As of 2018, 2 billion people are unbanked— meaning they don’t have any bank account. And many more live in developing countries with limited or no access. To financial services like credit, savings, loans, and insurance products. At the same time, the most significant part of this global population. Lives in rural areas where banks don’t have branches or ATMs. It also includes people living in urban areas who are too poor. To afford the high fees charged by banks or who need to travel too far to access one.
According to experts at SoFi, “Digital financial inclusion refers. To the availability of basic financial services through digital technologies.” More specifically, it refers to how individuals. And businesses access bank accounts, payments, and credit through mobile phones. Or the internet instead of traditional bank branches or physical stores.
DFI concept had existed since at least 2007 when the World. Bank used it in a report about electronic financial services in Africa. However, the recent rise of new mobile payment technologies has taken. This term and turned it into an increasingly relevant concept around the world.
Digital financial inclusion refers to using digital technology to provide financial services. To individuals who have no access to or are underserved by traditional banking or would benefit. From improved access to such services. For example, we can achieve digital financial inclusion through electronic payment, electronic remittance, e-commerce, and mobile phone technology, among other things.
- Financial services can be delivered faster, cheaper, and more efficiently.
- Low-income people can save money safely.
- People can make more informed decisions about their finances.
- People can have greater control over their own lives.
- Financial service providers can increase their revenues.
- Governments can improve tax collection and reduce welfare spending.
DFI is critical in reducing global poverty rates and accelerating economic growth in developing countries worldwide. Hence, it’s essential to understand the concept if you work in the industry or want to work with companies that do business internationally.
1) Access to accounts
2) Usage of accounts
3) Use of a range of services
All three components are necessary for DFI to be successful. DFI can lead to improved economic well-being for individuals, households, communities, businesses, and nations when all three are present.
A common assumption in global development circles is that institutions can only digitally deliver financial services to poor people. The reality, however, is more nuanced: mobile money certainly has a role to play in reaching underserved populations. Still, many people will always have an affinity for banking in person—where they can see their money and discuss their needs with a trusted advisor—and there are no easy technological solutions to such barriers.
It’s easier than ever to open a bank account online with SoFI (SoFi Bank). And mobile phone technology can make money transfers quick and easy. But even though more people have access to these services than ever before, there are still billions of people who don’t have access to basic banking services like checking accounts and credit cards.