How is Digital Finance Growing in Developing Countries?

In today’s world, workplaces are undergoing significant transformations. Technology has become more popular in our daily lives. It allows us to live simple lives. In every industrial area, everything is turning digital by reducing the use of old methods.

Digital transformation is still a heated topic, especially among different industries. Depending on the industry, the term might indicate something completely different for a company. The adoption of new technology by one industry will be drastically different from that of another Industry, such as Different forms of digitalized uses in Communication, Manufacturing, Transportation, Hospitality or Tourism, Health Care, Education, Financial, Energy, Media, Retail, etc.

One of them is digital finance that becomes a ruler in their sector and most prominent in the financial industry. Let’s discuss more on digital finance, digital financial growth, and how digital finance works in developing countries?

What is Digital Finance?

New financial technology can make it easier to get financial services and make the financial system more efficient. It encompasses a wide range of products, applications, procedures, and business models that have revolutionized the way banking and financial services are delivered. Investment in new technologies has expanded dramatically in recent years and the rate of invention is increasing exponentially. AI, social networks, machine learning, mobile apps, distributed ledger technology, cloud computing, and big data analytics have generated new services and business models from both traditional financial institutions and new market entrants.

Digital Finance Products and Services:

There are many financial services become digitalized: Mobile banking, Blockchain, Big Data, Fintech, Automated Wealth Managers, Mobile Apps.

Is Digital Finance Really Helpful?

Yes, for the helping and reaching out easily but at the same time no, because it may not promptly be working in developing countries currently. Most of the people don’t have bank access and if people have bank access then fewer use their accounts regularly. There are advantages but as well as disadvantages in developing countries of Digital Financial Services to access them.

Advantages:

1. Easy and Efficiency: Many everyday activities may be completed more quickly or even completely automated. With a single mouse click, you can complete all of your tasks. This allows you to concentrate on more vital duties while still saving money.
2. A positive Customer Experience: A good customer experience begins with each internal team in your company knowing their role in providing it.
3. Transparency of Information: The information’s availability and accessibility can be controlled as needed. This assures security while also preventing data overload.
4. Environmental Friendliness: There is less need for physical delivery when information is transmitted through digital means, which helps to minimize traffic-related emissions.

• Disadvantages:

1. Lower Bank Access: It will not perfectly work in developing countries as most of them don’t have bank and financial services access.
2. Integration: It might be inconvenient to move archived or ongoing work, as well as data, from your old system to your new one. While the procedure is being completed, it will necessitate additional resources from your IT staff.
3. Compliance: Finance teams must consider the requirements of several laws, such as SOX, GDPR, and HMRC while updating technology.

Digital Financial Inclusion:

Digital financial inclusion may be described as excluded and rural areas having digital access to and usage of formal financial services. Insufficient finances and access to financial services are two of the most regularly stated hurdles to account ownership. Unbanked persons are served through mobile phone, internet, and card-based digital finance services.

How is Digital Finance Growing in Developing Countries?

In developed countries, the concept of a cashless society is not far off the horizon but in developing countries, the story is different. Many people are unable to participate in even the most basic financial systems, relying instead on the actual currency.

Around 1.7 million adults in the world were “unbanked” as of 2017. This suggests they didn’t have a bank or mobile money account. But, now they are aware of digital finance and having mobile phones. Now they can promptly use the financial technology services.

• Digital financial services are enormous for improving our economic situation and investing in the future, regardless of where we reside.
• Credit, e-commerce transactions, retail purchases, remittances, cross-border payments, insurance, digital lending, and saving management are just a few examples.
• In developing countries, fintech enables people with previously restricted financial access to become more financially savvy and better manage their own affairs.
• Countries like China, the United States, India, and Mexico have seen the greatest beneficial results from the financial services they provide.
• Fintech implies the start of a tech community, as well as new employment positions and investment prospects.

Conclusion:

Digital Financial Services is an important aspect of a contemporary economy’s infrastructure, allowing individuals, organizations, and governments to trade cost-effectively and efficiently. For both people and businesses, the digitization of finance has the potential to lower costs and offer up new market and lifestyle options.

Author:  Pooja S. – Jr. Analyst