The Banking Executive Magazine - February 2022

The Horizon Of Digital Financial Inclusion In Arab Banks • Partnering with a digital financial- services provider to digitise exist- ing products, services and operations: This involves providing mobile-money transactions to those in need. Such transactions include customer registration, cash-in/cash-out, peer-to-peer transfers, electronic top-ups and bill payments. • Developing agent networks to digi- tise existing products and services: This enables the control of the de- livery channel to identify, recruit, train, brand and manage their agents, through which clients can deposit, withdraw and transfer money, repay loans and pay bills. Fintech firms, global policy initia- tives and microfinance are all lever- aging innovative solutions to ensure that the most remote and most vul- nerable have opportunities to access financial services that can ultimately improve their economic wellbeing. And during the ongoing COVID-era, such opportunities can be of critical importance. THE ARAB WORLD’S DIGITAL DIVIDE The digital divide is defined as the gap between segments of society with regard to both their opportuni- ties to access information and com- munication technologies ICTs and to their use of the Internet. As society has grown reliant on technology and the internet, those lacking digital lit- eracy and access to ICTs face greater challenges and even outright exclu- sion integrating into an increasingly digitally-dependent economy and society. Often, people who face barriers to mainstream financial services are also digitally excluded. Cash may be all they have access to, and thus they become further marginalized in the digital economy as the prevalence and use of cash continues to decline. The COVID-19 pandemic greatly ac- celerated decline of cash usage, with statistics showing that the global per- centage of cash volume used at point-of-sale (POS) plunged from 52.6% in 2019 to 20.5% in 2020. Today, digital inclusion is a prerequi- site for financial inclusion. Those who are not connected are denied access to many services and invari- ably pay more for basic services and utilities. Financial exclusion affects a wide range of people of all ages. Those on low incomes are the most vulnerable. Age, education and background are just some of the fac- tors that influence financial exclu- sion. According to statistics from Arab barometer compiled by Daniella Raz, the internet has been touted as an engine for equality because of its potential to expand opportunities across all segments of society, accel- erate upward social mobility, and lend voice and platforms to margin- alized groups. Yet, despite decades of increasing internet penetration, the proliferation of smartphones, and an expanding internet culture, in- equalities in the Arab World remain pronounced, and by some estimates have grown more severe. Data from the latest wave of Arab Barometer surveys indicate that rates of internet usage differ markedly along demo- graphic lines. When controlling for potentially confounding variables, disadvantaged segments of society like women, the elderly, the less ed- ucated, and lower income individu- als are less likely to use the internet than their male, younger, higher ed- ucated, and higher income counter- parts. These findings from twelve Arab World countries contribute to a body of evidence showing that though the internet has the potential to mitigate some societal ills, dis- parate rates of internet usage along demographic or socio-economic lines can actually compound in- equalities and contribute to a worri- some digital divide. Across the Middle East and North Africa (MENA) the proportion of citi- zens who are offline (respondents who say they never use the internet) and online (those who use the inter- net at any frequency) varies greatly by country as shown in statistics from Arab Barometer. the BANKING EXECUTIVE 46 ISSUE 158 FEBRUARY 2022