Digital revolution is boosting access to financial services in developing economies – World Bank

The digital revolution which has been spurred by the COVID-19 crisis, has catalysed increases in access to, use of financial services in developing economies, David Malpass, the president at World Bank Group says.

Malpass made this known in a recent blog titled ‘Aiding the digital revolution in global financial inclusion’.

“Around the world, high inflation, slow economic growth, and food shortages are hurting the poor the most. On the positive side, the crisis spurred unprecedented change, especially in industries with a large digital component.”

He also added that this digital revolution has catalysed increases in access to and use of financial services in developing economies, transforming how people make and receive payments, borrow, and save.

A recent Global Findex survey by the World Bank found that 71 percent of adults in developing economies now have a bank account compared to 42 percent in 2011. In addition, the difference in the share of men and women in developing economies who own an account fell for the first time, from nine percentage points to six.

Likewise, Nigeria’s banked population increased by 15.6 percentage points to 45.3 percent in 2021, the highest in 10 years from 29.7 percent in 2011.

Read also: How Open Banking initiative can advance Nigeria’s financial inclusion

“This digital transformation makes it easier, cheaper, and safer for people to receive wages from employers, send remittances to family members, and pay for goods and services,” Malpass said.

The American economic analyst and former government official highlighted that the digital revolution also serves as a powerful anti-corruption tool, as it helps to increase transparency as money flows from a government’s budget to public agencies to citizens .

“Government social programs can now reduce delays and leakage by channeling transfers directly to their beneficiaries’ mobile phones. Millions of people in developing countries received payments in this way during the pandemic, helping to cushion the impact of COVID-19 on livelihoods.”

He recommends that building on these encouraging trends is crucial, especially given the current economic headwinds.

“Expanding people’s access to finance, reducing the cost of digital transactions, and channeling wage payments and social transfers through financial accounts will be vital to mitigating development setbacks resulting from the ongoing turbulence.”