The president of the World Bank, David Malpass, has disclosed that cheap and functional mobile phones as well as affordable internet access are necessary for the expansion of digital finance in developing economies.
He disclosed that the covid-19 pandemic influenced a digital revolution that has catalyzed the increase in access to and use of financial services in developing economies, which has transformed how people borrow, save, make and receive payments.
While stating in a World Bank blog titled, ‘Aiding the digital revolution on global financial inclusion’, he disclosed that the digital transformation has made it easier for people to send remittances to family members, and pay for goods and services.
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In his words, “These changes are strikingly evident in the latest edition of the Global Findex database, compiled from a survey of more than 125,000 adults in 123 economies, covering the use of financial services throughout 2021.
“The survey found that 71 percent of adults in developing economies now have a formal financial account whether, with a bank, another regulated institution such as a credit union or microfinance lender, or a mobile money service provider compared to 42 percent when the first edition of the database was published a decade ago.
“In addition, the difference in the share of men and women in developing economies who own an account has fallen for the first time, from nine percentage points to six. This digital transformation makes it easier, cheaper, and safer for people to receive wages from employers, as well as send remittances to family members, and pay for goods and services.
“Mobile money accounts can better handle a high volume, small-denomination transactions, which help users to access financial services and save in order to cope better with a crisis. Individual accounts also give women more privacy, security, and control over their money”.
No doubt, the system of digital banking has made a tremendous impact on economies globally. The huge development in the E-Commerce sector is largely attributed to the phenomenal growth of various digital payments.
Research reveals that some adults in developing economies who make use of digital payment grew from 35 percent in 2014 to 57 percent in 2021, and 39 percent of mobile money account holders in sub-Saharan Africa use their accounts to save money.
Expanding people’s access to digital payments has been proven to help mitigate economic setbacks in developing economies. Through the mobile phone digital banking, it saves time and eliminates the idea of going to queue at financial institutions just to make payments.
The lower cost and convenience of mobile services, make them accessible to more people, including those living in rural areas. Economies that switched to digital payment systems, have been proven to be more successful as doing so can boost a nation’s annual GDP by as much as 3 percentage points.
For example, in Bangladesh, it’s Bkash digital payment system which enables transfer via mobile phones, has spurred growth and boosted finances in the country. There has been a massive growth in the adoption of smartphones for digital banking across the globe.
The World Bank has revealed its plans to expand financial inclusion through digitalization, as it will aid millions of people to own accounts to connect them to a financial system that will build a country’s economic resilience.