The broad range of financial services accessed and delivered through digital channels can include payments, credit, and savings, remittances, insurance or mobile financial services.
Using digital technology to access financial services (known as Fintech, financial technology) is becoming an everyday occurrence for millions of people. And it’s set to be a growing trend in how we spend, send and save money. People can now pay bills, transfer money and access their bank statements easily using their computer or mobile phone. In higher income countries, this gives greater choice and convenience.
In developing countries, the growth in digital financial services has given millions of consumers who previously had little or no access to a bank account access to financial services for the first time.
But with technology developing so fast, it can be hard to keep up. A concern is that consumer protection mechanisms within financial services are being outpaced by the development of mobile banking and associated technologies.
Digital financial services can expand the delivery of basic financial services to the poor through innovative technologies. These can include mobile-phone-enabled solutions, electronic money models and digital payment platforms.
Digital channels can drastically drive down costs for customers and service providers, opening the door to remote and underserved populations. Financial regulators around the world have realised the tremendous role digital financial services can play for financial inclusion and seek to unlock this potential by creating enabling environments for digital financial services.
Just as with the development of internet-only bank. The arrival of this digital financial service offered online banking and other financial services without a network of branch offices. These so-called “virtual” or “direct” banks were able to pass savings in labour and overhead costs on to their customers by offering higher interest rates on deposit accounts, lower loan costs and reduced service fees.