The Future of Financial Inclusion in the Time of COVID-19
Updated: Oct 12, 2020
Due to the repercussions of the COVID-19 pandemic, industries all over the world have had to adjust to the new normal. Our current situation has accelerated the use of digital services across different platforms to be able to answer to the customer’s changing needs. The banking industry is at the forefront of this change, and financial institutions that have long adapted to the digital lifestyle are adjusting quite well to the new normal.
With other financial institutions having no choice but to shift to digital as well, the future of digital financial inclusion is looking bright. According to the International Monetary Fund (IMF), the resulting expansion of digital financial products and services due to the pandemic can benefit low-income households, and micro and small enterprises — all of which can boost economic growth. One that is of prime importance now that the lockdowns are letting up and the economy is recovering.
The effect of COVID-19 on financial inclusion is still up in the air as no vaccine is in sight yet. However, governments and organizations are already preparing for a post-COVID society. In this, financial inclusion will be pushed by digital financial services. To further financial inclusion across the globe even after the COVID-19 pandemic, the following must be accomplished:
Equal access to digital infrastructures
Electricity, internet connection, and cellular coverage are important in accessing financial services remotely. Digital IDs, on the other hand, is needed for eKYC requirements. Mobile devices and digital financial services are highly dependent on these so having equal access to digital infrastructures will ensure that everyone has the means and capability to become financially included.
Greater financial and digital literacy
Being aware of digital financial risks and being knowledgeable in how digital financial products and services work are integral components in promoting financial inclusion. Through understanding, banking customers can overcome their hesitation and use financial products and services smartly without any fear of making costly mistakes or becoming a victim of fraud. With the rise of the digital lifestyle, proper understanding is first needed to be able to access digital services.
Keep up with fintech innovations
Technology is everchanging and fintech innovations are no different. In a time where people and industries are heavily reliant on digital services and infrastructures, regulators and financial institutions need to keep up and be aware of fintech innovations to ensure their customers are secure when using their services on digital platforms. Cybersecurity and consumer and data protection are of prime importance.
Financial inclusion strategies by the government
To further support and promote financial inclusion, the government should lay the foundation for furthering financial inclusion in a post-COVID society. Policies, strategies, and regulations that support low-income households, financial institutions, and the fintech industry are important to make sure that they can work hand in hand. Policies that are for the betterment of the people should always be prioritized.
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