The Next Steps for International Cooperation in Fintech
IMF News, June 8, 2019
Source details
- Canonical URL
- The Next Steps for International Cooperation in Fintech
Other formats
Bibliographic details
- Published: June 8, 2019
Opening and context
- Opening Remarks by Christine Lagarde, Managing Director, IMF.
- Event: G20 High Level Seminar “Our Future in the Digital Age”, Fukuoka, Japan.
- Date: June 8, 2019.
- Fukuoka described as “Japan’s start-up city”; “in each of the last three years more companies have been started in Fukuoka than nearly anywhere else in Japan.”
Opportunities and risks in financial innovation
- Fintech can cut the cost of utilizing financial tools and enable millions to build a better life if handled correctly.
- Key trade-off: manage risks of fintech without suffocating innovation; keep up with rapid fintech innovation while ensuring consumers and investors feel secure.
- Objectives stated: create a safe, sound, sustainable and inclusive financial system, protected from criminal abuse.
- Gender and inclusion implications:
- Fintech has helped to close the inclusion gender gap in some countries, but not everywhere.
- Gaps in access to technology partly explain lower usage by women; even when access is equal, women may use digital services less due to social norms, affordability, and financial literacy.
- Country examples:
- In Egypt, Ethiopia, and India, men are 20 percentage points more likely than women to have their own phone.
- In Bangladesh, men are 22 percentage points more likely than women to have a mobile money account.
- Recommendation: increasing financial literacy can play a key role in generating higher gender participation.
The Bali Fintech Agenda and IMF–World Bank work
- At the request of IMF membership, the IMF and the World Bank developed the Bali Fintech Agenda, identifying twelve priorities for countries and international organizations in the fintech space.
- A survey of members attracted participation from 96 countries.
- Findings from the IMF–World Bank review to be released in a new joint paper (release described as “later this month” in the speech).
Survey highlights: policy priorities and international cooperation demands
- Countries overwhelmingly see fintech as transformative for financial inclusion.
- Countries are asking for greater international cooperation in fintech; top priorities reported in the survey:
- Nearly 80% mentioned cybersecurity as their most important priority;
- Around 60% listed anti-money laundering legal and regulatory frameworks;
- Another 40% cited payment systems including across borders.
- Countries want swifter progress in international forums where IMF staff participates.
Market concentration, big tech, and systemic concerns
- Anticipated significant disruption from big tech firms using large customer bases, big data, and artificial intelligence to offer financial products.
- Potential benefits: accelerating inclusion and modernizing financial markets.
- Associated risks: privacy issues, competition concerns, market concentration, and potential vulnerabilities in the financial system.
- China example:
- Over the last five years, technology growth in China allowed millions to access financial products and created high-quality jobs.
- At the same time, two firms control more than 90% of the mobile payments market.
- This concentration presents a unique systemic challenge to financial stability and efficiency.
Policy directions and concluding guidance
- Integrate different national approaches to crypto-assets, non-bank fintech intermediaries, and the governance of data to harness fintech’s potential for inclusion and development.
- Preserve financial stability and integrity, protect consumers, and increase financial literacy while fostering innovation.
- Emphasis on international dialogue and cooperation: “We will cross the bridge, together, into the fintech future. But we will only do so once we are confident that bridge is safe and secure.”
- Events and multilateral engagement are critical parts of the process; IMF positions itself as a partner.
Opening Remarks by Christine Lagarde, Managing Director, IMF — G20 High Level Seminar “Our Future in the Digital Age”, Fukuoka, Japan, June 8, 2019.