Banking stability is essential for any country’s economy & digital finance is the key right now. It makes people and organizations save and invest. However, many people or small businesses are not included in the financial industry.
For a long time, the norm was only the affluent ones need knowledge or access to finance. However, this idea changed after the revolution of digital finance. Digital finance promotes inclusivity. Therefore, the importance of digital finance at present is tremendous.
What is Digital Finance?
In simple words, digital finance is everything in the financial industry in digital form. Every sector is becoming digitalized to make everything easier and more straightforward, and the financial industry is no exception. Digital finance includes all the former financial services in newer digitalized form, also newer technology or inventions related to finance.
Importance of Digital Finance
Digital finance allows general people and companies to get financial services through their mobile devices without even going to the bank. One can have access to payments, savings, or credit products. Digital finance turns your smartphone into a wallet, a bank, a checkbook, or even an accounting ledger.
- Digital finance costs a lot less. A traditional or physical financial system costs 90% more than a digital system. Therefore, lower-income people can also be included in the digital financial system.
- Digital finance gives the opportunity to be a part of the financial industry despite being in a remote area.
- With the help of digital financing, banking has come into our hands. The entire banking system can be done from a smartphone. Opening an account, money transfer, paying bills, etc., all are part of digital finance.
- The fintech industry is reaching a new height, thanks to the digitization of the financial industry. It is used almost everywhere for the betterment of the industry as well as making user’s life less complicated.
- AI or machine learning is being used in digital financing system. With that, the user experience becomes easier. It is used to detect fraud or other suspicious activities within seconds.
Benefits of Digital Finance
The popularity of digital finance is increasing due to the accessibility and efficiency of the system. Here are some benefits of digital financial systems.
- It is accessible from anywhere around the world
- It saves a lot of time. You do not have to wait in queues like the traditional financing system
- It saves a lot of resources as well
- It is very easy to use and efficient
- It is a real-time system
- A transaction can be done in seconds, and the data will be updated instantly
- Comfortable when it comes to decision making
- Reliable system
- The transaction is secure and safe
- Tech support is available for a wider range of people
Digital Financial Inclusion
Digital finance inclusion means including the less-privileged society in digital finance. Though digital financial inclusion consists of a lot of things, including a wide range of people is the most important one. Digital financial inclusion consists of three components.
1. Digital Transactional Platform
A digital transactional platform is a system where transactional data is stored. It also processes data. Doing the processes in the most secure way is the utmost priority.
2. Retail Agent
Retail agents have access to resources for sending and receiving funds. They are the ones who convert electric money to hard cash.
3. Electronic Device to Access the Platform
This component consists of mobile phones, computers, or other electric devices from where one can access the platform for digital finance. In these devices, the interface for digital financing can be accessed and used. It is made to make as much user-friendly as possible so that everyone can use it without hassle.
The Future of Digital Finance
The fintech industry is working hard to make progress in the industry. We see the results everywhere. Here are some of the things we might witness in the near future.
- Artificial intelligence, machine learning, and big data will be used more in this sector. These will provide newer features for more convenience.
- Robotics and automated systems will be increased or updated. Much essential banking or financial works will be done by automated systems.
- AI and algorithms will be used in making decisions.
- Digital finance will provide better and faster processing.
- Tracking and maintaining financial records will get a lot easier.
- The system for identifying frauds will get better.
- Privacy and security system will become more reliable.
- Digital finance will positively impact the lifestyle of people.
All the traditional financial or banking services are being included in the digital financial ecosystem. Digital finance is spreading like wild-fire, and that is for the good of society. Moreover, digital financial inclusion provides an opportunity for a huge population to come under the financial industry, which will be beneficial for a country’s economy.