Digital financial services in marginalised communities: pathways to poverty reduction and economic empowerment

PurposeFinancial inclusion plays an essential role in today’s modern era. There has been a growing recognition that financial inclusion is an important enabler in poverty reduction. It is an essential tool in enabling inclusive growth and reducing poverty. This study aims to identify the barriers that limit customers to use digital financial services (DFS) in Pakistan. Second, this study aims to spread awareness of DFS and benefits of digital financial inclusion and services to retain customers in Pakistan. Third, the study purposes to retain old customers toward DFS in Pakistan.Design/methodology/approachThis study is qualitative phenomenology study. The data were collected through interviews (i.e., online or face-to-face, depending on participants convenience). The sample comprised respondents with different age and different nature of work. Before conducting actual interviews, the interview questions were validated by three experts working in the State Bank of Pakistan in the relevant field. The interviews took from those individuals who were have digital financial account, but not using it due to some reasons. Data analysis carried out by using the NVivo software to deliver the themes after analyzing the data by querying, visualizing and coding.FindingsThe study categorized s6 themes as second order themes including dependency, illiteracy, lack of trust, cost, lack of access to financial services and financial instability by emerging 16 subject themes as 1st order themes. It including financial illiteracy, digital illiteracy, lack of knowledge, depend on spouse, depend on parents/children, depend on siblings, fear, security issues, privacy issues, lack of internet access, lack of account access, unemployment, low income, high expenses, other cost and transaction cost. These barriers limit DFS adoption and its use. This study found that 90% respondents were financial illiterate and 80% respondents do not have the knowledge of new recent e-payment system.Originality/valueHowever, this study contributes to reducing these barriers and spreading knowledge about financial inclusion and DFS. From a managerial perspective, additional attention needs to be devoted to the adoption of financial inclusion and innovation in DFS.

Savings and Credit Co-operative Societies (Saccos) in Kenya have realised a tremendous growth in the subsector and are investing huge amount of their scarce financial resources in digital technology to enhance services delivery and offer a wide variety of products and services range, increased membership mobilisation and size, ensure better structure and effective financial performance. Digital financial Services as used in the Saccos industry is as a result of Information Communication Technology revolution commonly referred to as digital commerce. Many Saccos are steadily changing from manual banking system of operations to providing digital Financial (e-banking) services that include internet banking, M-banking and Automated Teller machine support. The adoption of digital financial Services by the Saccos is a strategic attempt to deal with increased cut throat competition from traditional banking institutions and non-banking financial institutions, to cut costs and add value to their services in order to optimise benefits to the shareholders. Despite the fact that Saccos have rapidly adopted digital financial services to provide services, and that they drive a huge section of the financial sector savings of the economy, they have experienced various challenges such as uncertainty and risk due to digital financial services. The study sought to establish the influence of digital financial services on the financial performance of SACCOs in Kakamega County, Kenya. The specific objectives was to determine the effect of the mobile banking, internet banking, use of credit cards and digital funds transfer on the financial performance of SACCOs in Kakamega County, Kenya. The research was guided by three theories of innovation and technology: Diffusion of Innovation Theory, The Theory of Task-Technology Fit Theory and the Technological context, Organisational context and Environmental context Theory.The study used a descriptive research design. The population of study were staff at the three SACCOs operating in Kakamega County. This consisted of 162 respondents who are the staff of the SACCOs. A sample of 49 respondents was taken which forms 30% of the target population which shall be evenly spread across the three SACCOs. The primary data was collected by use of self-administered semi-structured questionnaire.Collected data was analysed through descriptive and inferential statistics by the use of SPSS. Findings were presented by use of tables, frequencies, percentages, means and standard deviation.The study found that the financial performance of the SACCOs was significantly influenced by the digital financial services instituted by the SACCO managements. They demonstrated to have reliable mobile banking system where most of their customers had enrolled on the mobile banking platform and most of customer queries and updates were sorted via the mobile platform.Given the limitations and findings of this study, the researcher recommends that since there exists a positive relationship between digital financial services and bank performance and that e-banking has brought services closer to bank customer’s hence improving banking industry performance, SACCOs must also enhance the dynamics of the sector and embrace digital banking fully and extensively. Mobile banking faces various challenges among them being, system delays by the mobile money transfer service providers, slow processing of transactions, high transactions costs, limit on the amount of money that can be withdrawn in a day and fraud.

