traditional regulatory role. a developing financial sector increases efficiency and the regulator ensures stability. ladies and gentlemen : the structural transformation experienced thus far is just but the beginning. cbk and other players have earmarked several other reforms which are expected to take the development of the financial sector to new frontiers. cbk has embraced financial education as a critical component of its financial inclusion strategy. when consumers are financially literate, they are able to make informed financial decisions. in this regard, cbk and all the other financial sector regulators are members of the financial education and consumer protection partnership ( fep ), a private – public partnership, spearheaded by the financial sector deepening trust kenya with an aim of developing a national strategy for financial education in kenya. on the same token, ladies and gentlemen, as efforts progress towards a more developed financial sector, there is need to ensure existence of adequate disclosure of information by providers of financial services, efficient dispute resolution mechanisms, comparability of offers and data protection. as financial regulators embrace innovations in their jurisdictions, there is need to ensure that the innovations have adequate consumer protection safeguards. kenya ’ s new constitution promulgated in august 2010 entrenches consumer protection in the bill of rights and mandates parliament to enact consumer protection legislation. but in addition the constitution allows for strong institutions and protects them. strong institutions define appropriate incentives and the rules of the game to encourage prudent behavior. this is good for the financial market to allow defined entry and orderly exit from this important market. ladies and gentlemen : as i conclude, let me reiterate that innovative solutions for strengthened regulatory framework for a financial sector lie with the players. the regulators, the regulated and market participants should think outside the box. they exist for each other and it is only through their acceptance to promote, advise and partner that a smarter regulatory framework is put in place that enables the private sector to prosper. with these remarks, ladies and gentlemen, i take this opportunity to wish you fruitful deliberations while i look forward to receiving the forum ’ s report in due course for us to consider the relevant innovative solutions tailored to our circumstances. thank you. bis central bankers ’ speeches

and to drive development in the sector. ladies and gentlemen : allow me now to briefly share with you kenya ’ s experience on innovations in the banking sector. in pursuit of the financial sector ’ s vision in the kenya ’ s bis central bankers ’ speeches development blueprint, vision 2030, cbk and the players have embraced a partnership approach. consequently, several initiatives have been undertaken over the last 4 years aimed at the three envisaged goals of stability, efficiency and financial inclusion. these initiatives include : rollout of mobile phone financial services – approval for banks to leverage on mobile phone technology to present convenience and lower costs for their customers without compromising quality of service. through mobile banking, customers are now able to perform their transactions “ anytime anywhere ”. mobile money transfer has evolved from the initial concept of transferring money from one individual to another to include other functions such as payment of utility bills, loans, salaries and for deposits mobilization. introduction of agent banking mechanism in may 2010 where banks are allowed to engage third parties to provide certain banking services. the aim is increased outreach of banks to the vast under - banked and unbanked kenyan populace by introducing “ banking beyond branches ”. it also enables banks to leverage on additional cost effective distribution channels to offer financial services. agency banking takes banking to the people unlike previously when people had to go to the banks. licensing of credit reference bureaus to collect, collate, analyse and disseminate credit information among credit providers. credit information sharing provides an opportunity for individuals and businesses to rely on their credit history ( information capital ) as an alternative form of collateral to the traditional physical collateral, to secure credit facilities from banks. individuals will also be able to use their positive credit history to negotiate for better terms and conditions from their banks. on the other hand, banks will benefit from the mechanism since it will address the problem of information asymmetry and by extension the problem of non - performing loans which has in the past threatened the stability of the banking sector. the traditional challenges of the moral hazard and adverse selections can hinder financial sector growth. licensing of deposit taking microfinance institutions ( dtms ), whose focus is the lower end of the market, which is concentrated in the rural and periurban areas. the microfinance act, 2006, which empowers cbk to licence and supervise dtms, was operationalised in 2008. formalizing the operations of dtms is expected to bring more people, especially those previously un