The recent report by Digital Europe defines why a successful digital finance ecosystem is critical if we want to create an inclusive, green and secure Europe.
The digital finance revolution: unleashing the power of inclusion, growth, sustainability & security report highlights that the demand for digital financial services is generating significant disruption in the industry, and financial organisations are responding to this shift. Businesses are launching new products and services quicker and providing a more innovative customer experience while continuing to drive down costs and maintain stable security levels.
Today, the EU must actively focus on incorporating the potential of digital solutions into financial policies, to enable continued innovation. The Digital Europe report shows five key benefits for our society by supporting the digital transformation of financial services. This includes enhanced security and resilience, growth and competitiveness, data-focused sustainability gains, enhanced customer experience and greater inclusion in society.
Financial literacy will ultimately result in greater well-being. The economic benefit of reducing the size of low-skilled people in the EU is forecasted to be valued at around £200 billion annually over a decade. Aside from the financial aspect, a more digitally-focused society is vital to deliver a more secure, green and healthy future. Applying the right digital solutions and education will also play a critical part in strengthening cybersecurity, mitigation and response. In terms of digital finance literacy, education and training is vital for reducing poverty, improving economic inclusion and promoting wealth creation.
As payments continue to move online, new types of cyber-attacks are emerging. It is the responsibility of the EU to ensure people have the opportunity to understand and educate themselves on detecting financial threats. For years, finance businesses have focused on developing more structured economic concepts to enable customers to make informed financial decisions. According to the report, payment service providers are striving to improve their capabilities to reduce new fraud cases, but liability protocols should adapt to better suit liability to cyber fraudsters. It’s critical to point out that even if people are financially literate, most pre-contract information requirements tend not to work as well in theory, as people often avoid reading them due to the length and complexity. Regulation must explore how to improve these and make them work or enable providers to display the information in a way that can be taken on board by customers i.e. in a digital display.
Digital finance has proven to be vital for financial inclusion. For example, online payments enabled customers to access essential products and services during the pandemic, halting the economy from coming to an end. Today, new businesses and citizens who may have previously been left behind are growing and have equal access to the economy. This represents not a shift from physical to digital companies with a net-zero impact but a growth involving new businesses and people. If properly established, digital finance can make financial products and solutions more accessible and affordable to new population groups by reducing transaction costs, reducing requirements for physical infrastructure and enabling people to bridge the gap between various demographics. It also provides financial services to all groups, including minorities in selected rural areas and elderly age groups.
While digital finance cannot be a replacement for tackling the core social, economic and political factors that impact inequality and exclusions, it can provide driving support. Digital can improve access to financial services for people living in rural or impoverished areas or those physically unable to travel to branches. Digital can support people with disabilities who can experience financial exclusion in various forms. For example, ‘HandSome’ is a solution built for blind, visually impaired and dyslexic groups that verbally present the payment protocol once inserting the card into a terminal. This way, people can be assured correct figures are applied. Considering that approximately 15% of the global population has some form of disability, these digital solutions provide a critical service.
A successful digital finance system is vital if we want to deliver a more inclusive, green and secure future. Cloud computing, for example, has provided a 10% reduction in fraudulent activities. We must embrace and support new digital solutions enabling all people to manage their finances more effectively and safely.