The rapid advancement of digital financial services has reshaped the global financial ecosystem, offering enhanced accessibility and efficiency while also requiring users to possess a certain level of financial and digital literacy. This study aims to examine the impact of digital financial services on financial literacy in the city of Banjarmasin, South Kalimantan, Indonesia. Employing a quantitative research design, data were collected from 100 users of mobile and internet banking services at Bank Kalsel through structured questionnaires. Analysis was conducted using descriptive and simple linear regression methods. The findings reveal a strong positive relationship between digital financial services and financial literacy, with an elasticity coefficient of 8.172 and a correlation coefficient (R) of 0.662. The coefficient of determination (R² = 0.438) indicates that 43.8% of the variation in financial literacy is explained by digital financial services. These results underscore the importance of digital financial inclusion, technology adoption, and service quality in enhancing users' financial knowledge, skills, and behavior. The study recommends integrated efforts from the government, financial institutions, and digital service providers to develop inclusive, user-friendly, and secure digital platforms, supported by targeted financial education programs to promote financial empowerment and reduce socio-economic disparities in South Kalimantan.

Purpose This study explores the gender-specific determinants of the adoption of digital financial services (DFS) in Bangladesh, with particular focus on how perceived ease of use (PEOU), perceived usefulness (PU) and external factors (EF) influence users' intentions within the context of the Fourth Industrial Revolution (4IR). The widely accepted model related to technology adoption, the technology acceptance model (TAM), is used to investigate how adoption of DFS varies according to gender. Design/methodology/approach A questionnaire-based survey with 394 respondents that covered the major determinants of DFS acceptance was conducted. PEOU, PU and the influence of EF were used to identify the relationship to adoption behaviors, with emphasis on a comparative analysis of male and female adoption patterns. Findings From the study results, PEOU was identified as a significant predictor of DFS adoption for both men and women. However, it was found that PU had a significantly positive effect on DFS adoption in the particular case of female customers. Moreover, EF may enhance ease of use through social media for both genders, but no significant impact was found regarding PU in the case of the male respondents. Research limitations/implications The study findings emphasize the need for gender-sensitive design and DFS adoption strategies for both genders, with particular focus on women’s specific barriers, including digital literacy, trust and access to infrastructure. Financial regulators and DFS service providers should pay particular attention to developing inclusive DFS platforms that are easy to use, secure and responsive to diverse user needs. Future research should also examine the longitudinal impacts of DFS adoption on women's economic empowerment and explore innovative technological solutions, such as artificial intelligence-driven personalized services, to minimize gender gaps in digital finance. Originality/value The study’s novel approach is to examine adoption behavior through the TAM. It also considers gender to be an important factor influencing the adoption of DFS among consumers in the context of the 4IR. In addition, the study provides new understanding of gender-oriented factors affecting the preferences for using a DFS and makes recommendations for making DFS more gender and user-friendly, oriented towards men and women in Bangladesh. The findings add to the growing body of literature on digital inclusion and financial empowerment.

Digital Financial Services (DFS) is a relatively new, low-cost means of digital access to transactional financial services. Often termed ‘mobile money’ or ‘mobile financial services,’ DFS is one of the core solutions used in developing countries to catalyze financial inclusion and provide much-needed low-cost access to financial services. Aimed at those at the Bottom of the Pyramid (BOP) in developing countries, it shifts provision of financial services it uses digital access devices such as mobile phones and digital value transfer channels. It also features the emergence of agent networks for cash-handling and DFS account signups. DFS can be offered banks and non-banks – known as Digital Financial Service Providers (DFSPs) - who may be licensed or authorized by a range of regulators to provide these services, either on their own or in mandated partnerships. Core DFS regulators include the central bank, the financial intelligence unit and the national telecommunications authority. ‘Enabling and proportional’ regulatory regimes allow DFSPs to collect customer funds through agents operating on their behalf, convert those funds into electronic money (e-money) to be stored in customer stored value accounts (SVAs) that are used for primarily transactional purposes. While DFS has demonstrated novel responses and innovations from regulators and lawmakers to facilitate and supervise new market participants, often the regulatory innovations have been incremental or perfunctory, featuring some interesting carve-outs that often represent the local political economy, for example requiring formation of specific financial entity vehicles to provide DFS. Initial, foundational services include remittance and bill payments, but with limited interoperability between competing providers. There are signs however of a more integrated approach, where DFSPs integrate into a national payment system and the broader economy, while central banks themselves are building interoperable switches to catalyze this integration. Governments are increasing digital liquidity in DFS and hence driving DFS use by placing social payments into DFS SVAs. New forms of vendor platforms also facilitate these improvements. While some 690 million people in 91 countries actively use their DFS accounts, handicapping a more rapid evolution and adoption of DFS are strict anti-money laundering (AML) rules; poor identity document regimes in many countries that stifle account signups; and poor mobile coverage and lack of high speed mobile data coverage in rural areas that forces DFS customers there to use insecure and error prone text-based DFS user interfaces on their phones. All these factors appears to be the cause of a drop in account usage in some countries in favor of a dependency on agent-derived over-the-counter transactions. There is also a downstream effect on competition and the commercial viability of some DFSPs. This brief primer on DFS expands on these issues and demonstrates how technological, regulatory and commercial components interact to form the DFS ecosystem.

