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The Covid 19 pandemic has shaken the world at large, and the finance sector, in particular, has seen a massive change in its functioning in this short period.
In this context, digital finance has acted as a saviour in the unprecedented social and economic crisis. It has come under the spotlight to provide relief for millions worldwide, support businesses, and protect jobs and livelihoods. Hence, we can safely claim that Digital Finance is here to stay.
What is Digital Finance?
Digital finance is the impact of new technologies on the financial services industry. It has transformed the traditional way of providing banking and financial services. It includes a variety of products, applications, processes and business models.
Digital Finance has made it possible for us to interact with banks using mobile technology. As a result, making payments, transferring money and making investments using various new tools has become a one-click process. In addition, new services and business models by established financial institutions and new market entrants have changed the way we deal with finance.
Potential Of Digital Finance?
The Covid 19 crisis has already demonstrated the immediate benefits of digital finance. However, the disruptive potential of the digitalization of finance is immense.
For instance, Digital payments have transformed mobile phones into financial tools for more than a billion people. In addition, Digital Finance is supporting big data and artificial intelligence in advancing cryptocurrencies and crypto-assets, peer-to-peer lending, crowdfunding platforms, and online marketplaces.
Banks are not far in the race of digitalization as they have invested over US$1 trillion in developing, integrating and acquiring emerging technologies. In 2018, ‘fintech’ investment reached US$120 billion, one-third of global venture capital funding.
How does Digital Finance help in Sustainable Development Goals?
Digital finance empowers citizens as tax-payers and investors. It envisages a digital transformation at a scale that better aligns people’s money with their needs hence, collectively expressed by the Sustainable Development Goals (SDGs).
UN Secretary-General António Guterres said: “Digital technologies, which are revolutionizing financial markets, can be a game-changer in meeting our shared objectives. The Task Force on Digital Financing of the Sustainable Development Goals provides leadership to harness the digital revolution. “
The UN Secretary-General’s Task Force on Digital Finance sets out an ambitious, practical Action Agenda. The report highlights that billions of people respond to the COVID-19 pandemic by using digital tools to work, spend and socialize. There is a historic opportunity to harness digitalization in placing citizens, the ultimate owners of the world’s financial resources. It can give them control of their finances to ensure that it meets their needs, today and in the future.
Digitalization can be thus concluded as a force to drive the finance world into a direction that can ultimately help to strengthen the system and its shareholders.
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