The Central Bank of Jordan has made financial inclusion a priority and is working with the Jordanian private sector to expand financial access to the country’s most vulnerable citizens. “Supporting startups and entrepreneurship is a high priority for the Jordanian government and so is financial inclusion,” Maha Bahou, executive manager of the payment systems and domestic banking within the Jordanian Central Bank told Wamda.

“We have been partnering with the private sector, especially startups involved in payments systems, to develop [an] infrastructure that will enable opportunities for everyone to access digital and financial services,” she said.

In 2015, the Central Bank of Jordan began the first stages of financial inclusion reform. A year after, it released its vision for national financial inclusion. Since then, the Bank wasted no time in forming key private sector partnerships to carry out the task of expanding financial reach across Jordan by 2020.

According to the first financial study by the Central Bank of Jordan released in 2017, 38 percent of Jordanians are completely excluded from Jordan’s financial system. While access to finance in Jordan has shown improvements (as seen in the infographic below) overall in recent years, variations in financial inclusion across segments point to remaining disparities for the majority of the population, particularly for vulnerable groups such as the youth, women, refugees, and low-income segments.

Policymakers in Jordan have determined that low-income Jordanians are in critical need for platforms that allow them to save and store money.  This can be provided via mobile services and a digital wallet, which in turn allows for greater access to services like microfinance and funding for SMEs.

“We need to be thinking about how to shift the numbers when accessing finance in Jordan since there is a huge, untapped market for accessible financial services,” Amr Ahmad, head of the financial inclusion division at the Central Bank told Wamda.

Banking the unbanked

Jordan Mobile Payments (known as JoMoPay) is Jordan’s national e-payment and mobile payment platform, created and overseen by the Central Bank. The platform has been increasing its partnerships with private sector companies that provide financial services. One such partnership is with MadfooatCom, which operates through JoMoPay to facilitate bill payment via an online system known as eFawateercom. It allows the unbanked to access this network through digital wallets, instead of bank accounts. The system has allowed for over 1 billion Jordanian Dinars (US$ 1.5 million) in online financial transactions and has permitted Jordanians to reduce the amount of time, money, and effort that it usually takes to pay bills.

“Jordan is still a cash-based economy, so we needed to create a payment system that works for everyone, and we did,” MadfooatCom’s CEO Nasser Saleh told Wamda. MadfooatCom and the Central Bank have come together to provide an innovative approach to payment systems. “The government cannot be a startup and the startup cannot be the government, so you need to meet in the middle,” said Saleh.

“We’re proud to see all stakeholders work together to support entrepreneurship and inclusion. This collaboration is deepening,” Bahou noted.

Refugees aren’t left behind

The Central Bank’s financial inclusion strategy extends to the humanitarian sector, where the bank seeks to expand platforms for saving and sending money to refugees. In May 2017, JoMoPay changed its policies to make clear that UNHCR identification cards could be accepted to open a digital wallet account, making way for Jordan’s over 700,000 registered Syrian refugees to have access to the platform. 
The organization Dinarak was established in 2014 in order to become a licensed payment services provider under JoMoPay. The company was provided a full license from the Central Bank in 2016, and is uniquely focused on building an offering, brand and network that directly targets the financially excluded. Dinarak mainly targets governorates like Irbid and Mafraq, providing services to low-income refugees.

A future in fintech collaboration

As fintech is on the rise in Jordan, Amman hosted the Fincluders Startup Challenge last May. The Central Bank has been paying attention to this development, and is working to create mechanisms for fintech collaboration with private sector and other stakeholders.

In 2016, the Central Bank’s Financial Inclusion Division established the Digital Financial Services Council, made up of government, private sector, NGOs, international entities, and startups. Representatives from these groups met to discuss a host of topics related to financial technology issues. Through the dialogue in the Council meetings, the private sector’s suggestions and concerns are considered during the development of new financial regulations and guidelines. The most recent meeting, which took place last August, focused on the Better Than Cash Alliance, a UN alliance promoting responsible digital payments. The results of these discussions work to inform the forthcoming Jordanian National Financial Inclusion strategy, which will be launched in December 2017.

Sandbox, the first-ever fintech incubator housed within the Central Bank, is also expected to be launched by the end of this year and is yet another initiative in the works to expand services and access to fintech entrepreneurs. The launch of the incubator will provide entrepreneurs a testing environment within the Central Bank for their digital financial products.

“We will provide fintech entrepreneurs with the physical space and mentorship that they need. Entrepreneurs can come to the bank and test their products in real time and in a real testing environment,” said Ahmad.

Fadi Ghandour, chairman and CEO of Wamda Capital, acknowledged the Jordanian Government’s potential role in fintech growth. “In many policy directives and many speeches you will see a specific reference to the central and pivotal role of the private sector as the engine of economic growth and job creation,” he said in an email interview. “The more the Government eases regulation and recognizes the value of fintech for economic growth, the more startups will emerge in this space,” he added.

“In recent years the Bank has opened up a line of communication with startups,” said investment manager, Faisal Bitar, at Oasis500. “Innovation is often quicker than regulatory systems, so there’s a bit of a learning curve for the Central Bank, but at least the curve is there and it’s moving in the right direction,” Bitar concluded.