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> Posted by Jeffrey Riecke, Communications Assistant, CFI

Those of us living in higher-income countries rarely think about something that dominates our financial services: everything’s digital. From checking balances, to transferring money, to making payments, nearly everything’s digitized and accessible with an internet connection. However, for the 2.5 billion people who don’t have an account at a formal financial institution, making a payment or receiving money isn’t as simple as a few computer mouse clicks or a few seconds at an ATM machine. Managing finances the old fashioned way, with cash for transaction and jewelry, livestock, etc. for savings, creates numerous challenges and limitations. In A Digital Pathway to Financial Inclusion, a new report from Dan Radcliffe and Rodger Voorhies of the Bill & Melinda Gates Foundation, the divide between cash and digital is examined, and a portrait of digital financial inclusion, and how we might reach it, is presented.

Compared to those using digital financial services, those using physical methods incur storage risks, transport costs, and psychological barriers to saving, Digital Pathway claims. On top of these, handling finances physically effectively drives a wedge between unbanked individuals and the formal economy as it’s more costly for the organizations and institutions of the formal economy to transact with people who are not “hooked in.”

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