Digitalization of finance seen supporting inclusivity goals

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FREEPIK

THE digitalization of financial services is expected to reduce the ranks of the underserved, including rural residents, micro-businesses, and women, according to a report on Southeast Asian digital financial services issued by the World Economic Forum.

“Access to finance is not uniform among ASEAN’s digital generation. Among those who sought credit support, nearly half could not access formal sources of lending. Some 28% of those who needed loans did not get any and almost a fifth had to rely on family and friends, cooperatives and other informal lenders,” the report said.

The survey found that women (65%) were more likely to adopt digital finance apps than men (59%).

One in five women was found to need loans from financial technology (fintech) sources, making the industry the second most important source of formal borrowing after commercial banks.

Overall, women had less access to financial services compared to men. Only 22% of women who needed loans actually received credit from commercial banks, compared to 28% of men.

There were also fewer women (19%) using advanced financial products compared to men (24%). However, the survey indicated that women were adopting digital finance apps (65%) at a higher rate than men (59%).

“It is notable that only 22% of women who needed loans actually received credit from commercial banks, as compared to 28% of men. Online lending services seem to be playing their role in filling in financial needs of ASEAN women, promoting women’s further participation in the digital economy,” the report added.

Meanwhile, micro-business owner respondents said that better access and use of financial services allowed them to upgrade and expand their current businesses, ranked equally with managing cash flows and expenses.

“Compared to other respondents, business owners also placed higher emphasis on the potential to attract new customers and suppliers and ease supplier and customer dispute resolutions when having better access to financial services. Interestingly, these functions go beyond what is traditionally viewed as the function of a financial service provider and also underscore how financial services have evolved,” the World Economic Forum said. — Luisa Maria Jacinta C. Jocson