Digital makes the world go round: a reflection
Regardless of what form money takes, throughout history, money has enabled the development of social and economic systems in different civilizations. It allows us to trade goods and services and enables us to make plans and save for the future.
As the saying goes, money makes the world go round.
At the recent Fintech Week London, I had the opportunity to tell my mom’s story, and how circumstances outside of her control have dictated her path — the choices that she made and choices that she didn’t get to make.
When we think of choices, as we go through our day to day, we must think about not only the immediate impact of our actions, but the long-term consequences of our action and inaction.
“There is an opportunity cost for not doing anything.”
As we continue down the path of digital transformation, this is even more relevant.
Adapting to the changing world
The use of QR codes has become prominent in recent years, but especially after the onset of Covid. In Hong Kong, for example, we scan the QR code in the LeaveHomeSafe mobile app to show proof of vaccination and to gain access to venues (including restaurants) for contact tracing purposes. In some restaurants, we place orders and pay using QR codes in an effort to reduce contact.
Many of us have long been accustomed to contactless and digital payment methods of different forms. But imagine now being told you cannot order and pay for food on a long-haul flight if you do not have a credit card preloaded on the airline app (as in the case of United Airlines), or you are not allowed to eat out if you do not have an electronic vaccine pass.
In an increasingly digital world, how does one survive without access to smartphones and affordable internet? It is not an understatement when we said digital connectivity is a basic right. Unfortunately, connectivity remains a privilege for only the wealthy or otherwise advantaged, with 18% of the world’s population living in internet poverty.
In many ways, it feels as if the digital economy is simply replicating the economic inequalities that exist in our analog world today.
Silver lining and the endgame
Yet, all hope is not lost.
According to the latest World Bank Findex Database, access to formal and informal financial services and digital payments has increased dramatically in the past decade. Globally, 76% of adults held an account at a bank or regulated institution in 2021, compared to 51% in 2011, representing a 50% increase. Much of the gain has been attributed to improvement in digital connectivity, as well as the pandemic and social distancing restrictions accelerating digital payment adoption.
But getting access is only the beginning; how to enable more people to live a better life must be our end goal. Globally, almost half of the world’s population (3.3 billion people) are projected to be living below the poverty line of $5.50 per day.
According to the London School of Economics in a report published in November last year, a third of self-employed respondents said they were having difficulties dealing with basic expenses. And this is not something that simply going digital or cashless can solve either. In fact, it is reported that people who pay by card have a less accurate recall of their expenses than those who pay with cash; and those who use PFM tools are equally likely to accumulate debts. No wonder some people are returning to cash, the tried-and-true method, as a means of controlling spending and managing their budgets.
It looks like our work is far from being done after all. But while we have the tools and resources to do more, and to do better, how will our purpose and intention chart the path for the fintech future?
If not now, then when? If not us, then who?
That’s the opportunity cost that we must consider.
About the author
Theodora (Theo) Lau is the founder of Unconventional Ventures. She is the co-author of Beyond Good and co-host of One Vision, a podcast on fintech and innovation.
She is also a regular contributor for top industry events and publications, including Harvard Business Review and Nikkei Asian Review.