The COVID-19 pandemic has had an unprecedented impact on the global economy and engendered a decade worth of change in just a year. It has compelled everybody - consumers, businesses, and financial institutions to quickly adapt to new behaviours and attitudes, and re-evaluate priorities. In this new normal, the pace of digital transformation accelerated as innovative technological solutions quickly came to the fore to resolve the challenges related to social distancing and minimal contact.
The risk of going to the grocery or medical store made us realize how easy it is to have our supplies delivered at our doorstep and make contactless payments. Inarguably, the benefits of leveraging digital technology are myriad – both for businesses as well as for consumers. In this regard, while the adoption of existing digital technologies has accelerated it has also led to the emergence of new trends. Some of these are discussed below.
Remote working and more gig work – Traditionally, companies have been reluctant to embrace remote work and short-term projects. However, the constraints imposed by the pandemic necessitated a shift towards alternate ways of working and revealed that several concerns related to productivity and security were unfounded. Now that many have tried it, a large segment of the population is going to stick the new ways of working because of ease and habit.
Online Shopping and contactless payments - Inevitably, the society is shifting towards a cashless paradigm where e-commerce and online shopping is likely to continue growing at a strong clip. While a number of consumers had already started leveraging online channels for consumption, the pandemic also pushed those sitting on the fence to embrace e-commerce and online shopping. Now that most of them have registered on a variety of e-commerce sites, it is expected that they will continue to engage on these sites even post the pandemic. While we expect some behaviours to return post-COVID, digital banking and shopping will only continue to grow in the years to come.
Digital finance and financial inclusion - Even before the outbreak, it was clear that digital finance is the fundamental enabler of financial inclusion in developing and emerging economies such as in Africa. Fintechs are creating innovative solutions to enable easy access and ensure that financial services reach the grassroot level. COVID-19 has undoubtedly fast-tracked that process benefiting many low-income households and small firms with little access to traditional financial institutions.
As a result, the pandemic has also precipitated positive change. In a continent like Africa, financial technology solutions can play an integral role in mitigating the economic and social impact of the pandemic. Growing digital financial services will accelerate financial inclusion, improve e-commerce output and safety, while enhancing Africa’s competitiveness globally. Low-income households and small firms can benefit greatly from advances in mobile money, fintech services, and online banking. Handled responsibly, the digitalization of finance, for both individuals and firms, can reduce costs and open up new market and livelihood opportunities—helping countries rebuild better after COVID-19. A transparent and technology enabled digital marketplace can democratise the financial services landscape and ensure that every individual has secure access to quality financial products. This can empower them to make the most optimal financial decisions.
The shift towards digital financial services was already helping societies advance financial inclusion before the pandemic started, benefiting many low-income households and small firms with typically little access to traditional financial institutions. By ensuring that basic financial services are available to everyone in a transparent and seamless manner, fintechs are democratising financial services and empowering the economically vulnerable populations.
Financial inclusion benefits economies and societies as a whole.
By Hitesh Makhija
Vice President Finance | CFO - Ghana & MBTN (WAF3) at Olam International Limited,
Angel Investor and a Fintech Enthusiast –
e-mail- [email protected]