A strengthened cooperation among Asia’s policy makers is vital in harnessing the potential of new financial technologies for inclusive growth.
Moreover, they should work together to guarantee that they can respond better to the challenges posed by Fintech, according to a recent report.
New technologies such as mobile banking, big data, and peer-to-peer transfer networks are already extending the reach of financial services to those who were previously unbanked or out of reach, boosting incomes and living standards.
But with Fintech comes the risk of cyber fraud, data security, and privacy breaches.
Disintermediation of Fintech services or concentration of services among a few providers could also pose a risk to financial stability.
These are among the issues discussed during the High-Level Policy Dialogue on Regional Cooperation to Support Innovation, Inclusion, and Stability in Asia.
The panel was made up of the Deputy Governors from the National Bank of Cambodia, the Bangko Sentral ng Pilipinas, and Bank Negara Malaysia; the President of ADB; the President and CEO of Women’s World Banking; the Managing Director of the Monetary Authority of Singapore; and the Governor of Bank Indonesia.
Rapidly spreading new financial technologies hold huge promise for financial inclusion. An enabling environment must be fostered for the technologies to flourish.
Regional cooperation must be strengthened to build harmonised regulatory standards and surveillance systems to prevent international money laundering, terrorism financing, and cybercrimes.
Technology is an enabler that weaves the economies and financial systems together, transmitting benefits but also risks across borders.
Given East Asia’s rapid economic growth, understanding and managing the impact of technology in the financial systems is essential for policymakers to maintain financial stability.
Asia, including Indonesia, is an ideal place for Fintech to flourish.
In the case of Indonesia, there are more than a quarter of a billion people living on the islands, waiting to be integrated with the new technology.
The young people are eager to enter the future digital world. There are more than fifty million small and medium-sized enterprises (SMEs) which cannot wait to get on board with e-commerce.
It is a new society driven by a dynamic, democratic middle class which views the digital economy as something as inevitable as evolution.
Despite Asia’s high economic growth in recent years, the financial sector is still under-developed in some countries.
Fewer than 27% of adults in developing Asia have a bank account, well below the global median of 38%.
Meanwhile, just 84% of firms have a checking or savings account, on a par with Africa but below the 89% of Latin America and emerging Europe’s 92%.
Financial inclusion could be increased through policies to promote financial innovation, by boosting financial literacy, and by expanding and upgrading digital infrastructure and networks.
Regulations to prevent illegal activities, enhance cyber security, and protect the rights and privacy of consumers, would also build confidence in new financial technologies.