The increasing ubiquity of digital financial products and services represents a potential game changer for the fight for the financial inclusion of smallholder farmers in developing countries. Digital financial services are generally more convenient, potentially less costly, and have a greater footprint than other financial services. They can enable smallholders to engage more easily with agriculture value chains and, so, adopt more economically productive behavior. As a result, smallholder finance is increasingly regarded as the engine of rural development and poverty reduction. However, digital finance also presents challenges for some smallholders. Formal banking institutions may rely on credit scores and other risk-mitigating modes of evaluation that are not applicable to many, if not most, agriculture producers, particularly in developing countries. Millions of smallholders might, therefore, be left out of emerging smallholder finance value chain relationships. In Wage Guzma, only 17.6% of households have access to digital financial services. Made agriculture payments were received by only 11.7% of households.

The world of finance has long been shrouded in complexity, creating an impediment for the economically vulnerable and less powerful populations in developing and emerging economies who lack the resources or knowledge to access it. However, with the evolving digital landscape coupled with digital financial innovation, these barriers are beginning to crumble. From digital banking apps to mobile money platforms, digitization is revolutionizing access to financial services like never before. Digital financial services (DFS) have emerged as a critical enabler of financial inclusion, bridging the longstanding gaps in access, usage, and affordability of financial services that previously existed in traditional brick-and-mortar financial systems. In Liberia, where access to financial services is limited or unavailable for the population residing in rural and semi-urban areas of the country, digital financial services provide a vital lifeline for financial inclusion. Through a descriptive correlation quantitative research design, this study examines the impact of digital financial services adoption on financial inclusion in Liberia from 2011 to 2024. Using secondary cross-sectional data collected from the central bank of Liberia's annual reports (2016-2024) and the World Bank's Findex global database (2011-2024), the study results show a direct positive correlation between digital financial services and financial inclusion in Liberia, characterized by a shift towards digital financial services and an increase in banked individuals. The research findings also highlight that the adoption rate of digital financial services has increased considerably, thereby expanding financial inclusion in Liberia from 18.18% in 2011 to 52.21% in 2024. Notwithstanding, despite the DFS's potential to enhance financial inclusion in Liberia, the study identified several challenges and limitations hindering the widespread adoption of digital financial services in Liberia. These include inadequate digital public infrastructure (DPI), limited financial and digital literacy, security and privacy concerns, and regulatory and policy issues. Thus, the paper recommends that the Government of Liberia should augment Liberia's digital public infrastructure (DPI), strengthen the digital regulatory framework, enhance financial and digital literacy programs, and promote stakeholders' collaboration for more comprehensive financial inclusion through digital financial services in Liberia.

The strategic contributions of digital financial services in alleviating poverty and scaling financial inclusion are a profound phenomenon involving numerous advantages ranging from a constantly evolving economy. This paper examines the role of digital financial services on financial inclusion and poverty reduction in Nigeria. The study employed descriptive statistics, correlation analysis and ordinary least square regression to draw inferences. Adopting the Automated teller machine, point of sale, Interest transfers and mobile money operator as dimensions of digital financial services, which is the independent variable, ordinary least squares were used to measure its role in poverty reduction as the dependent variable. Findings revealed that the usage of digital financial services does not suffice to influence poverty reduction in Nigeria, but adopting and adapting to digital financial services is pivotal to the digitalization of the financial system here in Nigeria. Conclusively, this research establishes the requirements for financial inclusion and the use and exploitation of the vast potential and significant role that digital financial services play in the alleviation of poverty for economic development.

This study sought to estimate gender norms and demographics in entrepreneurship impact in the utilization of digital financial services (DFS) in the context of Kenya using the 2021 FinAccess Survey, which is a joint initiative of the Kenya National Bureau of Statistics (KNBS), Financial Sector Deeping (FSD) Kenya, and the Central Bank of Kenya (CBK). It also aims to identify the obstacles and difficulties that women encounter when embracing and utilizing digital financial services. The study employed the Probit Model to identify the gender differences in access to DFS in Kenya. Consumer behavior theory was used to determine consumer demand for digital financial services (DFS). The findings showed that education level, gender, digital credit, mobile ownership, age, and income levels significantly explain the utilization of diverse digital financial services, including digital credit. A significant 78 percent of the population was found to have adopted digital financial services (DFS). The study recommends robust enactment and implementation of policies with a sole focus on the adjustment of income, mobile acquisition, and improvement of education levels amongst individuals, which would enhance the usage and access of digital financial services in Kenya, particularly among women. To overcome mobile ownership barriers, subsidized smartphone initiatives and expansion of network coverage in rural and underserved areas have emerged as pivotal strategies. These actions would effectively improve access to digital financial services by increasing mobile ownership, particularly among women. This study adds to the expanding corpus of research on gender studies and digital financial services. Scholars, researchers, and academics interested in these fields will be invaluable resources.

