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Digital Tech, Key to Expanding Financial Services in the Asian Region

Digital Technologies for Financial Services in Asia

Participants at the recent Asia Finance Forum learned how digital technologies could bring new opportunities to provide financial services to vast underserved populations in Asia and the Pacific.

According to a recent press release, the Forum explained that people need to be well-prepared for this wave of emerging technologies.

At the same time, governments should also ensure appropriate policy efforts to counter potential risks.

Vice-President for Knowledge Management and Sustainable Development, Mr Bambang Susantono, said, “Technologies applied in the context of regulatory sandboxes for testing financial innovations, distributed ledger technology such as blockchain, establishing digital IDs through the use of biometrics, and so on have the potential to efficiently address long-standing obstacles and make real progress in expanding financial access.”

The Problem of Financial Exclusion

Around 1.7 billion people worldwide have no access to the formal banking and financial system, with around half of them in Asia and the Pacific.

This financial exclusion has a variety of causes that include the following:

  1. People living in remote locations
  2. Lack of required identification or collateral
  3. High fees
  4. Services that do not match banking needs

While financial technology (fintech) can provide solutions to such challenges, it also brings some risks.

Asian financial markets are increasingly interconnected both regionally and globally. Fast digital technologies could accelerate the contagion from a negative event in a single country.

As such, regulators and other financial authorities in Asia and the Pacific should cooperate and coordinate their oversight of fintech.

There is a need to proactively search for ways to ensure the new technologies are financially inclusive as well as ensure that information security, data, consumer protection, and financial stability are at the centre of preparation for digital financial services.

Support for Fintech Innovation

The Bank has been supporting innovations in fintech in Asia and the Pacific.

For instance, the Bank has helped roll out a cloud-based banking pilot in Mindanao, in the southern Philippines.

Furthermore, ADB is working on a digital access tool through the use of a biometric ID system in Papua New Guinea in order to provide access to financial services for people without formal documentation.

The Bank has also implemented a weather index-based crop insurance pilot project using mobile banking services for over 9,500 small rice farmers in Bangladesh.

500 participants from fintech innovators, technology companies, banks, regulators, as well as other experts gathered at the forum to share their expertise and lessons.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty.

In 2018, it made commitments of new loans and grants amounting to US$ 21.6 billion. Established in 1966, it is owned by 68 members, 49 of which are from the region.

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