[PANEL SESSION] Outcomes driven regulation

  • Isabelle BARRES, Consultant
  • Juan Carlos IZAGUIRRE, CGAP

  • Mariela ZALDIVAR CHAUCA, Superintendence of Banking, Insurance, and Private Pension Funds of Peru
  • Luis TREVIÑO, Alliance for Financial Inclusion (AFI)
  • Stella M. NKHOMA, Bank of Zambia


    In order to make regulations more customer centric, this session discussed how regulators incorporate outcomes-data in their frameworks, and how they use the data to result in better policies. Panellists would highlight their experiences in Peru and Zambia, but also globally, to exemplify the use of sex-disaggregated data and consumer protection outcomes to measure financial inclusion, in particular for women.

    Isabelle BARRES opened the session by explaining the broad range of speakers in terms of background and region, after which the speakers introduced themselves with their organisation’s background.

    Then Luis TREVIÑO, Senior Policy Manager of the Alliance for Financial Inclusion (AFI) presented their evidence-based approach to guide women’s financial inclusion. AFI developed a data measurement framework in its network, based on sex-disaggregated data. AFI member institutions measure financial inclusion in the following dimensions: access, uptake, usage and quality. Quality is determined by evidence-based reliability, accountability, data privacy and financial capabilities.

    AFI translated their gender gap-analysis of men and women in terms financial inclusion into a ‘Theory of Change of Financial Inclusion’, to underpin the importance of women getting access to financial services, savings and borrowings, eventually to lead to women’s economic empowerment. In this way AFI members strive for measurement with a gender perspective, working towards achieving the SDGs for gender equality and women’s empowerment. One of the important messages that Treviño brought across was the need to measure by using more granular and segmented data, in order to better inform policy decision-making as well as for monitoring and evaluation purposes. By implementing financial inclusion sex-disaggregated data and by using monitoring and evaluation tools and frameworks, AFI financial policymakers aim to develop a robust theory of change to reduce the gender gap in financial inclusion, based on baselines being linked to clear policies and targets. Treviño admitted that this is sometimes challenging, as there is a need to create awareness about the links between data, policy implementation and concrete results in strengthening women’s financial inclusion and thus lowering the gender gap. An excellent case study can be shared by the Bank of Zambia, an institution that has worked to establish policies to lower the financial gender gap guided by data..

    Stella Mlewa NKHOMA, gender specialist at the Bank of Zambia, next presented Zambia’s national financial inclusion strategy: “Towards enabling women’s financial inclusion through data”.

    Zambia’s government policy is geared to better financial inclusion of women, as that is expected to lead to economic growth and reduced income inequalities. They use demand side and supply side sex-disaggregated data to develop the right indicators and baselines to improve the outcomes for women, closing the gaps in financial inclusion and economic opportunities for women. Accuracy of data is key in this respect, and the Framework is now being used by the banks. It has helped them to make a lot of progress with mobile data, financial services and payment systems. The national financial inclusion strategy runs from 2017-2022, with clear vision, drivers and enablers to lead to indicators and targets set for 2022.

    Nkhoma emphasised that a sandbox approach can help to bring change in a more relaxed regulatory environment, and giving a chance to more women-centric opportunities. A similar result can be achieved with minimum standards to improve practice, while being consumer value-oriented and not too restrictive in order to improve services for providers and customers alike. Financial education initiatives in a digital environment are important to keep people safe (consumer protection), and safeguard their solvency, liquidity and inclusiveness. Such training should include local officials to create awareness.

    Juan Carlos IZAGUIRRE of CGAP explained about a promising customer-centric approach to consumer protection. He stressed the important role of traditional consumer protection in setting minimum standards, especially to improve point-of-sale disclosure and complaints handling practices at a time when no rules existed. Customer-centric approaches are now aiming to shift the focus of providers and regulators, from strict compliance with rules to customers and the outcomes and value they attain from financial services. The journey to set up a customer outcomes regulatory approach starts with a clear consumer protection mandate that anchors regulatory and supervisory actions, and then follows with the identification of clear customer outcomes. These are intermediate outcomes related to the customer’s use of financial services, which are necessary to achieve broader outcomes, like making customers more financially healthy. The next step is setting up a clear supportive regulatory framework covering the provider’s interaction with customers (data analytics to gather customer insights, assess customers’ situation on an ongoing basis, and provide effective recourse); and the provider’s internal processes (conduct governance, conduct risk management and product governance, all of which used to eliminate flaws in the system, and added by customer feedback). Monitoring, supervision and evaluation is also a core component of an outcomes-based consumer protection framework. In that respect Izaguirre listed the 5 steps that CGAP followed to develop an indicator framework in South Africa: agreeing on customer outcomes, translating them into measurable elements, selecting priority indicators, collecting data, and analysing results. The pilot comprised 20 indicators linked to outcomes and customer journey. Finally, he presented their main takeaways of the customer journey.

    Mariela ZALDIVAR CHAUCA presented next how outcomes-driven regulation has helped mitigate the effects of COVID-19 in Peru, while at the same time leading to increased digitalisation of the financial sector. At the outset of the pandemic, some 74% of Peruvians were not doing well as a result quarantine, mainly due to loss of income. Whereas MFIs faced the biggest drop in flow of new debtors, which only began to reverse after July/August 2020, due to a change in the whole financial ecosystem. There was a strong growth in digital channels and services, for instance some 40% of the account holders started with an e-wallet, next to other new products and services. This led to important changes in the financial ecosystem, with many new challenges, for which they had to establish measures to mitigate the impacts on people and institutions. The aim was to keep people safe, serve consumer protection interests, maintain stability and integrity, and importantly to also ensure inclusiveness. For this purpose they initiated financial education in the digital environment, with platform functions and a more prominent media strategy, which also included the training of local authorities and officials in this new and more volatile environment. They monitored client behaviour and helped reschedule loans (which was a challenge for the financial institutions), and they captured and analysed data to adapt their financial policies. In effect there is a stronger demand on financial regulations to safeguard clients, like in the case with loan rescheduling. Zaldivar Chauca finished by saying that we are passing a most critical time.

    With that said, Barres concluded the session by thanking the presenters for sharing their positive experiences in linking the regulatory framework with customer protection.