Summary

What is the Bali Fintech Agenda? Do technological innovations facilitate access to financial services? And what risks do they carry, particularly for financial stability? On January 28-29, 2019, the IMF, in cooperation with the JVI, the Austrian central bank (OeNB), and the Austrian Federal Ministry of Finance, organized a conference on Fintech at the OeNB premises. Speakers were from official authorities, international institutions, financial supervisors, and representatives of the private sector.

The Bali Fintech Agenda 

In October 2018, during the Annual Meetings in Bali, Indonesia, the IMF and the World Bank Group launched the Bali Fintech Agenda, a set of 12 policy recommendations for member countries (see Chart) for harnessing the benefits and opportunities of rapid advances in financial technology that are transforming banking services and also managing the inherent risks. Distilled from members’ own experiences, these elements cover topics for enabling fintech; ensuring financial sector resilience; addressing risks; and promoting international cooperation.

Chart

The general belief is that fintech can have a major social and economic impact. Because all countries are trying to reap the benefits and  mitigate the risks, international cooperation can ensure that the fintech revolution benefits the many and not just the few. The Bali Fintech Agenda provides a useful blueprint against which countries can assess their policy options as they tailor them to their own circumstances and priorities. 

The Vienna Conference

The conference at the OeNB was the first in a global series of 2019 IMF fintech conferences that will reach every region. The purpose is to promote broad discussions on—and develop a better understanding of—how member countries are incorporating Bali Agenda considerations into national markets and regulatory/supervisory frameworks. In his opening speech, Tobias Adrian, Director of the IMF Monetary and Capital Markets Department, reviewed the IMF activities in this area. In addition to the Fintech conferences, The Fund has conducted a survey of how its members are responding to the agenda’s priorities. It is also furthering its understanding of fintech issues through dialogue with national authorities as part of Article IV consultations and Financial Sector Assessment Programs.

The program of the Vienna conference reflected the fintech issues already being raised regularly by policymakers worldwide. Conference participants, most of whom were from the JVI region, discussed the private sector perspective, financial stability risks, financial infrastructure, legal and institutional frameworks, and financial inclusion. The evolution of crypto currency use and a surge in private payment providers have raised issues for regulators because many of these activities are not within the traditional perimeter of financial regulation. At the same time, if potential benefits are to be realized, regulation and supervision may need to adapt so as to facilitate the safe entry of new products, activities, and intermediaries. Participants also explored the implications of fintech for central banking services, such as digital currency and payment systems, especially the need for robust data infrastructures that can withstand disruption.

One of the greatest fintech benefits is the opportunity to facilitate financial inclusion and thus indirectly support national economic development and inclusive growth. Fintech is seen as a way to overcome long-standing barriers to accessing financial services and to offer new ways to raise funding and assess risks. However, to reap these benefits, fintech issues must be integrated into national strategies for financial inclusion and financial and digital literacy so as to foster knowledge-sharing between public and private actors, civil society, and other stakeholders.

Adam Gersl, Lead Economist, JVI