Digital Finance to Benefit Emerging Economies

Adoption of digital financial solutions could revolutionize financial inclusion that could turbo-charge growth in emerging economies, adding up to 6% or $3.7 trillion to GDP by 2025, benefiting billions of people according to a report by the McKinsey Global Institute, Yahoo reported. Two billion individuals and 200 million micro, small, and mid-sized businesses in emerging economies today lack access to savings and credit. Even those with access must often pay high fees for limited product choice. Digital financial services delivered via mobile phones, the internet or cards linked to a digital payment system—could be a boon to individuals, businesses, and governments across the developing world, boosting GDP and making the aspiration of financial inclusion a reality. “Using traditional brick-and-mortar banks, we’ve seen financial inclusion improve slowly as a country’s income rises. But we don’t find any correlation between mobile-money usage and income. Rather than waiting a generation for incomes to rise to close the financial inclusion gap, developing countries can use mobile phones to provide digital financial services for the vast majority of its citizens within a decade,” said Susan Lund, a partner at the McKinsey Global Institute and co-author of the report.