The Banking Executive Magazine - July 2022 Issue

Digital Revolution & Global Financial Inclusion To mitigate recent economic losses in developing nations, it will be es- sential to increase people's access to finance, lower the cost of digital transactions, and route wage pay- ments and social transfers through fi- nancial accounts. There are various ways that governments and the cor- porate sector can support this shift. The poor are suffering the most glob- ally due to rising inflation, limited economic growth, and food short- ages. In addition to the COVID-19 pandemic's unequal consequences, today's numerous crises have already resulted in catastrophic development reversals and an enormous rise in worldwide poverty. Positively, the COVID-19 crisis sparked unheard-of change, particu- larly in sectors with a significant dig- ital component. This digital revolution has changed how people send and receive payments, borrow money, and save money through in- creasing access to and use of finan- cial services in developing economies. The most recent Global Findex data- base, which was created using data from a poll of more than 125,000 adults in 123 economies and covers the use of financial services in 2021, glaringly shows these shifts. In com- parison to 42 percent in the first edi- tion of the database published ten years ago, the survey found that 71 percent of adults in developing economies now have a formal finan- cial account, whether it be with a bank, another regulated institution like a credit union or microlender, or a mobile money service provider. Additionally, the gap between the percentage of men and women who own accounts in developing nations has shrunk for the first time, from nine percentage points to six. With the help of this digital change, it is now simpler, less expensive, and safer for people to receive paychecks from their companies, remit money to loved ones, and make purchases. High volume, small value transac- tions, which enable users to access financial services and save money for better crisis management, can be handled more easily via mobile money accounts. Additionally, women have more privacy, security, and financial management thanks to individual accounts. From 35% in 2014 to 57% in 2021, the proportion of adults in develop- ing economies that send or receive digital payments increased. 39 per- cent of mobile money users in Sub- Saharan Africa currently utilize their accounts to save money. And after the COVID-19 pandemic began, more than one-third of consumers in low- and middle-income nations who paid an energy bill from an ac- count done so for the first time. As money moves from a govern- ment's budget to public agencies and then to citizens, the digital revolution is important because it helps to pro- mote transparency. By sending trans- fers straight to their beneficiaries' cell phones, government social programs can now cut down on delays and leakage. During the epidemic, mil- lions of people in underdeveloped nations got compensation in this manner, reducing the impact of COVID-19 on their standard of liv- ing. ISSUE 163 JULY 2022 the BANKING EXECUTIVE 21