Digital finance—financial services delivered through technology channels including via mobile money—holds an enormous opportunity for greater financial inclusion and expansion of basic services to underserved populations.
Digital financial services (DFS) can expand the delivery of basic financial services to the poor through new technologies like mobile phones, electronic money and new channels such as retail agents. These channels can drastically drive down costs for customers and service providers, opening the door to remote and underserved populations to products such as micro loans, insurance and remittances services.
Over the last few years, several countries in Africa have experienced remarkable advances in financial inclusion using digital financial services, which leverage information and communication technology and agent networks as a cost-efficient distribution channels. These innovations have had a profound impact on financial inclusion in markets where they have taken root, and appear to leapfrog traditional banking and microfinance infrastructure as a means of delivering financial services to the poor.
Digital finance is also a powerful means to expand access beyond financial services to other sectors, including agriculture, transportation, water, health and education. Innovative payment models linked to products, such as solar panels, or to utilities such as water, are being tremendously successful in many low income countries.
Regulators around the world have realized the tremendous role DFS can play for financial inclusion and seek to unlock this potential by creating enabling environments for DFS. In doing so, regulators seek to learn from policy and regulatory approaches that have been successfully tested and implemented in pioneering countries like Kenya, the Philippines, Pakistan, Tanzania and Peru, in particular for how to balance openness to experimentation and innovation with sufficient safeguards for consumer protection.
Additional content and publications:
- Measuring and Benchmarking Alternative Delivery Channels Performance (Mix)
- Alternative Delivery Channels & Technology
- Helix Institute of Digital Finance
- SME Finance Forum
- UNCDF/Better than Cash Alliance
- World Bank Financial Inclusion
- World Bank Group Universal Financial Access 2020
- State of the Industry Reports (GSMA)
- Financial Inclusion Insights Survey (InterMedia)
- Publication: The Journey Toward ‘Cash-Lite’ Bankable Frontier Associates)