Promoting Financial Inclusion through Digital Financial Services – Jordan Ready to Take Off

Paul Newall discussed with Khurram Sikander, who has been leading key digital inclusion initiatives in the country.

Enclude has been involved in multiple projects in Jordan recently, including a project working with the Central Bank of Jordan (CBJ) to promote financial inclusion through mobile financial services (MFS). What is the state of financial inclusion in the country and what is the vision for MFS?

There is a very low rate of financial inclusion in Jordan with only 24.6% of the adult population banked, leaving an entire 75% of the population un(der)banked. On top of that the Jordanian population is also expanding rapidly due to the influx of refugees who have limited access to financial services – further increasing the underserved population.

Recognizing the importance of financial inclusion to broader inclusive economic growth, the CBJ saw an opportunity to leverage MFS to reach these unbanked segments. Specifically, the CBJ took a proactive and forward-looking step by establishing regulations that enable both banks and non-banks to offer MFS, and by spearheading the development and roll-out of JoMoPay, the country’s mobile payment platform.

In establishing and operating the platform itself, the CBJ was able to set rules of the game and ensure a level playing field in Jordan. For example, JoMoPay is fully interoperable among providers – both banks and payment service providers (PSPs). This means that a bank, mobile network operator, or a wallet issuer (or a consortium of these providers) can offer MFS by applying for a PSP license with the CBJ. JoMoPay is also integrated with other national payment systems, including JoNet, the interoperable ATM and point of sale (POS) switch, and eFawateercom, the centralized bill presentment and payment platform. These integrations promote usage of various channels and instruments (mobile, ATM, agent, and card) to access mobile wallet accounts.

Ultimately, the CBJ’s vision for JoMoPay is to build a mobile money ecosystem that brings unbanked segments into the formal financial system, thereby benefiting the Jordanian economy and society as a whole.

How has the market responded to the initiatives promoted by the CBJ?

Since the launch of JoMoPay in 2014, four PSPs have received licenses and two PSPs have received provisional licenses. The four licensed PSPs include Al Hulool, which is a consortium of the telco Umniah, Emerging Markets Payments Group, and four commercial banks; Zain Cash, which is affiliated with the telco Zain; Aya Jo; and Dinarak. The market has been relatively slow to fully launch their services and expand market awareness of their products and services – this is the case for several reasons, including a focus on the technical and operational aspects of their services over the development of marketing and distribution strategies. It seems the market is waiting for one of the PSPs to make the first move.

That said, there is substantial market potential, particularly as the PSPs now focus on expanding their agent networks and targeting key sectors / segments. The foundation for MFS in Jordan is strong and the industry is well-positioned to scale.

Recognizing the CBJ’s vision for financial inclusion and MFS, how did our work fit into their broader strategy?

Two key pillars of the CBJ’s Vision and Strategic Framework 2013-2016 were to enhance oversight of the payment system department and to modernize the retail payment system while promoting financial inclusion. Additionally, the CBJ has been in the process of developing and rolling out a financial inclusion strategy and formalizing commitments to the Maya Declaration – both of which view digital financial services as a core enabler to achieve their targets.

Our work with the CBJ contributed directly to supporting achievement of these strategies and commitments. Specifically, with support of the European Investment Bank (EIB), our mandate was to enhance the oversight capacity of the CBJ’s payment system department (PSD), particularly as it relates to MFS. When the project was first designed, the CBJ had only recently gained authority to oversee the payment system. The PSD – led by Executive Manager Ms. Maha Bahou – was therefore eager for support to build the capacity of the team in areas including the legal and regulatory framework, risk management, and data collection for digital retail payments.

What were some of the key project outcomes and how did we approach them?


The Enclude team facilitates a risk management workshop with key industry stakeholders

A key characteristic of our approach was engagement with stakeholders across the payments ecosystem throughout the project. Although the CBJ was our main client, a strong understanding of market realities and the opportunities an
d challenges facing stakeholders was critical to delivering recommendations that were fully tailored to the Jordanian market.

At the end of the program, we produced a number of deliverables that we were happy to see were not just sitting on a shelf, but rather, were being used by the CBJ. For instance, on the legal and regulatory framework, our recommendat ions were incorporated into the CBJ’s bylaw and into the memorandum of understanding between the Telecommunications Regulatory Commission and the CBJ.

We also delivered a risk management framework and implementation plan for JoMoPay, with inputs from industry stakeholders, which is designed as a live tool for the CBJ to enhance readiness to mitigate and respond to risks as they rise. We developed a data collection methodology for the CBJ, including templates for the CBJ to collect data from the industry on indicators related to the access, usage, and quality of digital financial services. We also facilitated study visits between the CBJ and De Nederlandsche Bank (DNB), the central bank of the Netherlands; Finansinspektionen, Sweden’s financial supervisory authority; Riksbank, the central bank of Sweden.

What are some of our key takeaways from the project, and how will they inform our work and the broader industry moving forward?

A key takeaway from the project is an understanding of the role that regulators have in pushing the industry along and ensuring that the journey towards cash-lite is one of engagement and consultation with the industry. The CBJ has taken action to create a DFS ecosystem that is fully interoperable from day one – allowing providers equal and fair access to platforms and the customer, regardless of size.

In our work, we have often seen regulators struggle with the financial ‘integrity vs. inclusion’ debate. Particularly in a market like Jordan, which is in a region characterized by social, political, and economic instability, ensuring financial integrity is an utmost concern. However, the CBJ has been able to strike a good balance, understanding the importance of financial inclusion for inclusive growth and pushing the market where it needs to go when it was too slow to take up the reigns. Jo
rdan has all the right ingredients for DFS to take off. There is also another exciting project we are implementing that focuses on the digitization and inclusion of refugees and host communities in Jordan but that will have to wait for another blog.


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