Prudential Supervision for Deposits and Payments: Introduction

Nombre de réponses : 18

Digital Financial Services (DFS) are transforming traditional deposit and payment services by using digital platforms like mobile money and open finance. This is transforming the way customers interact with providers and enhancing financial inclusion. However, it also creates a challenge for prudential supervisors to balance financial stability with innovation. 

To address these challenges, an adaptive supervisory approach is required, applying risk-based proportionality to regulate diverse providers. This approach involves creating flexible licensing to foster a level playing field, using innovation facilitators, and supporting system-wide interoperability, including the sharing of customer data.

The following video unpacks how innovations in DFS have changed deposits and payments, what risks these have introduced, and provides more detail on the recommended adaptive prudential supervisory approach for deposits and payments that protects the financial system, but still fosters responsible financial inclusion. 

 

 

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Click to view the transcript.

This video has laid the foundation for the deposits and payments. The interaction and video that follow will unpack more specific prudential supervisory issues related to deposits and payments, such as EMIs, protecting depositors, and supervising the use of agents with DFS. 

Additional Reading:

We suggest the following as additional reading for learning more about the prudential supervision of deposits and payments in DFS: 

Reflection Questions for Discussion

Please post your response using the forum functionality, to share your insights and thoughts with your fellow students. 

  1. What types of innovation are you seeing in your market with respect to deposit and payment services using digital platforms?
  2. What are your concerns about these innovations?
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Re: Prudential Supervision for Deposits and Payments: Introduction

par AISHA UMARU HADEJIA, Group 1
1. In our market, we are seeing rapid growth in mobile wallets, instant accound opening throgh digital onboarding (eKYC) and embedded finance within fintech apps. There is also an increase in intergration between banks, MMOs and other Fintechs.
2. Our main concerns are data privacy and riks of over-indebtedness linked to instant loans, another concern is weak consumer understanding of digital products (financial literacy).
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Sarim Ali, Group 5
In Pakistan, we are seeing rapid growth in mobile wallets, Raast-enabled instant payments, QR-based merchant payments, and increasing integration of EMIs with banks and fintech platforms. Open banking discussions and embedded finance models are also gradually emerging.

My main concerns relate to operational resilience, fund safeguarding by non-bank EMIs, third-party and cloud dependencies, and cybersecurity risks. As interoperability increases, concentration risk and data protection issues also become more significant from a prudential perspective.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Michael Sserwanga Sserwanga, Group 4
Mobile money accounts continue to dominate the Ugandan Digital Financial services. These have allowed individuals to easily make payments and received deposits as they are linked to the telecom sim cards as well as the USSD which individuals already naturally use

People are able to make payments for utilities as well as using these mobile money accounts. There have also been innovations that now allow people to access savings products that operate in a manner similar to unit trusts (mutual funds ). There is one referred to as "yinvesta" that can be accessed via one of the telecoms via the mobile money platform and USSD. This allows individuals to make deposits as low as Ugx 5,000/= where as the typical traditional unit trusts would require minimum deposits of about ugx 100,000/=

Second, there has been growth in agent networks, where local merchants act as cash-in and cash-out points using digital devices (POS machines). This has significantly expanded financial access especially in rural and underserved areas.

We are also seeing more app-based banking and other user friendly mobile interfaces, enabling customers to manage deposits and payments entirely through mobile applications


Whereas these developments are making the payments and deposits more efficient, however there are significant risks that they pose, such as increased exposure to fraud, cyberattacks, SIM swap fraud, and system outages. Also, as mobile money providers become dominant in payments, a major system failure or breach could undermine public confidence and potentially create systemic implications.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Usman Bayero , Group 1
1. We are seeing real time payment systems, agent banking expansion, digital savings and the use of alternative data for financial profiling. Some providers are leveraging AI while most are leveraging APIs to to scale deposit and payment services quickly.
2.The key concerns are concentration risks due to dominant platforms, weak consumer protection in fully digital journeys, increasing fraud and cyber threats and regulatory capacity keeping pace with technological change.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Rehan Masood, Group 5
In our market, I’m seeing a lot of digital innovations in deposit and payment services. Mobile wallets and app-based banking are becoming very popular, allowing people to send and receive money instantly, pay bills, and top up mobile credit without visiting a bank branch. Some platforms are also offering interest-bearing digital savings accounts, micro-loans, and QR-based merchant payments, which are especially helpful for people in remote or underserved areas.

