UN Debates Impact of 'Fintech' Revolution on Asia-Pacific
NEW YORK (IDN) – Since the adoption of the Addis Ababa Action Agenda in 2015, significant efforts have been undertaken to mobilise funds for effectively pursuing Sustainable Development Goals (SDGs). Estimates suggest that low and lower-middle income countries around the world may need sizeable additional investment running into trillions of dollars yearly for moving ahead towards these ambitious goals.
With a view to supporting countries in their efforts, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has been organising broad-based high-level consultations on Financing for Development (FfD) since 2014. It has reconstituted its intergovernmental Committee on Macroeconomic Policy, Poverty Reduction and Financing for Development.
'Transforming Finance in Asia-Pacific: The FinTech revolution' was the latest such efforts undertaken on the sidelines of the 2018 ECOSOC Forum on Financing for Development from April 23-26, 2018.
The high-level side event, co-organized by ESCAP and the Permanent Missions of Bangladesh, Indonesia and Kazakhstan on April 23, provided a platform for countries to review their experience in pursuing FinTech initiatives, and identify policy and regulatory challenges in harnessing their potential in the region.
In her opening remarks, UN Under-Secretary-General and Executive Secretary of ESCAP Dr. Shamshad Akhtar underscored that access to financial services is an integral component of the global financing for the development agenda. "Frontier technologies are offering new solutions for providing an impetus to financial inclusion," she said.
The participants recognized the need to increase access to financial services for small and medium-sized enterprises (SMEs) and the region’s poorest people, if the aim of mobilizing $2.5 trillion annually in Asia and the Pacific is to be attained.
They noted however that regulators would need to strike the right balance between facilitating innovation, maintaining financial stability and ensuring consumer protection, the ESCAP press release stated.
FinTech solutions include cell phone apps that allow users to execute online transactions, such as bill payments, store credit scoring of consumers and small businesses owners based on big data analytics, along with online alternative financing platforms such as peer-to-peer lending and equity crowd funding.
Dr. Akhtar emphasized that “Asia-Pacific is leading globally the Fintech emergence and they are transforming the way people pay, send money, borrow, lend, and invest.”
Bangladesh Finance Minister Abul Maal Abdul Muhith added: “We need to create a regional platform for sharing experiences and best practices to enhance the access of MSMEs access to finance in the Asia-Pacific region.” MSMEs are Micro, Small and Medium-sized Enterprises.
Indonesia's National Development Planning Minister Bambang P.S. Brodjonegoro further underscored that governments need to "highlight the importance of proper regulatory framework to take advantage of FinTech to support the attainment of SDGs particularly in tackling inequality."
Panel members at the special side event included: Ambassador Kairat Umarov, Permanent Representative of Kazakhstan to the UN; Afghanistan's Economy Minister Mustafa Mastoor; Bhutan's Finance Secretary Nim Dorji; Iran's Vice Minister of Economic Affairs and Head of the Organization for Investments and Economic Assistance, Mohammad Khazaee; Maldives Government's envoy for FfD, Azeema Adam; and Ambassador Odo Tevi, Permanent Representative of Vanuatu to the UN.
Along with Kathleen DeRose, Clinical Associate Professor of Finance and FinTech Leader, New York University’s Stern School of Business; Xiaochen Zhang, President of Fintech4Good; Alisa DiCaprio, Head of Research at R3; Alexander R. Malaket, President of OPUS Advisory Services International Inc., and Lidy Nacpil, Coordinator, Jubilee South Asia Pacific Movement on Debt and Development.
One of the key areas highlighted by member States and experts is boosting financial inclusion for small and medium enterprises (SMEs). While access to financial services, both by the poor and SMEs, is known to reduce poverty and stimulate economic growth, Asia-Pacific developing countries, and especially the least developed counties, landlocked developing countries and small island developing States, have much to do in this area.
In this context, FinTech companies are emerging as an important source of successfully leveraging information technology to enhance financial access. Asia-Pacific is leading the growth of the financial technology industry (fintech) globally.
Fintechs range from mobile money and payments companies such as AliPay in China, to micro lending and credit scoring companies such as Lenddo’s social media-based credit scoring algorithm in Singapore. Such companies are helping to increase the financial inclusion of individuals and SMEs through expanding their access to funds.
However, the advancement of fintech as an innovative solution for SME financing requires proper regulation. A major challenge to regulators is how to strike the right balance between facilitating innovation and preserving financial stability and providing consumer protection. [IDN-InDepthNews – 28 April 2018]