As digital technologies such as the internet and mobile communications are continually integrated into the finance industry, financial transaction modes and service models are also evolving.
Technological innovations are being deployed to ease the way of conducting business in the industry, and digital, mobile, and intelligent financial inclusion have become a major trend.
The concept of Digital Financial Inclusion (DFI) was first proposed at the G20 summit in Hangzhou (China) in 2016. On the premise of controllable cost and sustainable model, DFI leverages various digital technologies to provide equal, effective, comprehensive, and convenient financial products and services for all walks of life, and especially for special groups with insufficient coverage of the existing financial system, such as low-income urban populations, rural populations, and people in remote areas, and small and micro-sized enterprises.
DFI has the following characteristics:
- Wider coverage: Compared with traditional banking outlet construction, DFI relies on digital technologies such as the Internet and mobile communications to deliver reachable services within signal coverage under the premise of wide coverage of basic communications facilities.
- Lower service costs: Digital technologies, especially mobile systems, can replace a considerable proportion of network outlets and labour costs. Moreover, the big data technology is used to analyse user information and data from multiple dimensions, identify requirements, and perform precision marketing, reducing the customer acquisition cost of financial institutions and improving the efficiency of financial services.
- Wider range of service objects: According to the World Bank survey, 1.7 billion adults worldwide still do not have financial accounts. Therefore, it is important that digital technologies are used to support and ensure the implementation of financial inclusion. For example, the big data technology can enable small and micro-sized enterprises to meet the credit assessment requirements of traditional financial institutions.
Africa: Telecommunications and banks cooperate to promote financial inclusion, delivering reachable services within signal coverage
In recent years, the popularisation of mobile communications has provided necessary conditions for the rapid development of the digital economy, significantly promoting financial inclusion.
Between 2005 and 2017, the number of mobile users in Africa increased from 87 million to 760 million, with an annual growth rate of 20 per cent, making Africa the fastest growing market in the world.
Kenya is by far the most successful country in the innovation of inclusive financial services in Africa, which can be largely attributed to the creation and promotion of M-Pesa.
Banks are another type of representative enterprises in the field of financial inclusion in Kenya, especially Equity Bank, NCBA, and KCB, which are famous for the agency banking concept and are the best providers of financial services for small and medium-sized enterprises in Kenya.
Latin America: Robust financial supervision effectively promotes the healthy growth of small and micro loans
In Latin America, small loans have played a positive role in promoting financial inclusion and helping impoverished people and small enterprises develop.
So far, Latin America has about 1,000 small-loan institutions, serving about 20 million customers, with a loan balance of over $40 billion. The average loan balance of each institution is $40 million, serving 20,000 customers with an average balance of $2,000 per customer. Many small-loan institutions have received funds from the capital market.
With a practical and effective financial supervision system, Latin America has complete laws and regulations, regulatory framework, and inclusive financial institution system. Its top-level design ranks first-class in emerging regions. Among the top 20 countries with the best small-loan business environment, 11 are in Latin American.
China: Credit and payment infrastructure lay a solid foundation for financial inclusion
Credit and payment infrastructures are the basic elements of a country's financial set-up, and are the key to solving the problems of information asymmetry and high transaction costs that hinder the development of financial inclusion. China’s progress in promoting financial inclusion is largely due to the efforts made in recent years to strengthen the national financial infrastructure.
Constructing payment infrastructure
The People’s Bank of China cooperates with other stakeholders to establish a functional and robust national payment system infrastructure in China. The Chinese government focuses on building and maintaining the payment and settlement infrastructure in rural areas to ensure its stable operation.
The infrastructure promotes the expansion of the physical network of financial institutions, improves the diversity and efficiency of payment products, and promotes the digitisation of government-to-peer (G2P) transfer payment.
Actively promoting the construction of the digital credit investigation system
In recent years, the People’s Bank of China has actively promoted the construction of a credit investigation system to reduce information asymmetry between borrowers and lenders, and provide responsible loans to enterprises and families.
The People’s Bank of China has also recognised the role that the private sector, particularly emerging financial technology companies, can play in improving China’s credit infrastructure.
On February 22, 2018, the Central Bank of China released a bulletin on its official website, indicating that the personal credit investigation service of Baihang Credit had been approved.
China is a global leader in promoting the development of financial inclusion with financial technologies, and its practices in credit infrastructure and payment infrastructure can set an example for other developing countries.
As a world-leading ICT provider, Huawei constructs inclusive connectivity networks to bridge the digital divide and build a solid foundation for financial inclusion.
In addition, Huawei has become a mobile payment carrier and a top technical solution provider in the finance field. It provides mobile wallet, mobile payment platform, small and micro-loan platform, open financial platform, and credit scoring system to form an overall mobile financial solution.