Digital finance is a robust medium to broaden the access outside the financial services to other sectors, which includes agronomy, infrastructure, services, energy among others. People without a bank account are accessing financial services via the digital medium. Several stakeholders are utilizing the cell phones along with a gamut of agents to provide simple financial services at better suitability and reduced cost against conventional banking. It is also known as "Branchless Banking".
Traditionally, the huge expenditure involved in constructing and managing conventional banks has been a key stumbling block for connecting with the low-income groups. Banking infrastructure is not easy to manage in remote areas, while it would be expensive for customers in rural areas to commute to urban centers.
Digital finance assists in negating the obstacles. Agents having cell phones are the most optimal medium for handling fewer value transactions for low-income groups, cost-effectively. Cash flow into innovative digital finance firms keeps increasing for consolidating assigned digital banking, mobile solutions, and delivery platforms among others.
The impact of digital finance on the global economy is expanding at an accelerated pace. It is transforming the way financial transactions are done. The benefits of digital finance are many, including cost decrease, development of essentially digital financial products and services, including advanced ones. Certain digital finance products are delivered on modified global digital platforms.
The technological advancements provide new prospects for FinTech start-ups. It also assists various stakeholders including governments and firms to steer development. There is a need for a highly effective global regulatory infrastructure to manage digital finance.
The Establishment of a Facilitating Scenario for Digital Finance Needs Certain Critical Policy and Regulatory Queries to Be Resolved Such as:
Corresponding the keenness for innovation with assurance about the legal framework. Regulating and protecting the provision of modified digital finance tools such as e-money. Comprehending AML's concerns pertaining to digital finance and mobile-empowered international remittances. Monitoring digital financial services. Regulating a wide array of third-party agents. The provision of financial services via highly innovative technology, which includes mobile money, could be a driving force for the utilization of a gamut of financial services - credit, insurance, savings among others.
According to Jin-Yong Cai, International Finance Corporation Executive Vice President and CEO, "The benefits of digital finance extend well beyond conventional financial services: This can also be a powerful tool and an engine for job creation in developing countries."
As per Thomas Duveau, the Head of Mobisol Solar Home Systems, "The buzzword 'digital finance' is already an everyday reality for our Tanzanian, Kenyan, and Rwandan customers who are using Mobisol Solar Home Systems. Paying for solar power in small installments through mobile money is not a 'fancy option': It's already the norm for commercial transactions by those at the bottom of the economic pyramid."
Digital finance is also critical for the retail business. It ensures the small businessmen have the access to funding, along with electronic payment systems, robust financial products, and the opportunity to construct a financial track record.
According to Walt Macnee, President of the MasterCard Center for Inclusive Growth, "Innovations in electronic payment technology like mobile and prepaid enable people to live more secure, empowered and included lives and that digital money will be the only way to achieve universal access to finance by the year 2020."
Digital Finance is a priority for banks in the recent past. Innovations like mobile deposits have radically changed the reach of banking. Currently, customers are finishing most of the transactions online using a mobile or tablet device. Customers are very conscious about the latest technology.
The penetration of digital finance is expected across various segments, including the medium scale business and corporate banking. There are obstacles like security, greater intricacy with regard to the kind of services required for distinct businesses.