Digital Innovation: Catalyst for Financial

Inclusion The case of Lebanon

Delivered by Mr. Mohamed Jabri Executive Director, Head of Training and Development Department

Banque du Liban

EuroMed Workshop 2019 |Non-bank finance and financial intermediation Naples, 18-19 June 2019

Outline 1. Digital inclusion in Lebanon 2. Financial inclusion in Lebanon 3. Promises of Digital Financial Inclusion

1. Digital inclusion in Lebanon

Demographic Characteristics Enabling factors for digital financial inclusion

Population

Including around 2 M refugees and displaced

18-35 years old

Millennials Tech-savvy consumers

Willing to experiment and

use digital financial products

and services

World Bank (2018), Hootsuite (2018)

Median age: 31.3 years old

Annual change in size: +0.2%

Literacy

Female: 92% Male: 96%

6 M

32%

94%

Highly Skilled Cost Competitive Labor

Force

Use of digital infrastructure Enabling broader outreach for digital innovation

Internet Users

5.54 M

Penetration: 91%

4.56 M

Mobile Connections

Penetration: 75%

Hootsuite (2018)

Annual growth: +22% since January 2017

or +995,000

Annual growth: +2% since January 2017

or +79,000

4.99 M

Mobile Internet Users

Penetration: 82%

Consumer Readiness

62.54

Out of a maximum of possible score of 100 as per GSMA Intelligence’s

Assessment of Mobile Connectivity

Comparison with other MENA countries

61%

90% 95% 95%

43%

99%

31%

42%

77% 85%

31%

89%

Egyp

t

Leba

non

Qat

ar

Saud

i Ara

bia

Tuni

sia UAE

Mobile penetration (2015)

Smartphone penetration

Mobile broadbank subscriptions

2014 2015 2016Egypt 36% 45% 59%Lebanon 62% 79% 84%Qatar 78% 94% 93%Saudi Arabia 85% 89% 93%Tunisia 45% 44% 49%UAE 96% 97% 100%

Internet penetration

The Economist (2016)

ICT and Knowledge Economy Role of Banque du Liban as a catalyst for digital innovation

Hootsuite (2018), Banque du Liban (2018)

USD 260 M

to support the Funding of Digital Innovations

invested in

start-ups

Banque du Liban’s Circular 331

through

Venture Capital firms and

Commercial Banks

in the sectors of

ICT and

Knowledge Economy

800 new companies created

9,000 new jobs created FinTechs including

2. Financial inclusion in Lebanon

destinationlebanon.gov.lb

Account Penetration Percentage of individuals with a current account at a formal institution

59% 41%

Adults (18+)

Included

Excluded

67% 49%

Gender

Male

Female

Account Penetration by Region

33%

63% 50%

Age

Young (18-24)

Adult (25-64)

Elderly (64+)

Bank Savings Account Percentage of individuals with a savings account at a formal institution

26%

74%

Adults (18+)

Saved

No

30% 21%

Gender

Male

Female

Bank Saving Account by Region

13%

26% 32%

Age

Young (18-24)

Adult (25-64)

Elderly (64+)

Borrowing Account Percentage of individuals that have borrowed at least one type of credit product Percentage of individuals with a Consumer loan at a formal institution

37%

Adults (18+)

Borrowed

No

39%

34%

Gender

Male

Female

Consumer Loan by Region

29%

41%

17%

Age Young (18-24) Adult (25-64) Elderly (64+)

14%

86%

ConsumerLoan

No

14%

14% Male

Female

7%

17%

5%

Young (18-24) Adult (25-64) Elderly (64+)

Debit Card Ownership Percentage of individuals with a Debit card

35%

65%

Adults (18+)

Owned adebit card

No

43%

27%

Gender

Male

Female

Debit Card Ownership by Region

22%

39%

19%

Age Young (18-24) Adult (25-64)

Elderly (64+)

24%

55% Education

Primaryeducation orless

Secondaryeducation ormore

Credit Card Ownership Percentage of individuals with a Credit card

23%

77%

Adults (18+)

Owned acredit card

No

27% 19%

Gender

Male

Female

Credit Card Ownership by Region

16%

25%

12%

Age Young (18-24) Adult (25-64)

Elderly (64+)

15%

36%

Education

Primaryeducation orless

Secondaryeducation ormore

Online Transactions Percentage of individuals that make online transactions (e.g. purchases, bill payments)

9%

91%

Adults (18+)

Mobilebanking

No

11% 8%

Gender

Male

Female

Internet transactions by Region

9% 10%

5%

Age Young (18-24) Adult (25-64)

Elderly (64+)

5%

17%

Education

Primaryeducation orless

Secondaryeducation ormore

Mobile Services Percentage of individuals that use a mobile for financial transactions (e.g. make or receive a payment)

7%

93%

Adults (18+)

Mobilebanking

No

8%

5%

Gender

Male

Female

Mobile banking by Region

9% 7%

3%

Age Young (18-24) Adult (25-64)

Elderly (64+)

4%

12%

Education

Primaryeducation orless

Secondaryeducation ormore

3. Promises of Digital Financial Inclusion

destinationlebanon.gov.lb

Digital Innovations

Atos (2018)

FinTech Space in Lebanon Technology-based companies disrupting/complementing the financial services market

FinTechs

40+ Local companies

Payments

Lending

Portfolio management

Digital banking

Treasury management

Money transfers

Personal finance

Insurance

Benefited from BDL Circular 331

Support

1/4

supplying various Financial Services

Fostering Financial Inclusion through FinTech Impact of digital financial innovations* on the customer and the market

1. Better customer experience: easier use, higher trust and customer engagement 2. Enhanced consumer protection: interactive complaint solving, fraud control 3. Improved products: new digital features, higher operational efficiencies,

greater affordability 4. New value propositions: customized services, higher flexibility 5. Sound financial infrastructures: catalyst for other financial services (digital

identity verification, collaborative customer due diligence, data sharing, easier payments)

6. Greater competition and use cases: greater choice and competition in the market, more use cases for digital accounts

CGAP (2019)

Create value and ease age-old pain points in delivering financial services to the under-served low income customers

*introduced by FinTechs or incumbent banks or Tech companies

THANK YOU

For more information, please contact financialinclusion@bdl.gov.lb