Cheap and Functional Mobile Phones, Affordable Internet Access Needed for Digital Finance in Developing Economies – World Bank

World Bank President David Malpass revealed that cheap and functional mobile phones and affordable internet access are necessary for the expansion of digital finance in developing economies.

He revealed that the covid-19 pandemic has influenced a digital revolution that has catalyzed increased access to and use of financial services in developing economies, which has transformed the way people borrow, save, make and receive payments.

While stating in a World Bank blog titled “Helping the Digital Revolution on Global Financial Inclusion”, he revealed that digital transformation has made it easier for people to send funds to family members and pay goods and services.

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In his words, “These changes are particularly 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% of adults in developing economies now have a formal financial account, whether with a bank, another regulated institution such as a credit union or a microfinance lender, or a mobile money service provider, up from 42% when the database was first published ten years ago.

Additionally, the difference in the proportion of men and women in developing economies who have an account narrowed for the first time, from nine percentage points to six. This digital transformation is making it easier, cheaper, and safer for people to receive salaries 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 of small-value transactions, helping users access financial services and save to better cope with a crisis. Individual accounts also give women more confidentiality, security and control over their money”.

There is no doubt that the digital banking system has had a huge impact on economies around the world. The huge development of the e-commerce sector is largely attributed to the phenomenal growth of various digital payments.

Research finds that the number of adults in developing economies using digital payment has increased from 35% in 2014 to 57% in 2021, and 39% of mobile money account holders in sub-Saharan Africa use their accounts to to save money.

Expanding people’s access to digital payments has been proven to help mitigate economic setbacks in developing economies. With digital mobile banking, it saves time and eliminates the idea of ​​queuing at financial institutions just to make payments.

The lower cost and convenience of mobile services makes them accessible to more people, including those living in rural areas. Economies that have transitioned to digital payment systems have proven to be more efficient, as it can increase a country’s annual GDP by up to 3 percentage points.

For example, in Bangladesh, it is the Bkash digital payment system that enables transfer via mobile phones, has spurred growth and boosted the country’s finances. There has been a massive growth in the adoption of smartphones for digital banking across the world.

The World Bank has revealed its plans to expand financial inclusion through digitalization as it will help millions of people own accounts to connect them to a financial system that will build a country’s economic resilience.

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