G20 endorses nine principles for innovative financial inclusion

by Jim Rosenberg : Monday, June 28, 2010

Amid the flurry of news coming out of Toronto, you’d be forgiven for missing this important development:

The G20 Leadership Summit in Toronto this past weekend highlighted the importance of the work being done by the G20’s Financial Inclusion Experts Group (FIEG). The group released nine “Principles for Innovative Financial Inclusion” formed through the efforts of the Access through Innovation Sub-Group (ATISG). “We have developed a set of principles for innovative financial inclusion, which will form the basis of a concrete and pragmatic action plan for improving access to financial services amongst the poor. This action plan will be released at the Seoul Summit,” the Toronto declaration said.

Read the nine principles here and over on the Microfinance Gateway you’ll find the Principles and report from the Access through Innovation Sub-Group of the G20 Financial Inclusion Experts Group.

Want the backstory? Check out an interview I did in March with Paul Flanagan, co-chair of the G-20 Financial Inclusion Experts Group and General Manager, International Finance Division, Australian Treasury: “The G-20 eyes financial inclusion using mobile phones, other ICTs.”

-Jim Rosenberg

TAGS: Access To Finance, News, Policy

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  • June 29th, 2010 at 12:46 am, Sherine Fernando ()

    I feel that “Awareness” could be added as another principle to this list – preferably as the 3rd slot after “Diversity”

    ● Awareness : Promote worldwide awareness of the need for poor people to have access to financial services. This will draw the attention of the many non-return conscious affluent donors who may still be not aware of microfinance operations. They would be more than happy to be part of such a deserving cause when they learn that each of their donations would continuously recycle to provide more and more poor people access to financial services.

    Wide publicity through the international media can achieve this.

  • July 15th, 2010 at 11:23 am, Erik Lindmo ()

    The CGAP branchless banking concept looks quite promising, and the fact that G20 is putting financial inclusion using mobile phones on the agenda makes it also a realistic scenario.
    Having long time experience in establishing payment systems I have some reflections:
    - there are many medium/small scale mobile payment pilots/project around the globe. They are not interoparable and therefore limited in reach.
    - the CGAP branchless banking pricing analysis indicates that branchless banking is not as cheap as might be expected. This is partly due to tha high initial investment in each new system (and due to the uncertainty of the future of the system I also assume that the investors want a quick recovery of their investment).
    - Normally it woul dresult in a more userfriendly, effective and competitive system to the benefits of society at large if the different mobile payment systems were interoperable. Today it is not possible to send money from the user of one system to a person participating in another system. This will severly inhibit the potential global reach and network value of such a promising technology.
    - A lot of effort is also being made in order to try to standardize on certain security elements and payment processes (e.g. white papers from Mobey Forum and EPC) – but so far this has not lead to any results.
    - Little effort, however, has been put into solving the critical task of establishing interoperabilty between the different systems – and thereby contributing to the growing reach of brancless banking as a global system concept (that can be used both for international remittances and local financial services and payments).
    - I hope that the G20 Financial Inclusion experts subgroup “Access Through Innovation” and the CGAP organization focus on this area as a missing but critical link in the “architecture of the mobile money systems.
    - Some kind of internationally interoperable directory service linking phone numbers to the local customer bank account is needed for a userfriendly and global service, but is it advisable to leave to the market forces to decide and establish such services ?
    - I therefore suggest that G20 FIEG-ATISG and CGAP consider engaging Logica (or others) to come up with a proposed architecture that satisfies the nine “Principles for Innovative Financial Inclusion”
    - I mention Logica because they have an interesting track record – in the early 70-ies they proposed the winning architecture for MSP – the project that later became the global SWIFT network (for high value payments). As far as I know, they are also the architects behind PayPal – another concept with potential global success.

    In this way I hope that CGAP combined with G20 could make the promising (branchless) mobile money concept become a reality to the benefit of the unbanked population of the world.

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