Remarks by Wencai Zhang, MDCAO, 'Embracing New Technological Challenges and Opportunities, and Building a New Financial Ecosystem', at the 2024 Wuzhen Summit (Annual World[...]

Distinguished guests, fellow delegates, Ladies and Gentlemen,

We're standing at the intersection of incredible technological progress. Fintech, blockchain, artificial intelligence, and digital currencies are driving real change and reshaping our financial ecosystem.

China is among the countries that have embraced these new financial technologies and realized impressive achievements because of them. In 2021, around 89% of adults in China had access to a transaction account, and around 85% of adults made or received digital payments - amongst the highest in the world.

At the World Bank Group, we recognize the possibilities and responsibilities that come with these advancements. However, navigating this path also presents unique challenges-particularly in developing regions where digital and financial inclusion remains limited.

Our goal at the World Bank Group is to support countries in harnessing these innovative technologies while managing associated risks. This is core to advancing our vision of a world free of poverty on a livable planet.

Let me focus on three areas, all intertwined: digital financial inclusion, building trust in digital finance, and accelerating digital transformation.

On Digital Financial Inclusion: Globally, 1.4 billion adults still lack access to basic financial services.

We know from experience how to bring people in and close the gap within and across countries. There are four fundamental building blocks.

The first is to get people an identity card issued by the government - preferably a digital identity. This is foundational.

When someone has an identity, they can open a bank account-the second building block. Our collective efforts to increase banking over the years have borne fruit: 71% of people in developing countries now have an account.

We need to focus on the rest-especially women and young adults, those in rural areas, those surrounded by conflict, and others who may be left behind.

Third, when people have an account, they need to be able to use it in their daily life and economic activities. Here, a digital public infrastructure helps enormously - more on that in a moment.

Finally-and this is the hardest step-we need people to use their transaction history to gain access to credit and to insurance.

The second area we focus on is building trust in digital finance: Trust is foundational to any financial ecosystem. The World Bank Group collaborates with central banks and financial institutions worldwide to develop regulatory frameworks for digital finance, focusing on data protection, cybersecurity, and privacy.

For example, in Latin America and the Caribbean, the World Bank Group is working with central banks on open banking and open finance and how new technologies can help develop new trustful ecosystems.

The third area is accelerating digital transformation. We see the digital transformation as a key opportunity to ensure continued economic growth and poverty reduction. A big part of this is developing digital financial infrastructure.

Governments play a critical role in developing infrastructure, platforms, and services for their citizens. Creating digital infrastructure and platforms like Digital ID can help citizens access services offered by both public and private sectors.

We are assisting over 60 countries in providing digital identities - for example, Morocco, the Philippines, Nigeria, and Samoa.

Similarly, the World Bank Group is supporting more than 40 countries in implementing or modernizing domestic and regional fast payment systems. Interoperability of fast payment systems across borders also has a catalytic effect on improving cross-border payments - which is why the G20 cross-border payments roadmap places a strong emphasis on interlinking of fast payment systems.

The traditional financial system has served us well, but today's digital world demands an ecosystem that is inclusive, resilient, and adaptive.

Here's how the World Bank Group is supporting this transition:

One, encouraging Public-Private Partnerships: No organization can do this alone. By fostering partnerships, we ensure that fintech innovations reach underserved communities, enabling small businesses, entrepreneurs, and women to access new financial tools.

For example, in Pakistan, we have trained 28 accelerators and incubators, along with all 5 private equity and venture capital funds, positioning them as platforms for hundreds of firms.

Two, empowering SMEs and fintech startups. Small businesses are often left behind in traditional banking, especially in emerging economies. To address this, we're working with local banks and fintech startups to create specialized lending and financial products tailored for SMEs. In Latin America, for example, our programs are supporting small businesses' access to low-cost credit through digital platforms, driving local economies and job creation.

Three, supporting emerging technologies and the future of finance: The emergence of new technologies like blockchain and AI holds strong potential and is already playing a key role in shaping the future of finance. The World Bank Group, in collaboration with our partners, is taking an active role in building knowledge and supporting our client countries.

For example, our flagship report on Fintech and Future of Finance analyzes the policy implications of ongoing fintech developments and identifies a set of policy priorities for EMDEs.

While these technological shifts are promising, they also come with risks-cyber threats, regulatory arbitrage, competition, consumer protection, data protection and privacy, and widening of the digital divide.

We must keep these risks top of mind, and we do both in our work with clients and in our own systems.

At the World Bank Group, we are dedicated to building a financial ecosystem that works for everyone. We're excited about the future we're building together with our partners and client countries-a future where technology serves as a powerful tool for financial empowerment, poverty reduction, and economic resilience.

Thank you.

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