By reshaping the money transfer ecosystem, the digital transformation is also making it necessary to drive data-driven compliance in Africa. Indeed, the digital transformation has supported the expansion of services such as mobile money and remittances, especially in emerging and developing countries. These services play a crucial role in promoting financial inclusion and economic growth. However, the regulatory authorities and central banks of these countries do not always have the tools necessary to effectively govern and leverage these services. Technology can bridge this gap. Eager to explore the potential of technology in supporting data-driven compliance and decision-making, the UNCDF invited industry experts, including GVG, to give their perspective at a webinar on 28 September.
The need for mobile money and remittance data
According to the GSMA’s The State of The Industry Report on Mobile Money for 2018-2023, the value of mobile money (MM) transactions in Sub-Saharan Africa increased by an astounding 600% during the period under scrutiny. Sub-Saharan Africa alone now accounts for 70% of the global MM market. As for remittances, the World Bank indicates that they grew by 6.1% in 2022 and by 14.1% in 2021. Although their growth appears to be slowing down after the surge observed during the pandemic years, they remain resilient. In some cases, remittances are also sent using MM platforms, due to the lower fees. This consolidates MM’s economic impact.
It is widely acknowledged that MM and remittances promote financial inclusion and economic growth in African economies. Against a backdrop of continuous expansion, this represents a strong incentive for regulators and central banks to ensure transparency, compliance, and security within these services. However, this requires the ability to collect and analyze the massive volumes of data digital financial transactions generate. Once processed, the data can effectively support decision- and policy-making processes. The relevant authorities can therefore promote data-driven compliance in Africa by building their technological capacities. This will enable them to match the pace of innovation and digitization in the money transfer ecosystem.
Technology for data-driven decision-making
The growth of MM and remittances is partly due to technological innovation. Technological innovation can thus help manage and leverage this growth. Based on this premise, the UNCDF hosted a webinar entitled Technology for Enabling Data-driven Decision-making in LDCs on 28 September. This event forms part of a webinar series on Better Remittances Data for Better Decisions. Its aim was to explore ways to harness technology to optimize the use of data for compliance purposes, with a view to enabling the effective governance of the digital financial service sector of least developed countries (LDCs).
As an expert in the field of data-driven compliance in Africa, GVG was invited to take part in the webinar. Edouard Docteur, GVG’s Chief Delivery Officer, represented the company. The other guests were firms Regnology and Sunoida. Regnology specializes in financial and tax regulatory reporting solutions for regulators and regulated firms. As for Sunoida, it is a Dubai-based Banking BI & Analytics company offering its services to banks in emerging markets. The moderator, Paloma Monroy, Senior Remittance Policy Specialist at the UNCDF, introduced the participants. The latter then presented the data-driven compliance solutions they implemented in the Republic of Congo, Ghana, and Rwanda respectively.
GVG’s approach consists of implementing a RegTech solution that tracks, and reports on, the MM industry’s compliance efforts using Big Data analytics. By giving the relevant authorities optimal visibility over the sector, this approach fosters transparency and security. This therefore reinforces trust in the MM ecosystem and allows authorities to reconcile AML and CFT standards with financial inclusion. As an example, Edouard Docteur described the positive impact of GVG’s approach on the Republic of Congo’s MM services. The number of active users and the MM transaction volume increased by 9.8% and 13.6% respectively from May 2022 to May 2023, he stated. During his presentation, Edouard Docteur emphasized GVG’s vision to develop and deliver a system that is scalable and adaptable to the local ecosystem; that complies fully with the local regulation; and that collects data in real time and non-intrusively.
Both Regnology and Sunoida share GVG’s objective to provide reliable, granular data to their clients for improved decision-making, and to support regulators by facilitating reporting, enabling proactive supervision, and reducing costs, among others. Regnology’s solution was installed at the Bank of Ghana (BoG), for instance, where it acts as a single data collection portal. The collected data has enabled the BoG to obtain valuable insights into the causes of the financial gender gap, for example, and to remedy this gap through improved decision-making. Sunoida’s solution, for its part, is automatically preparing reports on remittances and Mobile Money for the National Bank of Rwanda (NBR). Thanks to the high-quality data the platform provides, the NBR’s decision-making processes greatly improved. As a result, financial inclusion in Rwanda now stands at 93%, compared to 47% four years ago.
GVG’s white paper on data-driven compliance in Africa
GVG’s work with various African governments and regulators has showcased the benefits of technology as an enabler of a data-driven approach to compliance in digital financial services like MM. Indeed, Big Data platforms like GVG’s enable the safe and effective collection and analysis of data for decision-making purposes. They achieve this by connecting the regulator directly to the regulated industry.
GVG formalized their data-driven approach to compliance in the form of a white paper entitled Data-Driven Transparency and Compliance in the Digital Financial Ecosystem in Africa: An emerging trend in emerging economies. This document highlights the need for data to support financial intelligence and decision-making in the African digital financial services sector. It also showcases the positive impact of a data-driven approach on compliance within the MM and remittances ecosystems. Indeed, this approach enhances regulatory compliance, policymaking, financial inclusion, and financial intelligence. Three case studies involving the Republic of Congo, Ghana, and Rwanda describe how GVG’s Mobile Money Monitoring (M3) platform has helped these countries govern their respective MM market more effectively.
In developing and emerging countries, data technologies are increasingly showing up in governments’ regulatory toolboxes, ensuring the good governance of the digital financial ecosystem. Their implementation does not only support regulatory oversight and revenue mobilization for governments. Indeed, it also helps build trust in the ecosystem, which may result in enhanced financial inclusion. The crucial need for data to leverage and effectively manage the growth of digital transactions has led a growing number of African governments and regulators to adopt these technologies. GVG is proud to be the technological partner of some of these forward-thinking governments.
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