While these innovations make financial services more accessible and convenient, I do have some concerns. First, there is the risk of fraud or cyberattacks, since users’ money and personal information are online. Second, not everyone may fully understand the terms, fees, or risks of these new services, which could lead to exploitation or over-indebtedness. Finally, there’s a worry that the rapid growth of digital platforms may outpace regulation, making it harder for supervisors to ensure safety and fairness.

Overall, I think these innovations are exciting and promising for financial inclusion, but strong oversight, education, and secure technology are essential to make sure they truly benefit everyone.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Mariam Nansubuga, Group 4
In Uganda, digital payments space is dominated by MTN MoMo and Airtel Money, with growing fintech innovation in merchant payments, agent banking, and embedded finance products. Key concerns center on systemic concentration risk from telco dominance, adequacy of customer fund safeguarding by non-bank e-money issuers, rising fraud vulnerabilities, and a regulatory framework that is struggling to keep pace with the speed of innovation.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Aboo Badhasa Aboma, Group 2
1. Innovations in Deposit and Payment Services
The market is currently witnessing the rise of embedded finance, where micro-savings, digital credit, and insurance products are layered directly onto mobile wallets like Telebirr and M-Pesa to serve over 136 million users. There is a significant shift toward merchant-led digitization facilitated by the rollout of the National Interoperable QR code, which allows informal micro-merchants to accept payments through "Personal Retail Accounts" with simplified KYC requirements. Additionally, the launch of the Ethiopia Instant Payment System (EIPS) by EthSwitch has enabled real-time, 24/7 interoperability for P2P, P2B, and G2P transactions across all banks and payment instrument issuers. Finally, the integration of National Digital ID (Fayda) into payment platforms is streamlining remote account opening and transaction authentication, creating a foundational "Digital Public Infrastructure" for the entire ecosystem.

2. Supervisory Concerns Regarding These Innovations
A major concern is the systemic liquidity risk associated with the rapid scale of non-bank issuers, as the sheer volume of digital transactions—now exceeding 18.5 trillion Birr annually—requires flawless real-time monitoring of trust accounts. There is also a heightened focus on operational and cyber resilience, specifically the risk that a technical failure in shared infrastructure or a major cloud provider could paralyze the national payment grid. The rise in sophisticated digital fraud and social engineering remains a threat to consumer trust, especially as low digital literacy rates among rural and female populations make them vulnerable to "digital informality" and scams. Lastly, the regulatory lag in supervising "Big Tech" and foreign fintech entrants poses a challenge, as the National Bank of Ethiopia (NBE) must ensure these well-capitalized players do not engage in predatory pricing or create "walled gardens" that stifle local competition.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Faith Fxentirimam Envuladu, Group 1
1. Digital deposit and payment service advancements are transforming Nigeria's financial technology sector. The financial sector has developed new payment methods which include fast international transfer services and various super apps and NIBSS-based real-time payment systems and international payment cards. The Central Bank of Nigeria's Regulatory Sandbox 2.0 and Open Banking framework together with these developments will boost financial inclusion and transaction efficiency and ecosystem competitiveness in the financial sector.
2. The main issue with these new technologies, which emerge as their chief problem, requires development of equal access systems that guarantee all population groups, especially underserved groups, will receive the technology benefits. The digital payment innovations face major implementation challenges because different issues, which include, cybersecurity weaknesses, and user financial knowledge gaps, create operational hazards that threaten their long-term viability.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Lucy Kihembo, Group 4
1. In our market, we are seeing several innovations in deposit and payment services delivered through digital platforms. These include seamless interoperability between bank accounts and mobile wallets, enabling customers to move funds between bank accounts and e-wallets in real time. Merchant payments have also expanded significantly through the use of digital payment codes, allowing customers to make payments to merchants using their mobile money wallets. Another key development is digital customer onboarding, where financial service providers are increasingly using digital channels to onboard customers remotely. Additionally, new solutions are emerging to support specific use cases, such as digital pocket money solutions for students in boarding schools. Under these arrangements, students are issued wristbands or stored-value cards linked to digital financial services platforms, enabling them to make purchases at school canteens while parents can remotely deposit funds through their mobile wallets. 
 
