Future of Financial Inclusion Through Electronic Banking Models In Palestine And The Resulting Regulatory Implications

This paper addresses technology issues in enhancing the reach and cost effectiveness of delivery channels for banking and payments products and services in Palestine. It draws on lessons from international experience.

Palestine exhibits high potential demand for electronic banking services. Its demographics offer the potential for rapid adoption of electronic banking services. Challenges to electronic banking in Palestine include lack of an adequate legal framework, lack of interoperability among banks, fragmented market, merchants’ and customers’ preference to use cash and lack of information on potential clients’ creditworthiness.

The paper discusses important areas of focus in the short to medium term as well as areas that need regulatory reform. Recommendations for the short to medium term include:

• Support enactment of payment system and electronic commerce legislation;
• Develop and issue e-Banking and agent banking Instructions;
• Begin to implement the national switch;
• Address limitations to information on creditworthiness;
• Expand agent banking at merchants;
• Expand mobile network operators’ role in e-payment services;
• Support efforts to improve the overall business environment.