The emergence of financial technology has been changing the way we do business, pay bills and even extend money to friends and family, speeding the flow of cash from senders to recipients.
But the advantages are weighted, of course, to those who have access to such technology in the first place, via mobile payments or other conduits. Wealth creation and ease of use may be segregated into the “haves” and “have-nots.”
A report released by McKinsey on Wednesday (Sept. 21), and cited by Quartz, showed that as many as 2 billion people are among the “have-nots,” lacking access to even the most basic financial services, such as credit and the simplest forms of savings accounts. That weighty number represents half the adult population in the developing world, said the McKinsey Global Institute. Should those people be given access to mobile phones (and online services), global GDP would jump by $3.7 trillion, or as much as 6 percent, within the next nine years, the report said.
Breaking down that GDP push, two-thirds would come from better productivity via digital payments, and the other third would come through increased investment on an individual and enterprise level.
Additional benefits upon digitization of finance in the developing world would be seen in tandem with the reduction of poverty, corruption and the creation of 95 million jobs. The poorest nations in the world, such as Ethiopia, could boost GDP by 12 percent, said McKinsey. Other, richer countries, such as Brazil, could see a mid-single-digit percentage point jump in GDP. Deposits worldwide via financial institutions would bump up by more than $4 trillion, McKinsey said, spurring personal (and business) investment.
Such projections are not too far from being realized, at least as far as infrastructure is concerned, in terms of extending financial inclusion, as 80 percent of adults in developing nations have mobile device subscriptions. That number will rise to 90 percent within four years, said McKinsey. And yet 90 percent of payment transactions are made in cash, the tried-and-true method in those areas, which stands out in stark contrast to the roughly half of transactions that are made digitally in the United States, for example.