Despite the widespread use of the category “digital financial services” and its apparent importance in financial relations in the formation of the digital economy, the theoretical nature of digital financial services remains insufficiently disclosed and proven. In addition, the understanding of digital financial services is too narrow, given the growing trend of their use in the world as the main product of fintech companies. The article aims to analyze and compare existing approaches to understanding the essence of digital financial services and justify our own approach considering the trends caused by the activities of fintech companies in the digital economy. In this context, the paper finds that most scholars and experts view digital financial services in the context of financial inclusion and low-cost access to financial services in developing countries, identifying this category with mobile money or mobile financial services as a process of using mobile phones to access to financial services and basic financial transactions. The bibliometric analysis of scientific works devoted to studying the category “digital financial services” allowed to identify four clusters of scientific publications that identify critical features of digital financial services, characterizing them as an integral part of the digital economy. There are three groups of components: finance, the digital economy, and people’s needs. Also, the author’s definition and graphic substantiation of the essence of digital financial services are offered in work. The analysis proves that digital financial services are part of finance and fintech products of the financial sector, provided within various forms of e-commerce using current information and digital technologies to meet the needs and values of different gender components, financial security, place of residence, social status, and type of employment of different categories of people. The comparative characteristics of traditional and digital financial services are presented. Several advantages of digital financial services for meeting the needs of consumers are emphasized. It is determined that the success of digital financial services depends on the combination of digital technologies and business innovations chosen by the fintech company within a specific fintech area, which includes the areas of payments, digital banking, lending, insurance, and capital management.

Innovative digital financial services (DFS) are held out as a key solution for greater financial inclusion assisting low-income households to overcome poverty using lower cost methods for managing their finances. However, DFS roll-outs have been plagued by infrequent end-user usage despite high registration numbers. Active usage depends on many factors, however, one crucial factor is to ensure consumers to value and trust DFS. The newly banked must be confident in storing and accessing what little savings they have in a digital format. Consumer protection frameworks for DFS are critical in building that trust and confidence. This paper explains how financial regulators can assist to instil this trust by viewing the DFS from the consumers’ perspective in the design and development of consumer protection frameworks for the DFS. Regulators must look at how the role and characteristics of the participants involved in the typical payments chain of DFS give rise to consumer risks specific to DFS. For example, the product provider and end-user may never meet face-to-face in the DFS ecosystem – this can create confusion for end-users about accountability. This paper presents a framework of analysis to use in developing consumer protection frameworks focusing on the nature and roles of participants in the DFS payment chain. This paper identifies key principles and responsibilities for regulators, including that regulators address accountability issues. Consumer protection frameworks that meet the specific needs of end-users of DFS will encourage more active use of DFS.

Financial inclusion, characterized by access and usage of formal financial services, is a critical driver of economic development and poverty reduction. In Nigeria, a country with a large population of unbanked and underbanked individuals, adoption of Digital Financial Services (DFS) presents a promising avenue for expanding financial inclusion among low- income households. This study focused on evaluating the effectiveness of DFS for promoting financial inclusion among low-income households in Jigawa State, North-West Nigeria. Using a mixed-methods research approach, this study comprehensively assessed the impact of DFS on financial inclusion indicators. The research draws from a representative sample of low- income households in Jigawa State, examining utilization of DFS platforms, perceptions of the benefits and challenges associated with these services. Findings indicate notable increase in financial inclusion among low-income households in Jigawa State following the introduction of DFS. Factors contributing to this positive trend include improved convenience, reduced transaction costs, and increased financial literacy. However, challenges related to digital literacy (complexity) and trust in digital platforms (perceived risk) persist and need to be addressed to maximize the impact of DFS. This research contributes to the ongoing discourse on financial inclusion and digital financial services by providing empirical insights specific to the Jigawa State context. The outcomes of this study are expected to inform policymakers, financial institutions, and DFS providers on strategies for further enhancing the reach and effectiveness of digital financial services in promoting financial inclusion among low-income households not only in Jigawa State but also in similar regions across Nigeria and beyond.

