ITU Blog: Digital Financial Services and the need for global dialogue
The world is a growing and dynamic place. Despite the obvious challenges, it is generally becoming a richer and more prosperous place to live in with more people being lifted out of poverty than ever before. For people in low- and middle-income countries, digital financial services (DFS) can be a pathway to move and remain out of poverty. The commercial benefits are increasingly documented with studies showing that the costs of payment transactions can be reduced up to 90% if they are performed through digital channels. Digital technology can address one of the main obstacles that have been keeping these services out of reach for so many, the fact that they are too expensive for people whose transactions are worth a fraction of a dollar.
However, despite the growing penetration of mobile devices (including smartphones) and continuous technological innovation, an estimated 2 billion people worldwide still remain unbanked. While everyone has a frequent need to transact to buy products and services, the ability to access or utilize formal financial services, particularly in developing countries, is undermined by numerous legal, cultural, commercial and financial issues, not to mention in many cases the lack of reliable national ID schemes which makes it extremely difficult for poor people to even open a basic account. There is therefore much more that both the public and the private sectors can do together to exploit the potential DFS can offer to bring the most vulnerable segments of the world’s population into formal financial services.