2. One is consumer protection risks, including the potential for fraud, misuse of customer credentials, and limited customer awareness when using digital platforms. In addition, AML/CFT risks may arise where digital onboarding processes are not sufficiently robust, particularly in remote customer verification. Further to the above, the rapid expansion of digital payment services raises oversight and interoperability challenges, requiring regulators to ensure that new products operate within the appropriate regulatory perimeter
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Re: Prudential Supervision for Deposits and Payments: Introduction

par KABIRU MUDASHIRU, Group 1
1. There is an increasing rate of mobile wallet creation and creation of virtual accounts, especially for payment purposes.

2. The concern especially centered around virtual account expecially the dynamic virtual account, there has been an increasing incidence of fraud through this product, and traceability becomes a challenge, especially when it is being used to purchase USDT (virtual asset)
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Elsabet Getachew Mulugeta, Group 2
1. Capital Markets Direct electronic access of the trading platform to investors using mobile app and web app is a recent innovation as the standard is using brokers and dealers direct access will have more risk to cyber security and fraud. The broker can give direct access if the firm believe in the integrity of the client of credit risk.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Doreen Ninsiima, Group 4
There is a wide spread use of mobile money lately which is being used for payments, withdrawals, payment of bills another transactions. However, there is a challenge of fraud resulting in instances where people's money is withdrawn off their accounts without their authorisation.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Agaba Albert Busingye Agaba, Group 4
In the Ugandan Market, the innovations of mobile money services through the movements of cash transactions from customers' bank accounts to customers' mobile wallets digital accounts to minimize the handling of cash and adapt paperless transactions. Other innovations are the use of Merchants code payments whereby Telecommunications companies have created merchant code payments through MTN and Airtel services to protect sellers from the reversal or cancellations of payment and create confidence in business digital transactions. this helps customer pay for the bills in shopping malls, Supermarkets, Restaurants, Hotels, fuel stations and other utility companies. These innovations reduce the mutual transfer of money and reduce the many banking hall transactions to mitigate risks like frauds.

The concerns around these innovations are risks from cyber-attacks on customer data that is not encrypted and the mobile money system breakdown or downtime or overages that makes the use of the system inadequate and the system losing customer confidence.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Aisha Kabir Ahmed, Group 1
1. Growth is accelerating in real-time payments, agent banking, digital savings, and alternative data for customer profiling. Providers are using AI and APIs to quickly scale deposit and payment services.

2. Key risks include platform concentration, weak consumer protection in digital journeys, rising fraud and cyber threats, and regulatory capacity lagging technological change.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Elsabet Assefa , Group 2
1. E-money accounts, other payment accounts, user-friendly mobile apps.
2. Cybersecurity, operational resilience, customer fund safeguarding, systemic risks, and data privacy issues from interoperability.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Jemimah Precious Kuteesa , Group 4
In Uganda, innovations in deposit and payment services are mainly driven by mobile money platforms which enable clients to store value, pay bills, transfer funds and provide micro credit. There is also growing adoption of QR-code payments, virtual debit cards and digital wallets.

These innovations raise data privacy and operational risk concerns such as system outages, cyber threats and fraud due to their heavy reliance on technology and third-party providers.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Ahmed Jibrel Yeha, Group 2
In Ethiopia in particular to the capital market operation, instead of the banking operation, we have seeing innovation in account opening through the helps of technology which is expected to be more and more efficient. In addition innovation facilitator tools in the form of regulatory sandbox is under implementation, for instance an IPO clinic sandbox is created to closely follow and see the potential risks as well as implementation challenges before making it applicable to the entire market.
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Re: Prudential Supervision for Deposits and Payments: Introduction

par Aliyu Mohammed, Group 1
In Nigeria, there is growing innovation around online lending and the use of POS for agent banking and collections by merchants. Modern terminals feature dynamic PIN input and gradually moving towards biometric authentication.
My concern around online lending is consumer protection from excess charges to less financially literate cinsumers while POS features failed transactions and hanging consumer funds that takes alot of time to reverse without regulator's intervention.