“Digital innovation holds tremendous promise for financial inclusion and financial health,” was the message from Queen Maxima of the Netherlands during the opening plenary of the Sibos 2022 Conference in Amsterdam.
Queen Maxima began her speech by announcing that the conference’s theme this year, progressive finance for a changing world, “could not be more timely.”
Accessibility
There has been major progress in the last decade, Queen Maxima stated, with a quarter of the world’s adult population having gained access to financial services. “Fully 76% of adults are now in some way included,” she said, “which has unlocked new opportunities for millions of people previously left behind.”
Investments in critical digital public infrastructure – including greater connectivity and digital IDs – have “laid the foundations” for this growth, Queen Maxima added. “And the rise of digital payments has driven a massive increase in account ownership.”
Queen Maxima detailed the fact that in the last four years, almost 40% of adults in developing economies opened their first account to receive a wage or a government payment. Moreover, millions of small merchants are now paid and make payments using their phones. “This has enabled financial service providers, especially new fintech players, to innovate in the design and delivery of new products and services.”
New possibilities – and challenges
The growth in mobile phone use, and new customer data trails, means innovative ways to offer financial products, claimed Queen Maxima, by leveraging big data and AI – especially in emerging markets. “Yet we should not seek innovation for innovation’s sake,” she warned.
“With each new technology – such as central bank digital currencies – we must always ask what problems we are trying to solve, and what future are we envisioning, to stand the best chance at achieving long-term success.”
Queen Maxima asked a packed Sibos audience how they could provide more value beyond what existing platforms already offer.
“The priority is to make sure we do not harm,” stressed Queen Maxima, “ensuring key digital public goods are in place – like cybersecurity, consumer protection, data governance and digital literacy – can help marginalized communities navigate financial services more safely in ways that work for them.”
Fair competition and interoperable payment systems were highlighted as helping markets work better for all, including the smallest-scale customers. “But that is only a first step,” remarked Queen Maxima, “we have a chance to move beyond ‘doing no harm’ to actually ‘doing good.'”
Transformation
“Just as we should not innovate for innovation’s sake, we should not design products simply to maximize short-term returns,” claimed Queen Maxima, who highlighted the “importance” of seeing how much value can be generated in the long run. “Value for customers that in turn translates into value for firms.”
The audience was also asked how people can better manage their day-to-day finances, get access to credit, plan and meet future goals and – “during multiple crises” – build resilience and insure themselves against shocks. “To do so makes good business sense,” stressed Queen Maxima, since financially healthy customers are “better” customers, and those who provide these services can differentiate themselves from other providers.
“But for the moment, that is not what is happening,” remarked Queen Maxima, who told audience members that only 55% of adults in developing economies can access emergency money within 30 days.
Additionally, Queen Maxima referenced a survey finding that almost half of respondents, including those from OECD countries, agreed with the statement: “I have no money left at the end of the month”.
“In some places, we have seen both an increase in access to finance – and simultaneously a decrease in financial health. So let us identify the best solutions to these challenges and bring them to scale,” commented Queen Maxima.
What can be done?
Given these challenges, Queen Maxima suggested an approach to solving the decrease in financial health is to encourage private-private partnerships that provide services across entire value chains.
“Collaboration across industry and government is also key to creating inclusive digital public infrastructure that enables services beyond finance – such as health and education. These are the building blocks of sustainable development,” commented Queen Maxima.
“If we get this right, digital innovation holds tremendous promise for financial inclusion and financial health. So let us envision that better future, share our experiences, and use this conference to build a secure, trusted and efficient digital economy that works for all.”
The Sibos 2022 opening plenary can now be watched on-demand here.
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