COVID-19 has contributed to the rapid expansion of digital financial services to the benefit of low-income families and small businesses, the IMF said.
Much remains to be done to ensure maximum absorption of COVID-19.
The COVID-19 pandemic could change the rules of the game for digital financial services. Low-income families and small businesses can benefit enormously from promoting mobile money, fintech services, and online banking. Financial inclusion through digital financial services can also promote economic growth. The pandemic aims to increase the use of these services, but also poses challenges to the growth of small players in the sector and aims to achieve unequal access to digital infrastructures. Several actions are needed to ensure maximum inclusion in the future.
Benefits beyond financial inclusion
Financial inclusion benefits economies and societies as a whole. Previous studies have shown that the expansion of traditional financial services for low-income households and small businesses is accompanied by rising economic growth and a decline in income parity. According to our analysis, digital financial inclusion is also associated with higher GDP growth.
During COVID-19 exclusions, digital financial services allow governments to quickly and securely provide financial support to hard-to-reach people and businesses, as shown in Namibia, Peru, Zambia, and Uganda. This will help reduce the economic downturn and can improve the recovery.
The task that awaits us
To harness the great potential of digital financial services in the post-COVID era, many factors need to be changed. Equal access to digital infrastructures (access to electricity, mobile and Internet coverage, and digital identification); more financial and digital literacy; and for more inclusive recovery, data distortion must be avoided.
A global survey of over 70 stakeholders, including fintech companies, central banks, regulators, and banks, found that regulators need to keep up with rapid technological changes in fintech in terms of security and safety. Ensure consumer protection, cybersecurity, and interoperability in all countries. users and borders. Fintech companies also report a global shortage of “programmers”: software developers and programmers.