LONDON--(BUSINESS WIRE)--Citi Digital has published a new report, entitled; “The March Towards the Digital Money: Bringing the Underbanked in from the cold”.
Now in its fourth year, and produced in conjunction with Imperial College London, the report is based around the Digital Money Index which assesses how 90 countries are building the enablers of a digital money economy and why that is important - namely the ability for digital money to transform economies, making payments faster, cheaper, safer and more transparent.
But Citi’s latest Digital Money Index finds that, while there’s been a 2% overall shift towards digital money readiness since 2014, progress is patchy.
Two billion people worldwide don’t have any kind of bank account, and according to Citi a 10% increase in digital money adoption would allow 220 million people to enter the formal financial sector. So it’s a concern that the gap between those at the top of the Index and those at the bottom is widening, with countries at the top seeing average improvement of 3% over the past three years and those at the bottom just 0.5%.
But there are weaknesses even at the top. The Index reveals that the affordability of financial services fell by 3.2% in high-performing countries, but grew by 2.3% in emerging ones – therefore highlighting that many countries in the developed world are still struggling to bring their unbanked and underbanked in to the digital fold.
“The efficiencies and cost savings of moving to digital money are potentially staggering,” says Greg Baxter – Citi’s Global Head of Digital, “and the social benefits from wider financial inclusion enormous. It is therefore a concern that the Index is highlighting a risk that some low-income countries and potentially even low income segments within developed countries could fall irretrievably behind in the digital economy.”
Citi’s research finds that true adoption of digital money can only happen when there is a concerted, holistic effort that includes a supportive institutional environment, financial and ICT infrastructure, digital money solutions from government and the private sector, and enthusiasm from consumers and businesses. One country that has done so is India (with a year-on-year improvement by almost 10%) and the report scrutinises some of the key digital money initiatives its government, with the help of the private sector, has pushed through in recent years.
“No-one is saying it is easy,” continues Greg Baxter “but it does seem that developing countries have some salutatory lessons to offer even the world’s digital money leaders. Go back to basics, ensure there is true interoperability, incentivise the unbanked and underbanked and do not forget the power of evangelism. Not only will you reap the rewards, but you will also minimize the threat of lower income citizens being further left behind.”
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