If implemented correctly, digital finance can contribute to the objectives of financial inclusion and poverty reduction in developing countries. In general, digital financial services should have three key components: a digital transactional platform, retail agents, and a mobile phone for transacting. These three components will help improve the financial inclusion process and benefit poor people, while increasing access to financial services. Let’s explore the benefits and challenges of digital finance and its potential in developing countries.
Impact of new technologies on the financial services industry
Artificial intelligence (AI) applications are poised to revolutionize the financial services industry, changing the focus from scale to scale of data. This is a great opportunity for financial services companies, as AI will enable them to process huge amounts of data in a more efficient manner. AI solutions will also help financial institutions improve their services by leveraging data analytics, chatbots, and AI technologies. As a result, many financial institutions are using these tools to improve their products and services.
Challenges for CFOs
As the world turns increasingly digital, CFOs face a number of challenges. These challenges come from all corners of the job. Here are ten of the biggest challenges CFOs will face over the next few years. In 2021, 67% of CFOs plan to focus their attention on tax policy, as parts of the Tax Cuts and Jobs Act (TCJA) are set to expire. As a result, the corporate tax rate will likely increase. Meanwhile, state budgets will face challenges with regard to state-level taxation. Finally, global trade policies and taxes will have a significant impact on CFOs’ operations.
Benefits for poor individuals
One way to make financial services more accessible to rural communities and poor individuals is to expand digital financial services. In some areas, the poor cannot access traditional banks because of poor transportation infrastructure, and long queues can make it impractical to go in for a banking transaction. By making financial transactions more accessible online, banks can cut costs and improve their financial inclusion. In addition, using digital financial services can enable more people to access basic financial services, such as paying their bills and transferring money.
Also Read : The Institute of International Finance
Challenges for providers
Providers of digital finance need to make sure that they are meeting the needs of their consumers. However, the rapid pace of technological change is causing inefficient regulatory practices and a lack of consumer redress. To meet these challenges, providers should adopt innovative regulatory approaches that will help them create a fair marketplace for consumers. Consumer associations play an important role in the creation of such a marketplace. For example, organizations such as Consumers International have conducted research on financial services in low-income countries and have identified challenges and opportunities for a more equitable environment.
Supporting infrastructure needed to make DFS work efficiently
Digital finance is the delivery of financial services through the use of digital infrastructure. This includes the Internet, mobile, and point-of-sale devices. It facilitates smooth transactions between all parties, including consumers, businesses, and government agencies. For example, digital infrastructure helps financial institutions provide early warnings of climate and environmental risks, as well as dispose of social risks and other issues. Digital infrastructure is vital to the success of digital finance.