Consultant: Development of a Special Report on RegTech for Financial InclusionAFI

1. AFI & Project Background:
The Alliance for Financial Inclusion (AFI) is a unique international network of central banks, ministries of finance and economy, and other regulatory bodies which hold the mandate to develop and implement financial inclusion policies. Our aim is to do so through our mission of empowering financial regulators and policymakers to increase access and usage to quality financial services for the most underserved and unserved populations.
Regulators are increasingly being challenged to deliver and ensure the desired level of compliance, supervision and oversight in a plethora of functions and roles; from ensuring actors in the ecosystem adhere to regulations regarding market conduct, consumer protection, financial stability & integrity, transparency, AML/CFT measures, reporting and so much more, delivering on these expectations, particularly in this age of data abundance, digital disruption in the design and delivery of financial services - some of which fall within regulatory grey areas, places an urgency and demand on policymakers to respond faster and more comprehensively.
To keep pace, regulators across the developed and developing world are busy identifying the opportunities and challenges presented by Regulatory Technology (RegTech) which in the context of this deliverable refers to applications of innovative technologies that support compliance with regulatory and reporting requirements by regulated financial service providers and in part, supervisory technology (SupTech), which refers to technologies used by supervisory agencies and policymakers themselves.
For many AFI members, this is an emerging area where there is a need to innovate, test and pivot solutions and scale learnings. The proposed knowledge product would therefore support AFI members understand and engage with the global RegTech landscape, learn about tools that can help them improve and redesign their approaches to oversight and supervision, regarding the increasing innovation in the design and delivery of digital financial services the veracity, volume and velocity of data, and the absolute necessity to uphold consumer protection, market conduct and financial system integrity.
RegTech has also emerged as a priority during the COVID-19 pandemic as operations of financial sector regulators are disrupted and they are challenged to remotely perform their supervisory functions, especially of digital finance and fintech.
2. Objective:
The deliverable is a special report that presents a framework offering guidance to members within the AFI network practical insights and approaches that will help members design, develop, adopt and adapt Regtech initiatives for different and relevant thematic areas.
The special report should also provide comprehensive insights that will allow regulators and members of the AFI network move from their current state of risk and compliance function supervision and oversight to a future state which might be powered by regulatory technology such as, near real-time information collection and analysis, use of smart machines to make sense of complex patterns in data and hence better able to foresee risks and compliance failures.
This special report should document different use cases and countries experiences drawn from the AFI network and beyond.
Furthermore, insight from this knowledge product should present ideas of how RegTech can serve as a response to emergencies (local, regional or global) such as the COVID-19 experience, as well as test innovative and appropriate RegTech solutions, shifting the way regulators approach supervision and monitoring of DFS and fintech with an end goal to build resilience in the financial sector for times of crisis but also to open up new opportunities for innovation and financial inclusion.
3. Scope of Work:
We expect the special report and framework proposed in the deliverable to capture some of these broad themes:
Regulatory and supervisory technology and the abundance of data
Captured succinctly in this article, financial authorities are actively working to implement proportional, risk-based approaches (RBA) to both regulation and supervision, in a bid to better engage with changing markets and plan for growth given their resource constraints. However, embracing these new approaches has proven challenging for emerging-market financial authorities. These authorities need to become more effective at capturing and analyzing data to build an evidence base for informed and timely decision-making, targeted supervision and to decode innovation and understand consumers' experience and needs.
Financial authorities are therefore exploring Regtech and Suptech as new tools for data collection and analysis to keep pace with market growth and innovation. These tools could help build the sector's knowledge base, facilitate market oversight and develop evidence to shape policies. Tools that help gather consumer-sourced data could provide deeper insight into consumer needs and highlight appropriate actions for financial authorities.
Financial system stability
As innovation in the design, delivery and use of digital financial services continue to evolve and grow at a rapid rate, regulators and market actors agree the same technologies that are generating these opportunities present risk of unprecedented harm to customers and destabilization of the financial system, if governments fail to anticipate and manage the problems that will emerge with them.
Therefore, as technology transforms finance, regulation could become the single most important factor in how much it will produce good versus ill. Policymakers are now faced with the daunting responsibility to enable desirable innovation while negotiating at high speed proportionate regulation, oversight and supervision.
