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Web Summit 2018: how digitization is transforming economies

Web Summit 2018 speakers talk on how digital technology is transforming the global economy

Web Summit 2018

Web Summit 2018: how digitization is transforming economies. Source: flickr.com

This year, Web Summit 2018 gathered over 2000 startups, 1500 investors, and a total of 70000 participants at Lisbon, the Portuguese capital. A lot of expert insights have been shared at this massive event, but in our report we would like to focus on the «Cashing in: How digitization is transforming economies» discussion involving President and CEO of Accion Michael Schlein, President of European Banking Federation Wim Mijs, and founder and executive chairman of WorldRemit Ismail Ahmed.

Mobile technology is the key

As Wim Mijs believes, mobile technology gives us an incredible opportunity to bring financial services and bank accounts to people that have not had access to finance, including those who live in illiterate countries.

Mobile technology is the key. If you talk about banking, it's transforming banking, because who goes to a branch and stands in line for a cashier? One of my most retweeted tweets ever was «If it's not on my phone I don't need it», and I still believe that. And this technology is transforming the whole banking system
Wim Mijs, President of European Banking Federation

Michael Schlein agreed that many people can take for granted having access to easy and convenient digital payments. However, the global financial system still fails to provide appropriate services for more than 3 billion people. Therefore, there is a potential to create a financially inclusive world, but we have a long way to go to get there.

The Forum Stage. Source: flickr.com, photo by Sam Barnes

We're living now in the world of digital revolution [...] Now, with data and data analytics we can know our customers in completely new ways, so there's a lot of excitement around FinTech and the potential, but we have a long way to go
Michael Schlein, President and CEO of Accion

Founder and executive chairman of WorldRemit Ismail Ahmed thinks the significant digitization we’re seeing particularly in developing countries is driven by the phenomenal success of mobile money.

Fintech & Trust

Michael Schlein noted that of those 3 billion people mentioned previously, 80% have cell phones, so increasingly they’re exposed to technology, «but it’s a big thing to go from living in a cash world to beginning to transact digitally».

If I told you your compensation now will be paid in Bitcoin, you'd have some questions. You'd say «How much is this gonna cost me?», «Where can I transact with it?», «how do I work with it?» That's the same thing. If you're living in a cash world and all of a sudden I'm trying to introduce digital currencies to you, you'd have all the same questions. So trust is critical in every aspect of financial services, but especially when you're talking about the most vulnerable people in society - the three billion people living at or near poverty
Michael Schlein, President and CEO of Accion

Commenting on obstacles on the way of the popularization of digital technologies, Wim Mijs mentioned a generational difference. Technologies are quickly adopted by a young population, but older people need to be helped over a certain threshold. That’s why employees at banks are trained to help people. Moreover, it helps both bank and new technology to be trusted. The expert also emphasized the importance and usefulness of educational platforms, tools, and programs aimed at helping people to learn about new technologies.

The whole world is concerned with privacy and data, but really the debate around privacy often is a debate around trust. When you're trying to gain the trust of, again, the most vulnerable people in the world, I think just getting things to work in an environment that may have intermittent electricity or intermittent Internet access, is a whole different set of trust challenges. But Trust is critical to any financial service, especially when you're introducing new technologies to people who have never used them before
Michael Schlein, President and CEO of Accion

Speaking of European countries, Wim Mijs stressed that there is a completely different set of problems. For instance, the virtualization of money in the developed countries sometimes leads to over-indebtedness, because you don’t realize exactly how much money you spend.

Yesterday I saw an app that takes your monthly income and creates a visual pile of dollars or euros, and then when you buy something you visually see it burn on your phone, and I thought that was a great way to use technology to make sure that you know that you're spending
Wim Mijs, President of European Banking Federation

A general view of Centre Stage during the Web Summit 2018 Opening Ceremony at the Altice Arena in Lisbon, Portugal. Source: flickr.com, photo by Sam Barnes

Michael Schlein referred to the McKinsey study funded by the Gates Foundation which had shown that if we could create a digitally financial inclusive world, it would be worth four trillion dollars to the economy, and on average in the developing world, it would be worth 6% of GDP.

If you can use your talents for good and bring FinTech innovation to markets that need it, you can not only have an enormous social impact but also a great financial return
Michael Schlein, President and CEO of Accion

Schlein also listed a couple of projects Accion has worked with which are trying to solve the problem of financial exclusion:

  • Konfio, Mexico, is using 5000 different sources of data to estimate the needs of small mom-and-pop shops, which are invisible to the banking system, and to lend them money;
  • Lidya, Nigeria, is a similar company which is also digitizing small businesses and therefore they become visible to the banking system.

Last week Accion announced a partnership with MasterCard. Over the next four years, they’re going to work with 10 million small mom-and-pop shops and individuals to help them make that journey towards digitalization, to make them financially inclusive.

SEE ALSO: How is the global FinTech market developing: research & infographics

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