UNDP, UNCDF, Switzerland and Kenya launch new initiative to govern BigFintech
Regulators, UN agencies, market actors and officials from 10 countries launched the Dialogue on Global Digital Finance Governance, implementing one of the key recommendations of the UNSG Digital Finance Task Force, to catalyse international and corporate governance innovations to ensure BigFintechs benefit all.
Achim Steiner, cochair of the Digital Finance Task Force and UNDP Administrator said: "Many positive developments have happened that align fintech with sustainable development, which need to be built upon. BigFinTechs present a different challenge in that their size and scope present much greater potential for both positive and negative impacts. Strengthening the opportunities and mitigating the risks with governance innovations will ensure that BigFinTechs and fintech follow a similar path in supporting the greater good.”
BigFintechs are the new giants of tomorrow’s financial system, with technology driving an upsurge in growth, scale and diversification into financial services. Such BigFintechs originate from different contexts, from China’s AntGroup to Africa’s numerous mobile money companies, South East Asia’s ride hailing services, Facebook Pay, Amazon and Google in the US, Jio in India, Mercado Libre in Latin America and many more.
These platforms have positive impacts - from deepening financial inclusion to creating livelihood opportunities to enabling direct citizen action - but also bring new challenges. Negative impacts on sustainable development, intended and nonintended are numerous (research indicates that ride-hailing services create more air pollution than trips they displace, wages get suppressed as digital platforms scale, decisions made by e-commerce big players can impact hundreds of thousands of SMEs in other markets, data privacy breaches are making headlines).
Patrick Njoroge, Governor, Central Bank of Kenya said: “Digitalization has been the silver lining in the dark cloud of the coronavirus (COVID-19) pandemic, enabling official and personal transfers to vulnerable households and facilitating essential social services including health, education and online shopping. But with opportunities come risks, particularly of market concentration by BigFintechs. A global discourse on these emerging risks that brings everyone to the table is imperative.”
Amb. Christian Frutiger, Assistant Director, Swiss Agency for Development and Cooperation said: “Good governance of Big Tech and Fintech is one of development’s cutting edge issues that will define tomorrow’s world. It requires a new geometry of actors to ensure that no one is left behind. The Dialogue on Global Digital Finance Governance offers a unique platform to convene a wide range of stakeholders, including from the Global South and bring in new perspectives to different relevant international bodies.”
The Dialogue on Global Digital Finance seeks to facilitate a balanced and more inclusive dialogue, particularly involving developing nations, on SDG-aligned governance of global digital financing platforms. It convenes representatives from central banks, finance, trade and other relevant ministries, cross-sector regulatory bodies, LDCs and non-state actors from developing countries, and representatives from key institutions such as FSB, BIS, IMF, World Bank and Global Partnership for Financial Inclusion affiliated entities.
The platform provides a means for advancing consensus on policy and regulatory responses to the development of global digital financing platforms appropriate for developing contexts and economies. It also seeks to catalyse governance innovations that improve consideration of the SDGs and can support developing countries to harness digital finance in leapfrogging towards sustainable development. The initiative is cochaired by the UNDP Administrator and the Governor of Central Bank of Kenya, funded by the Swiss Agency for Development Cooperation and hosted by UNDP and UNCDF.
