Financial technology or fintech has always been playing a pivotal role in transforming finances. It contributed to, among others, enhancing operational efficiency and customer experience in financial services. Adapting to the new normal has only accelerated such functions.

Looking beyond, fintech will continue to fulfill its roles of enabling digitalization across businesses and working towards financial inclusion, which is also a driver of economic recovery and growth towards a post-pandemic world. The Bangko Sentral ng Pilipinas (BSP) is, in fact, aiming to transform 50% of the total volume of retail payments into digital and expand the financially included to 70% of Filipino adults by 2023 under its Digital Payments Transformation Roadmap.

The role of fintech was evident when the lockdown and several restrictions took place to curb the spread of COVID-19. As many businesses started or sped up their digital transformation to adapt to the new situation, fintech has aided them to continue having payment transactions with their customers without physical contact.

The central bank has reported that the volume of monthly digital payments has reached 20.1% in 2020, and monthly digital payments volume for merchant payments grew by 47.8%, while person-to-person monthly digital payments volume increased by 18.1%.

As digitalization continues to expand across industries, businesses in the post-pandemic world would likely be digital and the adoption of fintech could take part in the digitalization of their services.

“There is no arguing that the new economy is digital. Our aspirations for a more inclusive and prosperous post-COVID world necessitate putting in place the critical pillars of a digital economy,” BSP Governor Benjamin E. Diokno said in a keynote speech during a FinTech Alliance virtual forum in 2020. Such pillars, he continued, have given new immediacy to the central bank’s financial inclusion and digital transformation agenda for the sector.

“Fintechs as an innovative provider and enabler of digital financial services will find compelling opportunities in this digital transformation agenda,” he said.

Also part of looking beyond the current pandemic deals with restoring the economy, particularly its growth. Financial inclusion is deemed to be among the factors to drive such recovery, which fintech also has a role to play.

According to Sharmista Appaya, a senior financial sector specialist in the Finance, Competitiveness, and Innovation Global Practice at the World Bank Group, 1.2 billion formerly unbanked adults gained access to financial services over the last decade, decreasing the unbanked population by 35%, which was mainly supported by the increase in mobile money accounts.

She also noted that 1.7 billion adults remained unbanked around the globe. Yet, fintech is nonetheless helping in making financial services further accessible to more people.

In the Philippines, as of the first quarter of 2021, the proportion of banked Filipino adults has reached 53%. These comprised basic deposit and e-money accounts.
“In a world where access to financial services and high-speed broadband internet is not universal or affordable, fintech can democratize access to finance and the world can move closer to achieving financial inclusion,” Ms. Appaya wrote in an article from the World Bank’s website.

And financial inclusion, she added, “is not only a goal in itself, but also a means to an end as an enabler and accelerator of economic growth.”

An article published on the International Monetary Fund (IMF) Blog further substantiated that advances in fintech services, online banking, and mobile money could significantly benefit low-income households and small firms. And such financial inclusion with the help of digital financial services can also support economic growth.

According to the article, previous studies have concluded that extending the reach of traditional financial services to low-income households and small firms “goes hand-in-hand with economic growth and reducing income inequality”. And as noted in the article, by anaylsis, digital financial inclusion could be also linked with higher GDP growth.

“To tap the high potential of digital financial services in the post-COVID era, many factors need to fall into place. Equal access to digital infrastructure (access to electricity, mobile and internet coverage, and digital ID); greater financial and digital literacy; and the avoidance of data biases are necessary for a more inclusive recovery,” it said.

“The pandemic shows that the trend towards greater digitalization of financial services is here to stay,” it added. “To build inclusive societies and address rising inequalities during and after the ongoing crisis, global and national leaders must close the digital divide across and within countries to reap the benefits of digital financial services,” it added. — Chelsey Keith P. Ignacio

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