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> Posted by Anita Gardeva

Last week the Alliance for Financial Inclusion (AFI) held its second Global Policy Forum in Bali. AFI is a network of central banks and other financial regulatory bodies from nearly 60 developing countries who exchange knowledge on financial inclusion policies. The Center for Financial Inclusion’s managing director, Beth Rhyne, was a guest speaker at the event and we asked her to tell us what regulators are talking about.

AG: How does AFI affect financial inclusion?

BR: What AFI is doing is unprecedented. By bringing together this many policymakers interested in financial inclusion, AFI creates a stronger voice for financial inclusion all around the world. Until now financial regulators have tended to place top priority on financial stability and have often perceived inclusion as a threat to stability. AFI’s work helps to get financial inclusion high on the agenda in a way that it has not been before.

And the philosophy behind AFI was inspired. AFI believes in peer-to-peer exchange. And it works! It’s much more convincing to regulators to hear from a fellow regulator than to be told what to do by an “expert.” I could see this happening as I watched conversations between regulators. For example, everyone wanted to know about the regulations that led to Kenya’s success in mobile banking (M-Pesa). The Kenyans became celebrities: everyone wants the same kind of success.

AG: I understand that your focus was consumer protection. What were the concerns regarding this issue?

BR: Client protection is a deep concern among regulators. It popped up everywhere, not just in the client protection discussions. It’s very much on regulators’ minds.

In client protection, the best practices for regulators are all over the place. Countries have many different ways to respond to client protection needs. For example, in Malaysia the client protection system is focused on high-income people, and the Malaysian regulators were thinking about how to adapt its system for low-income people. Other countries are starting fresh. They’re trying to answer questions such as: “Who will be in charge of client protection—the central bank or a new entity?”

AG: What’s your message to AFI members about client protection?

BR: I would advise regulators to treat the industry as partners rather than enemies, and to work with industry groups to increase their capabilities—using tools such as the Smart Campaign that build capacity through proven practices that have been implemented by players around the world. Regulators can’t be everywhere. One lesson that came up repeatedly from South Africa was that regulators need to focus on protecting against the truly bad offenders. There is a lot of goodwill by industry players to implement good practices. Regulators can tap this goodwill to get the industry to do part of the necessary work.

For more information on CFI’s Financial Inclusion 2020 campaign, sign up for updates here.