PHAPANO PHASHA
This past week, India hosted the Global FinTech Festival, themed “blueprint for the next decade of finance”, which is billed to be the largest fintech gathering in the world.
The conference was attended by policy makers, central bankers, related regulators, academia, fintechs, non-bank financial institutions, artificial intelligence specialists, tech enthusiasts and many technologists who converged to share perspectives and insights, collaborate and showcase their wares.
For India and other developing countries, fintech provides a platform for collaboration beyond the immediate areas of financial technology and financial inclusion to allied areas such as international trade and industry and digitalisation in general.
Digitalisation is indicated as making a crucial contribution towards not only growth and development, but also positively transforming economies from developing to developed. Digital transformation of traditional industries, not just finance, is central to economic inclusion, modernisation, increased exports of high-value products and increased productivity while lowering the cost of living and doing business.
The Global Fintech Fest 2024 is in its fifth edition. For governments in the Global South and their central banks, gatherings related to the industry are an opportunity to see how the national and international payment architecture could be upgraded, with an eye on bolstering policy agendas, such as financial inclusion, and providing resilience in the face of ever-present threats from malign state and non-state actors, especially in cybersecurity that have become a danger to the global economic and monetary system in a polarised multipolar world.
For the distributed ledger technology and blockchain, the backbones of the digital currencies, including Central Bank Digital Currencies, look to be particularly promising for governments, their central banks and commercial banks.
Beyond their use for domestic payment and settlements, they are particularly, important for cross-border settlement purposes such as the one the BRICS are busy establishing; The BRICS Pay. This would be an alternative to the SWIFT global financial messaging system which has become highly politicised.
Therefore, FinTech’s catalytic role in driving financial inclusion as a development agenda issue has never been greater. Large developing countries are some of the keenest in adopting digital wallets. In the Global South, India, China, Kenya and Brazil, are significantly ahead of many other economies.
The rapidly evolving fintech landscape is revolutionising not only banking as we know it but financial inclusion as the cornerstone of development.
In developing economies, financial inclusion is about ensuring access to all financial services, about 71% of people have a bank account. A decade ago, this was at 42%. Globally, the number rose from 51 to 76%, according to the 2022 World Bank report.
The biggest gains in financial inclusion were in digital payments. The surge was observed during Covid-19 mobility restrictions and when cash was perceived as unsanitary. Digital payments have become safer and more convenient and can be an entry to using other financial services. This implies that the need for digital infrastructure and technologies is ever greater if rapid delivery of services to as wide a population as possible is to be achieved.
At a time when the world is experiencing the highest social, political and economic tension at any point in recent history, critical and emerging technologies must necessarily emerge to help solve the impasse and stabilise the global financial ecosystem that can allow the transmission of digital payments globally without power-play disruptions. It is here that BRICS becomes relevant in shaping a better future using fintech.
Thirty decades ago, the world did not project that India would be a global calabash of the fintech industry. The country, which is reeling from centuries of colonial rule, has managed to use its population as the talent market of the world for fintech.
It is such areas of advancements and development within countries in the Global South that have become of interest to us, in the hope that other developing nations, especially African countries, would take such leaps of faith and invest in their young population, and use them as human capital, especially in IT and fintech.
While fintech might be seen as the lubricating mechanism for conducting smooth business and social activities, it also is the essence of development, and Africa cannot be left behind.
Phapano Phasha is with the Centre for Alternative Political and Economic Thought with focus on The Global South and BRICS Plus Countries.
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