devise a financial and digital literacy strategy to stimulate adoption of fintech applications and promote start-ups and incubators. ### Medium-Term Goals - Ensure reliable electricity, internet, and cellular network coverage across the country. - Focus on simple and affordable retail payment software applications. - Establish a favorable market environment and incentive structures for all market participants. - Promote education and build capacity through partnerships with regional universities, associations, research institutions, and development partners. ### Characteristics of existing and emerging technologies - Feature phones running on lower 2G bandwidth cellular networks are expected to represent over 50 percent of connections in Pacific island countries in 2020 (GSMA 2015). - The unstructured supplementary service data (USSD) technology has reemerged as a critical enabler for mobile services, including payment systems in developing economies; most mobile payment and other financial mobile services, even M-Pesa in Kenya, are using USSD. - More powerful mobile devices—smartphones—provide faster access to newer generations of cellular networks, such as 3G and 4G connections; smartphones can host mobile wallet applications and are equipped with Bluetooth and near-field communication (NFC) technology. - NFC-enabled payment applications include Apple Pay, Android Pay, Samsung Pay, Visa payWave, and MasterCard PayPass. - Biometric technology (fingerprints, typing patterns, face, iris, etc.) can establish secure and private digital identity but introduces risks because biometric data, if compromised, cannot be changed and can be intercepted. - Artificial intelligence (AI) and machine learning (ML) assess creditworthiness (example: M-Shwari via M-Pesa) but require a large amount of high-quality representative data samples and skills in computer coding and data science. - Application programming interfaces (APIs) are essential for interoperability but are susceptible to cyberattacks such as data breaches, unauthorized service access, and denial of service attacks. - Moving mobile services to a cloud architecture is a common risk mitigation strategy; cloud architectures alleviate certain cybersecurity risks inherent to on-premise data centers but introduce challenges related to transferring control over data to third-party providers. - Distributed ledger technology (DLT) offers reduced need for interoperability among participants, enhanced resilience to cyberattacks, and cost-effective applications; DLT can be public (permissionless), permissioned, or closed/controlled with differing opportunities and risks. - Public blockchain networks (examples: Bitcoin, Ethereum) are permissionless; private or permissioned DLTs are likely for government-led initiatives to maintain control. - Blockchain’s properties can reduce settlement time, lower back-office costs, and secure data transmission, but face challenges related to scalability, high energy consumption (in permissionless networks), and maturity. ### Case study: Papua New Guinea (digital identity pilots) - Papua New Guinea: population of about 8 million people, 72 percent of whom live in rural or remote areas (APEC 2018). - Citizens in remote areas lack access to identification; 65 percent of the total population does not have a bank account. - 80 percent of the total population lives off the electrical grid (APEC 2018). - Very few people have smartphones; more than 75 percent of the population uses SMS-capable phones. - The Bank of Papua New Guinea (BPNG) piloted IDbox: a low-cost device with biometric-technology-enabled identification which runs on a private blockchain and relied on phones with SMS capability; IDbox included solar panels to operate in areas with no electricity. - IDbox set identity once using biometric fingertip identification; biometric information was cryptographically encoded and stored on the device’s ID card and linked to an individual’s SMS-capable phone. - Use cases included domestic or cross-border payments, voting, validating vaccine and medical history, and trading excess electricity units stored in the device. - Pilot outcomes: concept and design were viable in two field trials, but scalability and transaction capacity speeds were unacceptable; reliance on a single individual for development and maintenance was a key unmitigable risk. - Papua New Guinea is exploring NFC-based alternatives; the ADB supported development of the Digital Access Rights tool that works on any Android-powered platform and can operate in online and offline modes, gathering basic KYC data, capturing photo ID and potentially biometric features, transferring captured data wirelessly to a plastic card via NFC. - A working prototype of the Digital Access Rights tool has been successfully piloted with further development and trials expected through the end of 2019. ### Supporting infrastructure and legal frameworks - Submarine cables timeline and examples: - 2000: Southern Cross (Fiji) - 2009: PIPE (Papua New Guinea) - 2010: Hantru (Micronesia, Marshall Islands) - 2013: Tonga Cable (Tonga, Fiji) - 2017: SEA-US (Palau, Micronesia) - 2018: Tui Samoa (Samoa, Fiji) - 2019: Coral Sea Submarine System (Solomon Islands, PNG) - 2019: ICN2 (Solomon Islands, Vanuatu) - 2020: Manatua (Cook Islands, Samoa, French Polynesia, Niue) - 2020: Southern Cross Next (Fiji, Tokelau, Kiribati, Samoa) - Payment systems modernization legislation examples: - Papua New Guinea (National Payments System Act 2013) - Samoa (National Payments Act 2014) - Fiji (Interchange Network (Payments) Act 2017) - Vanuatu (Payments System Act 2018, planned) *Source: sfapicea - Conclusion (sfapicea - Conclusion)* ### Appendix 3. Existing Pacific ### Appendix 3. Existing Pacific Island Country Efforts ### Selected Applications - Mobile Money and Remittances: - Mobile money companies operating in several Pacific jurisdictions, including Samoa, the Solomon Islands, Tonga, and others. - Multiple mobile money operators have partnered with fintech companies specializing in remittances to facilitate transfers from sites of the Pacific diaspora. - E-Wallets: - Several mobile network operators and banks are competing with their own e-wallet platforms in Fiji, Papua New Guinea, Samoa, and the Solomon Islands. - Fintech for utility bills: - Customers are buying prepaid electricity top-ups through Vodafone’s M-Paisa mobile wallet in Fiji. - Remote customers in Papua New Guinea use pay-as-you-go meters that can be topped up the same way for solar power. - Mobile Insurance: - Mobile micro insurance offered in Papua New Guinea by BIMA uses the Digicel platform and is underwritten by Capital Life Insurance Company. - Digital Identity: - IDbox, a Papua New Guinea pilot program developed in partnership with the central bank, was piloted to facilitate improved identification and compliance. - Papua New Guinea also piloted the Digital Access Rights tool to provide access to a variety of services that require a unique identity as the basis of engagement using the Near Field Communication technology and encrypted identity cards. ### Fintech Ecosystem Opportunity: Actors, Constraints, Enablers - Actors (demand / supply): - Demand: Government; Financial services providers (incl. non-banks); Financially under and unserved; Merchants; Mobile devices; Mobile applications; Tech firms; Mobile network operators (MNOs) services. - Supply: MNOs infrastructure; DFS systems. - Constraints: - Infrastructure (incl. electric grid) - Cost of remoteness - Lack of incentives - Lack of regulatory framework - Affordability - Financial literacy - Credit history - Technical, and entrepreneurship skills - Unclear regulation - Interoperability - Commercial viability, cost/benefit - Identity verification - Digital literacy - Enablers / Conditions for success: - Innovation incubation, regulatory sandboxes - Access to financially relevant data across enablers - Competitive cost, regional public/private sector coordination - Enable safe innovation hubs - Capital (VC, IFIs...) - Regional collab public/private sector/development partners - Continue to improve internet access - Implement interoperability of payment platforms, included via MNOs and other non-banks - Effective collaboration between banks, MTOs, MNOs - Develop fintech talent - Customer confidence. Trust in digital platforms ### Key Takeaways and Priority Actions - Build Resilient Enabling Infrastructure: - Reliable electric grid and telecommunications in rural areas - Continue to improve internet access - Promote Technological Adoption: - Implement interoperability of payments and platforms, including via MNOs and other non-banks - Foster participation of merchants, retailers, etc. - Facilitate simple, affordable retail payments systems - Share Knowledge and Collaborate: - Establish regional networks for collaboration between supply and enablers - Effective collaboration between banks, MTOs, MNOs - Build capacity through training - Improve financial, digital literacy - Develop fintech talent - Access to financially relevant data across enablers ### Relevant Initiatives and Examples Cited - International and regional examples: - TechFin: Alipay; MNOs: M-Pesa, Wing (Cambodia), bKash (Bangladesh) - Biometrics: Aadhaar, e-KTP - DLT: uPort, Celo, OneName - Aadhaar Pay, BHIM; BanQu, CordaKYC - Interbank: Stellar, Ripple - Crypto and mobile remittances: Abra, Coins.ph, WeChat, Alipay, WorldRemit - Ledger Atlas work in PNG to advance DLT use cases in the region - PNG ID Box using fingerprint and blockchain - WBG’s work with Samoa, Solomon Islands, Tonga and Vanuatu on payment systems - Several financial inclusion strategies, incl. Solomon Islands 2016–20 strategy - Examples of regulatory innovation and sandbox work: Europe: PSD2, MiFID2, GDPR; WBG, GFIN, ASIC, UNCDF, Global Financial Innovation Network references in broader bibliography *Source: IMF staff.* --- _Source: https://www.imf.org/-/media/files/publications/dp/2019/english/sfapicea.pdf_