Digital Finance is the talk of the town. A new wave of technological innovations in financial services (mobile payments, online banking, cryptocurrencies and processing of big data) has changed the way consumers and businesses interact with financial institutions. Beyond massive business opportunities for providers, digital technologies in finance promise to significantly leverage financial access to millions of the hitherto unbanked.
Indeed, impressive progress has been made over the last decade in financial inclusion. Powered by the mobile phone, new data and technological innovations, it has become affordable and convenient for unbanked customers to access and use formal banking services. Mobile money is now available in two-thirds of low and middle-income countries and registered mobile banking accounts surpassed half a billion in 2016. In Sub-Saharan Africa alone, there are over 277 million registered accounts. This is more than the total number of bank accounts in the region. Has mobile money achieved more in Sub-Saharan Africa in the last ten years than traditional finance has in centuries?
Challenges in Digital Financial Inclusion
But before getting too excited, it is worth taking a step back – as with new opportunities, comes new risks and challenges.
One of these challenges is that digital financial services are not yet used to their full extent. In fact, only one third of all registered mobile money accounts are active on a 90-day basis. And even when they are used, most of the transactions are made to add airtime. That is a big issue. If customers are not properly using these new products, providers cannot make any money and achieving financial inclusion is moving beyond reach.
What’s more, the rise of new technologies and non-bank actors (such as Telcos or Fintechs) entering the space are putting massive pressure on traditional microfinance providers. Those who fail to keep pace with technological advances will eventually lag behind their competitors and be sidelined. In the race to meet consumer demands and gain market share, they will be overtaken by technology-focused, resource-rich players. Watch and wait is not an option anymore.
But jumping blindly on the next tech innovation is also not the solution. To effectively leverage tech for financial inclusion, one needs to understand the underlying dynamics, technologies and associated risks in digital finance.
Frankfurt school’s new e-learning course in Digital Finance will certainly help. We have designed a 6-month course that gives you a thorough understanding of the principal trends and concepts in the new space and makes you a Certified Expert in Digital Finance. Wondering who we are? ‘We’, this is Christian Hecker, Head of Multinational National clients at ING Bank in India with practical and theoretical knowledge in disruptive technologies, like Blockchain, API and Open Banking and me, Constanze Lehmann, Digital Finance consultant, combining several years of experience in both the microfinance and fintech space.
Our new CEDF course covers the key topics in digital finance including the various new products available, the emerging technologies like blockchain and artificial intelligence and the regulatory landscape. It offers traditional providers strategic guidance on how to go digital and offer innovative, customer centric financial services that respond to the new customer expectations.
Technology offers tremendous opportunities and has accelerated financial inclusion at an incredible pace. Yet, the road is still long. 1.7 billion people have no access to formal financial services. We hope that by providing you with the essentials on how to go digital, you can leverage the opportunities at hand and successfully deploy digital financial services that clients are actually looking for.