The Banking Executive Magazine - February 2022

The Horizon Of Digital Financial Inclusion In Arab Banks DIGITAL FINANCIAL INCLUSION The World Bank Group defined dig- ital financial inclusion as involving the deployment of the cost-saving digital means to reach financially ex- cluded and underserved populations with a range of formal financial serv- ices suited to their needs and respon- sibly delivered at a cost affordable to customers and sustainable for providers. The G20 Global Partnership for Fi- nancial Inclusion (GPFI) points out that universal access to financial services is today within reach thanks to new technologies, transformative business models and ambitious re- forms. Financial instruments such as e-money accounts, along with debit cards and low-cost regular bank ac- counts, can significantly increase fi- nancial access for those who are now excluded. The potential. The former World Bank Group pres- ident Jim Yong Kim foresees a big po- tential in enhancing digital financial inclusion; reaching billions of new customers, banks and a widening array of non-banks are offering digi- tal financial services for financially excluded and underserved popula- tions, building on the digital ap- proaches that have been used for years to improve access channels for those already served by the formal fi- nancial sector. Digital financial serv- ices, including those involving the use of mobile phones, are now prevalent in many countries, with some reaching significant scale. As a result, millions of formerly excluded and underserved poor customers are moving from exclusively cash-based transactions to formal financial serv- ices including payments, transfers, savings, credit, insurance, and even securities, using a mobile phone or other digital technology to access these services. And the picture is continuing to shift rapidly with the emergence of ever more new tech- nologies. The components. The World Bank Group identified the essential components of digital finan- cial inclusion as: • digital transactional platforms en- abling customers to make or re- ceive payments and transfers and to store value electronically through the use of devices that transmit and receive transaction data and connect to a bank or non- bank permitted to store electronic value; • devices used by the customers that can be either digital devices (mo- bile phones, etc) that transmit in- formation or instruments (payment cards, etc) that connect to a digital device such as a point-of-sale (POS) terminal; • retail agents that have a digital de- vice connected to communications infrastructure to transmit and re- ceive transaction details enabling customers to convert cash into electronically stored value (cash- in) and to transform stored value back into cash (cash-out). • digital financial services offered by banks and non-banks to the finan- cially excluded and underserved including credit, savings, insur- ance, and even securities. the BANKING EXECUTIVE 42 ISSUE 158 FEBRUARY 2022