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Ms. Elena Loukoianova, Yongzheng Yang, Mr. Si Guo, Ms. Leni Hunter, Mrs. Sarwat Jahan, Mr. Fazurin Jamaludin, Umang Rawat, Johanna Schauer, Piyaporn Sodsriwiboon, and Mr. Yiqun Wu
Asia has made significant progress in financial inclusion, but both its across-country and intra-country disparities are among the highest in the world. The gaps between the rich and the poor, rural and urban populations, and men and women remain deep. Income is the main determinant of the level of financial inclusion; but other factors, such as geography, financial sector structure, and policies, also play important roles. While some countries in the Asia-Pacific region are leaders in fintech, on average the region lags behind others in several important areas such as online (internet) purchases, electronic payments, mobile money, and mobile government transfers. This Departmental Paper aims to take stock of the development and current state of financial inclusion and shed light on policies to advance financial inclusion in the region. The research focuses on the impact of financial inclusion on economic growth, poverty reduction, and inequality, linkages between financial inclusion and macroeconomic policies, as well as structural policies that are important for improving financial inclusion. Given the increasing importance of financial technologies (fintech), the paper also provides a snapshot of the fintech landscape in the Asia-Pacific.
Ms. Elena Loukoianova and Yongzheng Yang

-served, including leveraging telecommunication companies and agent bank networks to provide insurance, as well as focusing on easy-to-understand and affordable microinsurance products. Chapter 5 Impact of Technology on Financial Inclusion Fintech Use and Financial Inclusion: Stylized Facts Fintech 1 is playing a growing role in improving financial inclusion around the world. The cost savings and economies of scale arising from fintech have made financial services commercially viable for some previously excluded groups. This is particularly true for developing

International Monetary Fund. Asia and Pacific Dept

could reduce the need for carrying cash by purchasers. Most of teller functions traditionally offered at bank branches were obviated by the expansion of ATMs. Machine learning and artificial intelligence have enabled analysis of large and diverse data in credit decisions and identifying fraudulent activities in payments. 2 2. A new wave of technology-enable financial services, called Fintech, has made a substantial effect on increasing financial inclusion particularly in emerging economies . Fintech uses technological innovations to offer various financial services

International Monetary Fund. Asia and Pacific Dept

and enhance competition and productivity. Directors commended Vanuatu for its removal from the FATF grey list and recommended that the financial sector’s regulatory and legal frameworks be further strengthened to account also for increasing fintech use. Together with ongoing progress in enforcing the AML/CFT framework, this should help maintain correspondent banking relationships. Directors also noted that the National Financial Inclusion Strategy 2018–2023 should help improve access to finance and inclusion more generally. Directors noted that the national

International Monetary Fund. Western Hemisphere Dept.

national financial inclusion strategy adopted in 2015 . Fintech use is being promoted to boost financial intermediation. The recent launching of a web-based platform for economic agents to access the different costs of financial services is expected to foster competition. The National Financial Education Plan is expected to be adopted in the near term, with a view to stimulate financial inclusion through financial education. Significant progress has also been achieved in addressing issues raised in the Fund’s safeguards assessment report . Haiti has received

International Monetary Fund. Asia and Pacific Dept

banking transformation and interlink between banks and fintech using open Application Programming Interface (API) standards; (ii) strengthen the configuration of retail payment systems to make it more efficient and safer; (iii) strengthen financial market infrastructures through modernizing the infrastructure and in accordance with international best practices; (iv) establish a public data infrastructure, that will connect all payment transactions and manage the flow of payment data, including digital ID; and (v) strengthen the current regulatory, licensing and

International Monetary Fund and World Bank
The paper finds that while there are important regional and national differences, countries are broadly embracing the opportunities of fintech to boost economic growth and inclusion, while balancing risks to stability and integrity.
International Monetary Fund and World Bank

region . Fintech use has expanded beyond payments to include lending, insurance, and investment; adopting a wide range of technologies based on consumer needs, level of development, regulatory stance, and existing financial and technological infrastructure. Asian tech giants (e.g., in Bangladesh, China, Indonesia) have become important providers of financial services, putting competitive pressures on traditional financial institutions. Policymakers are trying to catch up with the rapid pace of fintech development, while ensuring that fintech risks are well understood

Mrs. Sarwat Jahan, Jayendu De, Mr. Fazurin Jamaludin, Piyaporn Sodsriwiboon, and Cormac Sullivan

China and Tencent. Countries in the Asia-Pacific region are at various stages of fintech development. Several Asia-Pacific EMs are at the forefront of fintech use. For example, China is a global leader in mobile payments, accounting for more than half of total mobile payments in the region at end-2015 ( World Bank, 2018 ), reaching levels greater than those in most developed countries. Many Chinese consumers have moved directly from cash to mobile payments, bypassing debit and credit cards. The use of Fintech in China has also expanded to include savings and credit

Yoke Wang Tok and Dyna Heng

recent paper by the BIS 1 found that 29% of men use Fintech products and services as compared to 21% of women. 2 The Fintech gender gap (8 percent point) was larger than the gap in bank account ownership between men and women 3 (7 percent point) 4 , and existed in all countries. The authors found that the gap could not totally be explained by either country-specific circumstances or individual characteristics such as age, education, income, and marital and employment status. Their results suggest that the gap in Fintech use is due to differences in attitudes and