Consumer protection and market conduct
As observed in a number of AFI member countries, prototyping and testing Regtech solution to address consumer complaints and ensure a responsible and efficient market is quickly becoming the norm. How has the experience of regulators in Philippines shaped Regtech for consumer protection with the BSP rolling out a chatbot solution that allows Filipinos to file complaints through their mobile handsets via an app or via SMS, as well as a processing utility to generates insights from all complaints that BSP receives?
Detection and prevention of financial crimes
The global community has been stepping up our efforts to combat criminal financial activities such as money laundering and terrorist financing, yet, these threats are ever evolving jeopardize the integrity and stability of the international financial system as illicit fund flows are varied and often cut across jurisdictions and economic sectors. With the disguise of funds, their source or transactions are increasingly adopting sophisticated ways to "beat the system", what promise does Regtech and Suptech present to mitigate these risks?
Remote supervision and reporting
With the provision of financial services becoming digital-native, mobility restrictions due to global emergencies, geography etc and the plethora of different classes of financial service providers surging, the idea of remote supervision and regulatory reporting is becoming mainstream. How should the design, implementation, risks and future of this look like?
Should the resultant Regtech/Suptech system avoid actual "collection" of many kinds of data by regulators, in order to avoid building large centralized databases that attract hackers. Instead, information might have to remain in place in the regulated firm, accessible remotely through APIs or will the adoption of AI-enabled regulation, machine readable and executable regulation etc address both the need and risk?
Gender and Women's Financial Inclusion
RegTech adoption and use across the financial service ecosystem clearly offers several benefits from reducing costs, improving efficiency and reducing risks. However, we envisage RegTech can contribute to overcoming some of the persistent barriers and challenges impacting women's access and usage of financial services and their overall inclusion. We begin to see use cases where RegTech is employed to manage the continuous stream of regulatory policy changes , particularly around compliance with AML/CFT, KYC and customer due diligence rules - so these changes does not at any time present barriers to vulnerable groups and women.
Secondly, with the increase in data generation across the financial service ecosystem, Regtech is increasingly adopted in the management of data that is needed for regulatory compliance, whether this is for regulatory reporting or transaction monitoring, Regtech, therefore presents an increasing opportunity for the collection of sex disaggregated data and governance.
Finally, RegTech offers the opportunity to convert well-managed data into insights and information that can not only help improve onboarding, sustaining and improving the inclusion of women, but ensure financial service providers are compliant with women specific and gender-sensitive policies that would deliver the desired outcome of a global reduction in the gender gap.
Accelerating Financial Inclusion
The single greatest driver of expanded financial inclusion is a technology - it is revolutionizing how people at all levels of wealth and financial sophistication deal with money. Regulators will need technology-based information and tools to oversee these rapid shifts, so as not to inadvertently choke off desirable innovation, counter related risks or affect the rising levels of inclusion globally.
4. Timelines and Key Deliverables and Activities:
The consultant is expected to commence the assignment in October 2020 and will complete the deliverables by December 2020. Key timelines is available in the RFP doc.
During the assignment, the AFI MU will closely support the consultant by: sharing internal expertise and existing research; contacting or connecting key stakeholders to assist in arranging the consultant's communications and telephonic interviews; and providing inputs to deliverables. This assignment is expected to involve extensive desk research and interaction with key stakeholders.
5. Consultant Experience:
10+ years of professional experience in broad financial regulatory and policy interventions, digital financial services and financial technology, financial regulation for DFS and Fintech, and AML-CFT, public policy, financial inclusion and international development.
Sophisticated understanding and experience in analyzing the issue of regulatory oversight and supervision around financial inclusion, stability, integrity, and consumer protection through the lens of growing digital technology.
Experience working directly with central banks on policy development and implementation, preferably in regulatory oversight, supervision, reporting and enforcing policies and mandates.
Knowledge of potential technological solutions for regulatory and supervisory technology (e.g. FinTech and RegTech applications) and their linkages to deepen financial inclusion.
Excellent written and presentation skills in the English language.
Previous experience working with policymaking and regulatory institutions is desirable.
Advanced university degree in social science, international economics, development finance or other related field.
6. Reporting:
The consultant will work closely with the PPRI and Policy Analysis teams and report directly to the Policy Specialist Fintech.
7. Criteria for Evaluation:
The proposals submitted will be evaluated based on the following criteria: * Academic Qualification
Experience and competence of the key staff for the assignment related;
Adequacy for the assignment
Regional/Global experience * Adequacy of the proposed work plan and methodology in responding to the Terms of Reference
Technical approach and Methodology
Workplan
ReliefWeb

Philippines
Permanent
Full-time