Throughout the trials and tribulations of the ongoing Covid-19 pandemic, the acceleration of advancements in technology provided the clarity on how mainstream resources can assist developing societies. This trend was especially evident in the remittance market, with easier access to tools and digital transactions to quickly and securely move money, even without access to a bank account. Francis Bignell provides details in The Fintech Times.
“Karen Jordaan, head of UK at digital payments company, WorldRemit, believes the pandemic inadvertently helped the remittances market as customers recognised the benefits of digital transactions: customers no longer needed to travel long distances to find pick up locations, stand in long queues and risk carrying cash around with them: “Remittances, or any non-commercial money transfers sent from abroad to a ‘home’ country have an important impact on nations across the globe, as well as being a lifeline for many families. Additionally to helping recipients manage the costs of medical expenses, education, living costs and more, over time remittances can aid in reducing extreme poverty as money finds its way into the wider economy.”
Easy and inexpensive access to mobile technology serves as an on ramp to customers who, either through physical, economic or societal disadvantages, previously were underserved. Advances in areas such as digital wallets, that I covered extensively in my report Digital Wallets: Moving Beyond Payments With Expanding Options, were developed with first world solutions as primary drivers but have an outsized impact on underserved communities that are seeing increased access. Third party universal wallets provide flexible opportunities for undeserved communities to use their mobile phone as a resource, but also not be tied to a particular operating system or device, a critical need for access in developing areas.
Bignell’s article provides additional thoughts from Erin Holloway, president of Prime Trust who adds details on how easier access to money through easy, digital remittances solves issues related to typical roadblocks of being served by more standard financial institutions:
“’These funds can help families buy essentials like food, clean water and housing, pay off debts, enable them to travel, or sustain them during issues like international conflict.
‘Through the traditional financial system, it can be challenging to create the necessary accounts, let alone send the funds internationally. Many immigrants or lower-income families may not have the items required to open an account with a financial institution, such as:
- Government-issued photo IDs
- Social Security Numbers or Tax IDs
- A permanent address or phone number
- Funds for an initial deposit
‘This has locked swaths of people from accessing the economy and impedes their ability to save money, buy necessities, or send money – internationally or otherwise.’”
The digital wallet can serve as an access point for critical components that Roberson identifies. First and foremost, the digital wallet serves as an always accessible access point for funds and digital transactions without the need to access a bank account. With that, users of digital wallets now possess the ability to transfer funds seamlessly to and from a variety of sources. In addition, digitization of identification provides governments and citizens better access to necessary documentation to move into an account-based system as conditions change and previously underserved communities emerge to become a new generation of customers for traditional FI’s.
Moving forward, other technology advances discussed in the article, from blockchain to real-time payments and banking-as-a-service, while developed with the first-world market in mind, may have even greater impact on other communities as those technologies move further into the mainstream.
Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Mercator Advisory Group