Advancing Financial Inclusion through FinTech in ASEAN

Takehiko NakaoPresident

Asian Development Bank

ASEAN Finance Ministers’ and Central Bank Governor’s Joint Meeting (AFMGM)

6 April 2018 | Singapore

New technologies driving changes

2

3D printing

Artificial intelligence and robotics

The Internet of Things

Big data

Mobile and cloud technology

Technology can contribute to inclusive growth

3

Education:

Remote access through online

learning

Smart and interactive learning for

upskilling and reskilling

Health:

Medical innovation and

technology

Better access for rural and

remote health care

Infrastructure:

Better connectivity for smart grids and

smart cities

Climate resilient

Education:

▪Remote access

through online

learning

▪Smart and

interactive

learning for

upskilling and

reskilling

Health:

▪ Medical

innovation and

technology

▪ Better access

for rural and

remote health

care

Infrastructure:

▪Better

connectivity for

smart grids and

smart cities

▪Climate resilient

4

Leveraging digital platforms and mobile technologies to offer Inclusive financial services

Source: World Bank, Global Financial Inclusion Database and World Development Indicators.

1 billion adults have no

bank account in developing Asia

3.7 billion have a mobile

phone

ADB support for financial inclusion using fintech

5

SME financing: Technology

enabled credit scoring system in

Greater Mekong Subregion

ADB supports KIU (an IT service company in

Viet Nam) and partner banks to provide SME

financing based on AI-enabled credit

scoring.

• 8,000+ SME clients by end-March 2018,

with loans up to $50,000 per client.

• ADB provided $100 million SME credit line

to a KIU partner bank in Viet Nam. KIU

also has partner banks in Cambodia,

Myanmar, and Bangladesh. 6

Cloud-based banking in the

Philippines

ADB, Cantilan Bank, and Oradian (an IT

service company) launched a cloud-based

banking application in July 2017 to

improve financial inclusion in Southern

Philippines.

• The project follows the Bangko Sentral

ng Pilipinas (BSP)’ sandbox approach–

allowing firms to experiment within

certain bounds.

• ADB provided $150,000 grant.

7

FinTech Challenge Viet Nam

• ADB and the State Bank of Viet Nam

(SBV) launched FinTech Challenge Viet

Nam in November 2017 to spur innovation

in financial services

• FCV attracted 140+ global FinTech

solutions of which 16 were selected

• The SBV will allow regulatory sandbox

piloting testing for selected FCV

solutions

• ADB contributed $150,000 to organize

it and will collaborate with partner

banks to pilot-test the best solutions

8

Branchless banking in Indonesia

The Financial Market Development and

Inclusion Program (policy based loans of a

total $800 mil in 2 subprograms for 2012-

2019) supports the revision and the

subsequent implementation of banking

regulations to promote branchless banking.

• Indonesia’s Financial Services Authority

(OJK) introduced new branchless banking

regulations in 2015 to enable consumers to

easily locate branchless banking (agents) and

to provide more information on available

financial products and services

• Branchless banking now covers 27

commercial banks and 512 out of 514

provinces. 9

Policies that harness the power of technology for financial inclusion

10

Ensure access to basic digital infrastructure

Provide enabling environment for innovators and entrepreneurs

Improve the regulatory environment

11

Ensure access to basic digital infrastructure

Affordable and safe mobile internet for low cost financial

services

Available to everyone, including

isolated regions

▪ Greater

investment in

core ICT

infrastructure

▪ Broadband plays

a key role

▪ Affordable and safe

mobile internet for

low cost financial

services

▪ Available to

everyone, including

isolated regions

12

Provide enabling environment for innovators and entrepreneurs

Access to data

Linkage between finance and technology

Competition to mitigate rent-seeking

Educational programs that enhance digital and financial literacy

Improve the regulatory environment

13

Protect consumers against cyber-crimes and fraud

Prevent illegal activities such as money laundering and terrorist financing

Enhance cybersecurity to prevent cyber-attacks and hacking

Protect personal data and privacy

Balance innovation and financial stability