Digital Financial Services
- The World Bank Group works with governments and the private sector to expand access to financial services to promote economic development and end poverty.
- For almost a third of adults around the world, the most basic aspects of day-to-day life are harder because they cannot get access to the financial services they need to store and save money, make payments and get credit.
- In addition to these, other benefits have been shown to accrue to the poor through Digital Financial Services (DFS) such as:
- Resiliency to shocks,
- Increased employment opportunities, and
- Empowering women.
- Digitization of financial services has made it cheaper for financial service providers to offer financial services to the poor.
- Through both its lending and advisory instruments, the World Bank Group helps countries implement policy changes that promote the growth of DFS by addressing the key cost drivers that have made the poor un-bankable. These include:
- Opening financial markets,
- Enabling simplified due-diligence and e-KYC (Know Your Customer),
- Legal and regulatory reform – as well as physical infrastructure, and
- Digitizing government-to-person (G2P) payments.
- The World Bank Group has been involved/helped launch a number of agendas/targets, including the Bali FinTech Agenda, Universal Financial Access 2020 Agenda, Digital Economy for Africa Initiative (DE4A), and Identification for Development (ID4D). IFC has invested in and provided technical assistance to DFS players.
- The World Bank Group welcomes the focus on cross-border payments. It is important and timely, given the impact of inefficiencies in cross-border payment arrangements on global trade, the digital economy and international remittances. Inefficiencies in cross-border payments impact emerging markets and developing economies (EMDEs) significantly, especially because international remittances are a significant portion of GDP for many EDMEs.
- The World Bank, in response to the call from G7 and G20, set up a comprehensive program on international remittances. The collective efforts of the global community brought the global average cost of international remittances from over 10 percent to 6.82 percent (Q4 2019) over the last decade. The World Bank is also participating in the FSB-CPMI cross-border payments group and supporting a series of different regional or global initiatives such as the Arab Regional Payments System or the ID4D.
- The importance of the reductions in the cost of cross-border payments cannot be understated: for every one percent drop in remittance prices, around $6.89 billion becomes available annually to migrant workers. We need to intensify our efforts to enable further reductions in the cost of cross-border payments by leveraging improvements in domestic payments.