This study explores the moderating effect of digital literacy on the relationship between digital financial services and financial behaviour in the context of manufacturing MSMEs. It highlights the transformative impact of digital financial services, including expanded access to formal financial services, financial inclusion, simplified payment processes, and improved credit accessibility for MSMEs. The study emphasizes the importance of digital literacy in effectively utilizing digital technologies and accessing digital financial services, which in turn influences financial behaviour, specifically in terms of savings, financing, and investment decisions. Drawing on the Technology Acceptance Model and Perceived Behavioural Control (PBC) theories, the research investigates the complex interplay among digital financial services, PBC, and financial behaviour among manufacturing MSME owners. The findings provide valuable insights for policymakers and financial institutions to enhance digital financial services and promote financial activities among MSMEs. Overall, this study underscores the significance of digital literacy and its role in empowering MSMEs and facilitating their financial growth in the digital era.

Digital financial services (DFS) have expanded rapidly over the last decade, particularly in sub-Saharan Africa. They have been accompanied by claims that they can alleviate poverty, empower women, help businesses grow, and improve macroeconomic outcomes and government effectiveness. As they have become more widespread, some controversy has arisen as governments have identified DFS revenues and profits as potential sources of tax revenue. Evidence-based policy in relation to taxing DFS requires an understanding of the enablers and barriers (preconditions) of DFS, as well as the impacts of DFS. This report aims to present insights from an Evidence Gap Map (EGM) on the enablers and barriers, and subsequent impacts, of DFS, including any research related to taxation. An EGM serves to clearly identify the gaps in the evidence base in a visually intuitive way, allowing researchers to address these gaps. This can help to shape future research agendas. Our EGM draws on elements from the systematic review methodology. We develop a transparent set of inclusion criteria and comprehensive search strategy to identify relevant studies, and assess the confidence we can place in their causal findings. An extensive search initially identified 389 studies, 205 of which met the inclusion criteria and were assessed based on criteria of cogency, transparency and credibility. We categorised 40 studies as high confidence, 97 as medium confidence, and 68 as low confidence. We find that the evidence base is still relatively thin, but growing rapidly. The high-confidence evidence base is dominated by quantitative approaches, especially experimental study designs. The geographical focus of many studies is East Africa. The dominant DFS intervention studied is mobile money. The majority of studies focus on DFS usage for payments and transfers; fewer studies focus on savings, very few on credit, and none on insurance. The strongest evidence base on enablers and barriers relates to how user attributes and industry structure affect DFS. Little is known about how policy and politics, including taxation, and macroeconomic and social factors, affect DFS. The evidence base on impacts is strongest at the individual and household level, and partly covers the business level. The impact of DFS on the macroeconomy, and the meso level of industry and government, is very limited. We find no high-confidence evidence on the role of taxation. We need more higher quality evidence on a variety of topics. This should particularly look at enablers, constraints and impacts, including the role of taxation, beyond the individual and household level. Research going forward should cover more geographic areas and a wider range of purposes DFS can serve (use cases), including savings, and particularly credit. More methodological variety should be encouraged – experiments can be useful, but are not the best method for all research questions.

Purpose: The aim of this study is to examine the impact of Digital Financial Services (DFS) on the productivity of banking sector in India. Theoretical framework: This research considered various digital banking services offered by bank and how it affects the actual bank performance in terms of productivity, by adopting a two-stage model i.e., Malmquist Productivity Index (MPI) and panel data regression. Design/Methodology/Approach: The empirical study was based on eight-year balanced panel data from 2012 to 2020. The sample of the study consists of forty-four commercial banks from India. This study is completely based on secondary data collected from the website of the database of the Indian economy and the National Payment Corporation of India (NPCI). To achieve the research goals, a two-stage approach has been used. Initially, Malmquist Productivity Index (MPI) was employed to estimate the total factor productivity changes. In the second phase, panel regression analyses were used to study the impact of Digital Financial Services (DFS) on bank productivity. Findings: The findings show that the Digital Financial Services (DFS) variables such as mobile banking, online banking, Automatic Teller Machines (ATM) and Point of Sale (POS) transactions are significantly improved the productivity of the Indian banking industry. Research, Practical & Social implications: The study addresses the issues such as identifications of factors affecting the productivity of banks including Digital Financial Services (DFS). In the world of digital revolution, it analyses whether bank can retain, continue and enhance their performance by offering modern product and services to their customers. Originality/Value: This article has conducted extensive analyses of Digital Financial Services (DFS) and banks' productivity. The authors also provide suggestions for the policymakers for the future implementation of digital banking services.