LISTEN NOW: Interoperability and Its Role in Financial Inclusion

This webinar looked at the fundamentals of interoperability and approaches within Africa, with a special focus on Mozambique and Malawi. Panellists for the webinar were Gertrude Kadumbo, Chief Executive Officer at National Switch Limited (Malawi) and João Gaspar, experienced DFS Consultant and Founder of PayTek.

Interoperability is the ability for different systems to connect with one another. In the DFS and Financial inclusion context, CGAP defines it as “The ability for mass market users of DFS accounts to perform specific use case transactions between accounts of different providers.” March 2017, the ITU DFS Working Group published a set of 85 recommendations and 28 thematic reports with the aim of accelerating the financial inclusion of more than 2 billion people worldwide. Interoperability and recommendations for implementation are a key part of this report.

It is not the concept of interoperability itself that the user will see, but they will experience benefits such as costs for transactions are simple and affordable (one small cost regardless of the bank/MNO/FSP you are sending to/from), you send/receive money instantly, and you can store value and pay for products digitally. These will increase trust in digital payments among users, which drives an increase in digital transactions. Value-add services, such as savings, credit and insurance, can then be offered to users – increasing their financial health and inclusion.

Interoperability is more than just the technology and infrastructure to provide the connections. It also requires collaboration between industry players including commercial banks, MNOs, fintechs, aggregators, microfinance and savings groups. Shared processes, rules and operations need to be agreed and getting these varied players to agree comes with its challenges. It is also about getting the business model right so that there is a balance between the economic interest of the partners and the end users. The Government and Central Bank also have a key role to play in oversight and ensuring that financial inclusion is part of the remit behind the move towards interoperability.

There are different approaches to and business models for how you can achieve interoperability, and the webinar showcases some of the options available and what countries have implemented. Joao focuses on Mozambique’s journey towards interoperability and Gertrude on Malawi’s journey to implementing a national switch. You can download a copy of João’s presentation and Gertrude’s presentation, and you can connect with them João Gaspar and Gertrude Kadumbo