New report from OMFIF and AWS shows central banks in Asia believe new technology and digital financial services will help solve the problem of the underbanked
25 November 2020: Policy-makers in Asia Pacific are developing regulatory frameworks for cloud technology, acknowledging its role in financial inclusion, a report by OMFIF and AWS finds.
Cloud computing can support more accessible, cost-effective and flexible delivery of digital financial services. The Covid-19 pandemic has created new opportunities for fintechs to provide safe and affordable financial services. Cloud can be a catalyst for developing countries to leapfrog and be the IT backbone for inclusive financial services.
- A survey of Asian central banks and financial regulators found that 73% of respondents have financial inclusion as an explicit target or objective for their institution.
- Over 90% of respondents consider innovations in digital payments as a key area in which fintech has helped improve financial inclusion.
- Three-quarters of respondents cite the need for reliable mobile infrastructure and network connectivity to process data and ensure provision of digital financial services.
- According to 80% of respondents, cost savings in IT investment and the resultant increase in market competition are primary benefits of cloud services to financial inclusion.
Providing the underbanked with financial services is intertwined with policies related to digital infrastructure reliability and conducive fintech ecosystems. The report finds that advances in the cloud computing could provide the impetus which has so far been lacking.
‘The Covid-19 pandemic and the ensuing push towards further digitisation have accelerated cloud adoption in the industry. Cloud provides financial institutions with flexibility, scalability and operational resilience,’ state Melissa Ingber, senior global manager, AWS Institute, and Michael Punke, vice-president of Global Public Policy, AWS. ‘It enables them to deliver cost-effective digital financial services such as remittances, lending and insurance to underserved and unbanked communities.’
Cloud computing can help facilitate the digital shift of incumbent financial institutions and the market entry of challenger fintechs by providing the high-volume, high-intensity computing power that supports digital financial services. It enables scalability at a lower cost, aligning the provision of affordable products and services to significant populations of underbanked individuals and small and medium enterprises.
‘Corporations and their providers must work with policy-makers to build a future that enables the participation of urban and rural dwellers alike. By taking a shared responsibility for the development and deployment of emerging technologies, corporations and governments will advance the inclusion of all people,’ says Tamara Singh, head of Asia Pacific at OMFIF.
Respondents to the survey are confident that improving awareness and promoting effective governance and risk management capabilities will enable central banks and financial institutions to enjoy the advantages of cloud while minimising its risks.