How prepared are we to embrace financial technology?

Julius Bizimungu Many countries across the globe are taking advantage of the latest technologies, while others haven’t even set up strategies to enable adoption of these technologies. In developed countries, like in the Americas and Europe as well as developing nations of Asia, heavy investments have been made to explore the opportunities that technology brings, and have put in place mechanisms to support the sector as a key driver of growth. Indeed, the potential impact cannot be overemphasised as evidenced by how technology has fostered development in the West. From a person who makes his order using their smartphone and a passenger who hails a cab using an Uber app to people making online transactions without an intermediary, and companies using Artificial Intelligence (AI) to improve service delivery in services, industries as well as other sectors, technology is driving everything and changing the way we do things. Youth and financial literacy Rwanda has been touted as one of the fastest-growing economies in sub-Sahara Africa and globally. The country is one of the few with business-friendly environment, thanks to its supportive policies. Today, the local financial sector has come of age, and is making great strides as players try to reduce the distance people travel to access a financial facility of any kind using financial technology (fintech). With increase in the mobile money business, people no longer have to walk 10km to get financial services, and to withdraw or send money. With your smartphone or ordinary handset one can easily send money from their mobile wallet. In addition, situations where people could move with bundles of cash when going for shopping have reduced giving way for cards that merchants or POS operators use to effect e-payments. These and many other happenings in the financial sector are unprecedented, but the next 10 years could easily change its operations to wholly ICT-based. This of course fits in well with Rwanda’s goal of becoming a technology hub and cashless economy in the short term. But how ready are we to embrace the financial technology that is unraveling? I was having a chat with some high school leavers about doing business recently, and testing how their understanding of the banking sector, especially its future. As a young entrepreneur, my expectations were high; however, I soon discovered that most of these youth didn’t have bank accounts. Our discussion centred mainly on what the future of financial technology holds for businesses and ordinary people. But the majority seemed not to understand the new developments that are shaping the financial industry presently or why having a bank account is essential. Many said they hadn’t given the idea a second thought previously, with some noting that they were comfortable using siblings’. The discovery that many of these young people don’t have bank accounts got me thinking, wondering what other young people think of fintech and whether they are ready for it. Going forward Despite the gradual increase of smartphone penetration, availability of Internet, and relevant policies, there’s need to invest in financial education, focusing on the youth to help them understand the sector better and also how technology will impact their lives. This will also raise the level of financial literacy among our people and specifically benefit the ordinary people who are using phones in their farms, small shops and other economic activities. Lesson from India India isn’t only trying to leapfrog the latest financial technology, but it is also addressing some of the significant challenges that come with having plastic money in circulation. One of them is corruption. India’s move to take high-denomination currency out of the system sought to fight corruption, among other things. This is part of the bigger 2020 plan to get rid of plastic money. India is already in the process of huge disruption in financial technology and innovation, moving away from plastic money to mobile payments. Prime Minister Narendra Modi said the government would make debit and credit cards, ATM machines, and POS irrelevant by 2020, pointing to the power of Bhim, the new app which currently lets Indian users of Google’s android platform transfer money from one bank account to another without the need of middlemen. The Indian government is also gearing up to link this app to Aadhar, India’s unique identification programme. Once this is complete, consumers will be able to make transactions via their thumbprints. Already, Bhim has been downloaded over 10 million times. The country removed 500 and 1,000 rupee bank notes from circulation by November last year, a move that represents efforts to prevent fraud, corruption and illegal cash holdings. Scholars say illegal activities are among the biggest obstacles to poverty eradication. We have been trying to leapfrog some of the emerging technology, despite criticism from some of the tech-savvy people in the West. Perhaps we can pause and review ourselves to ensure we lay a firm foundation for future innovations in the financial and other related sector like the telecom industry. Besides, technology will play a huge role in helping the country realise its key goals, including poverty alleviation, access financial services and cashless economy. Remember, lack of financial inclusion and inequality affects growth. Change has come, and so we should take advantage of fintech to realise development objectives as a people and not to be caught unawares. The writer is a journalist.

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How prepared are we to embrace financial technology?