For the Central Bank of Sri Lanka (CBSL), 2012 was the culmination of a 5-year effort to establish an enabling regulatory framework for mobile money that opened the market to both bank and non-bank providers and extended services to Sri Lanka’s unbanked population. Marking this shift was the launch of eZ Cash, a new mobile money service that has signed up over 1 million customers in just one year. eZ Cash is operated by Dialog Axiata PLC (Dialog), a mobile network operator (MNO) that was awarded a licence to operate as a payment services provider following revisions to the central bank’s regulations. The Sri Lankan case offers important lessons for both regulators and MNOs working to achieve the dual objectives of financial inclusion and economic growth.
Lessons for regulators:
- Enabling regulatory frameworks play a fundamental role in expanding the reach and improving the efficiency of the financial sector.
- Building an inclusive digital financial system requires a level playing field in which both banks and non-banks, particularly MNOs, can provide mobile money services.
- Developing mobile money requires leveraging the value-added proposition for MNOs
- Regulators are more likely to achieve their objectives if they are open-minded, test their policy approach, and cultivate a dynamic of mutual learning with private sector players.
- There is likely no need to reinvent the wheel: some of the policy and regulatory solutions to enable mobile money have already been tested successfully in a number of countries where MNOs are providing sound and secure mobile money services.
Lessons for MNOs:
- Be proactive with the regulator: engaging in transparent, constructive dialogue helps to build a more enabling regulatory environment.
- Launching several types of accounts with different KYC requirements can ease registration requirements for low-income users while satisfying the heavier transactional needs of power users.
- Use SIM registration data to support KYC whenever possible.