Consultant: Digital Financial Services Regulations – State of the Practice Report

1. Background

The Alliance for Financial Inclusion

The Alliance for Financial Inclusion (AFI) is the world’s leading organization on financial inclusion policy and regulation. Currently, nearly 100 member institutions make up the AFI network, including central banks, ministries of finance and other financial policymaking or regulatory institutions from over 85 developing countries and emerging markets. AFI empowers policymakers to increase the access and usage of quality financial services for the underserved through sustainable and inclusive policies and an effective use of digital technologies.

Policies developed and implemented by the members of the Alliance contribute to the attainment of a number of the 2030 UN Sustainable Development Goals. By setting their own agenda, AFI members harness the power of peer learning to develop practical and tested policy reforms that enhance financial inclusion with strategic support from both public and private sector partners.

AFI has seven Working Groups (WGs), which have become the key source of policy developments and trends in financial inclusion and as the primary mechanism for generating and incubating technical content in the network: The WGs are Consumer Empowerment and Market Conduct Working Group (CEMCWG), Digital Financial Services Working Group (DFSWG), Financial Inclusion Data Working Group (FIDWG), Financial Inclusion Strategy Peer Learning Group (FISPLG), Global Standards Proportionality Working Group (GSPWG), Inclusive Green Finance Working Group (IGFWG) and SME Finance Working Group (SMEFWG) and also serve as “communities of practice”.

Providing a platform for knowledge exchange and peer learning among policymakers to share, deliberate and deepen their understanding, the WGs offer leadership and expertise in their respective policy fields and support the network to monitor new developments in emerging fields.

The knowledge generated via the working groups is disseminated for implementation by a range of capacity building activities such as Joint Learning Programs, Member Trainings, and Trainings by Private Sector Partners. The practical experience members garner from engaging in peer learning based capacity building is then applied by members as in country implementation projects which are supported by the provision of financial or technical support to AFI member institutions in conducting activities that aim to deliver financial inclusion policies, regulations, supervisory tools or enablers for the development of policies, such as national financial inclusion strategies

The working groups receive strategic guidance and insight from the High-Level Global Standards & Policy Committee, while the Gender Inclusive Finance Committee, supports WGs in integrating gender considerations into all aspects of their work and support members in fulfilling their Denarau Action Plan (2016) commitment to promote women’s financial inclusion.

AFI members have made further commitments in a range of other accords which can be read here.

The AFI’s five regional initiatives support policy implementation in Africa (AfPI), Latin America and the Caribbean (FILAC), the Pacific Islands (PIRI), Eastern Europe and Central Asia (ECAPI) and the Arab Region (FIARI).

AFI is an innovative, fully independent international member-driven organization headquartered in Kuala Lumpur, Malaysia.

It enables policymakers in developing countries to share their knowledge of financial inclusion policies that have delivered tangible results. This knowledge and evidence of successful policies can empower each country in designing the most effective policy solutions for its own situation. AFI does this by facilitating online and face-to-face exchanges, regionally and globally, supported by grants and research.

Within AFI, working groups are the key source of policy developments and trends in financial inclusion and serve as “communities of practice” on key financial inclusion issues. They are the primary mechanism for generating and incubating knowledge in the AFI network and provide a platform for knowledge exchange and peer learning to allow policymakers to share, deliberate and deepen knowledge and understanding on key financial inclusion issues. **

One such working group is the Digital Financial Services Working Group (DFS WG). The DFS Working Group provides a platform for capturing, tracking and sharing information on innovative digital financial services, products, business models and appropriate new policy responses, and establishes linkages and provides inputs, where appropriate, to global Standard-Setting Bodies (SSBs) seeking to establish proportionate supervisory approaches.

2. Objective

As part of Alliance for Financial Inclusion’s (AFI) Digital Financial Services (DFS) & Fintech workstream deliverable, we plan to develop a special report on “**Digital Financial Services Regulations – State of the Practice**”

The objective of the report is to document the state of practise of digital financial services regulations among AFI member countries. Key policy lessons and regulatory gaps from the research will inform DFS policy/regulatory design among member countries to foster financial inclusion. To achieve this, the report will perform a thorough analysis of the impact and efficacy of existing regulations to ascertain best practices and use them as a benchmark when addressing regulatory gaps.

3. Scope of Work

The consultant is expected to:

· Preliminary consultations with AFI project lead and with AFI’s project supervisory committee on the scope, expected deliverables and related timelines.

· Develop an outline of the report along with a framework for analysis on “Digital Financial Services Regulations – State of the Practice” and share with AFI for inputs and finalization.

· The framework for analysis will identify enabling policies and regulations that helped leverage DFS and fintech in advancing financial inclusion. Global scoping will be carried out against the benchmark of these enabling DFS policies and regulations.

· The framework for analysis will also guide the scope and depth of the project to ensure that the insights are relevant and applicable to the needs of the member countries

· Review existing literature on the status of DFS regulation implementation across the AFI network.

· Conduct detailed literature review and map AFI member countries on the presence (or lack thereof) of the identified DFS related policies and regulations as per the framework.

· Collect primary and secondary data on DFS related policies and regulations, as highlighted in the framework for analysis, among AFI member countries.

· Complement data collection initiative by interviewing key stakeholders. The respondents for the interviews to include (not exhaustive) – select AFI member country regulators, academics/researchers, experts and other public and private stakeholders. Maximum 10-12 interviews may be conducted as part of this process. Where possible, AFI will provide assistance in setting up the interviews.

· Prepare preliminary report and presentation based on primary data collection and qualitative interviews to be presented to the project committee for review and comments.

· Collect feedback and inputs from select AFI members and key stakeholders and incorporate into the report.

· Submit the final version of the report along with a PowerPoint presentation summarizing the report.

4. Key Deliverables

A “Digital Financial Services Regulations – State of the Practice” report along with a PowerPoint summary presentation. The report covers following aspects:**

o A clearly articulated framework, research methodology and guiding questions used in the completion of the report. **

o A comprehensive analysis of the extent in which DFS regulations are being implemented across the AFI network. **

o Visualised data to supplement the report narrative (AFI will support with design and graphics). **

We envisage that the report could highlight case studies of best practises from AFI member countries and beyond. Analysis/examples of the initiatives taken up by the market players towards implementing successful DFS regulations will make the report more holistic and representative. Further, we envisage that the report could take a nuanced view of DFS regulations/policies from the perspective of advancing financial inclusion for women and other disadvantaged groups.

During the consultant’s work on this project, AFI will assist these deliverables by: providing inputs on the report content, where possible, contacting/connecting stakeholders to assist in arranging the consultant’s phone interviews; sharing desk research and literature review.

Apart from the report and summary presentation, other key deliverables include: summary note on literature review, draft of the outline and framework for analysis, draft of survey/interview guides, summary of interviews conducted, data on country regulations on DFS and project management related updates.

5. Timelines

This work would be undertaken between August and October 2021. The key timelines are summarized in the table below:

Timeline – Deliverable

Week of 23 Aug 2021 – Consultant Onboarding

Week of 30 Aug 2021 – Inception meeting

Week of 6 Sep 2021 – Desk research on DFS regulations

Week of 6 Sep 2021 – Finalisation of framework for analysis and report outline

Week of 20 Sep 2021 – Primary and secondary data collection

Week of 11 Oct 2021 – First draft of the report

Week of 25 Oct 2021 – Second draft of the report

Week of 8 Nov 2021 – Third and final draft of the report[1] along with summary presentation

6. Consultant Experience

· Degree(s) in one of more of finance, law, politics, social science, or international relations. Advance degree is preferred;

· Minimum of 8 years of professional expertise in technical, policy or capability aspects of digital financial services policies and regulations;

· Practical professional experience in provision of advice and analysis to government or other public sector institutions;

· Extensive experience in drafting reports and presentations related to digital financial services projects;

· Excellent writing skills and native-level fluency in English;

· Excellent organisational and evaluative skills;

· Experience gained from work for international organisations is highly desirable.

7. Reporting

Throughout the contract period, the Consultant will be reporting to AFI’s Policy Manager for Digital Financial Services. The contract will be with the individual consultant or consulting firm with specific names of the team member(s) that would be working on the assignment. The consultant is expected to have good knowledge and technical background related to digital financial services and related regulatory issues.

8. Criteria for Evaluation

The proposals submitted will be evaluated based on the following criteria:

· Academic Qualification (10%)

· Experience and technical competence of the key staff for the assignment; (50%)

o Knowledge and technical expertise of individual research relevant to the assignment (25%)

o In Digital Financial Inclusion policy related work (25%)

· Adequacy of the proposed work plan and methodology in responding to the Terms of Reference (35%)

o Technical approach and methodology (25%)

o Workplan (10%)

· Sample work – Writing experience and English (5%)

Total: 100%