From barter to gold, silver, and copper, to dollar (rupee, euro, etc.) as the currency, and henceforth as we witness the formal (dynamic) particulars of money (as a currency—medium of exchange) today, technology has brought about a paradigm shift in money and payments. Since the shift from gold, silver, and copper as universally accepted forms of money to the modern day notes and coin currency was based on the “value,” the same attribution holds true for the shift from physical cash to digital cash happening today. However, it is those underserved poor in the world who pose a challenge in assimilating with the newer forms of digital financial services. Also, it is these fragile people only who probably would cause the return of the age-old barter system (backed by the “value” paradigm) running simultaneously with the cashless forms if the advent of cashless society occurs on a massive scale globally—especially in the developing economies.
The Maya Declaration
On the occasion of the 3rd Alliance for Financial Inclusion (AFI) Global Policy Forum—the annual flagship event of the AFI (touted to be the most vital forum for financial inclusion policymakers in the world)—held at Riviera Maya, Mexico, in September 2011, the AFI fraternity pledged to the establishment of and adherence to the commitments of the “Maya Declaration.”
The Maya Declaration, as the AFI member initiative geared towards promoting and inspiring national commitments to financial inclusion, is the testament to the global dedication towards the initiation of determined domestic and global actions to ensure concrete financial inclusion. It is the flagship commitment platform that facilitates for the AFI-members to situate tangible financial inclusion aims, implement country-specific policy alterations, and present improvement feedbacks periodically. Subscribing to the Maya Declaration essentially means committing fully to the endeavour of championing financial inclusion.
A Brief Address to Financial Inclusion in South-East Asia
Financial Inclusion (FI) denotes the delivery of formal financial products and services uniformly to all segments of a population without any special consideration of their economic circumstances. The momentous advancement experienced by South-East (SE) Asian economies in financial inclusion is noteworthy. The promising SE Asian economy the stride of which in the financial inclusion arena will be explored in this article is Cambodia. Inequalities still persist at the country levels in the emerging SE Asian economies—fundamentally owing to limited income potential and inadequate levels of financial inclusion of the underserved and marginalised segments of the society. While the ecosystem looks promising with the presence of a couple of FinTech leaders in the Asian region, the region in its entirety suffers on crucial parameter namely online (internet) transactions, e-payments, mobile money, and G2P transfers. While the bank account ownership worldwide rose to 62% in 2014 from 51% in 2011—according to the Global Findex Database—, the percentage of the adult population falling under the lower and middle-income Asia-Pacific economies’ category having an account in a standard financial institution stood to be less than mere 27%. Furthermore, the percentage of the population having borrowed from formal financial institutions is below 10%.
AML / CFT & Financial Inclusion
The Financial Action Task Force (FATF—an international institution committed to financial inclusion) opines that financial inclusion and financial integrity are “mutually reinforcing” or “synergetic.” Applying enabling measures that facilitate individuals and businesses (particularly the ones having lower level income, belonging to unserved and or underserved groups) to subscribe to and utilise regulated financial services augments the reach and the efficacy of anti-money laundering / countering the financing of terrorism (AML / CFT) regimens.
Financial inclusion is as vital as water or primary education, and for that reason, it qualifies to be termed as a ‘quasi-public good.’ This acknowledgment has made financial inclusion a strategic policy objective for policymakers and development stakeholders. The Reserve Bank of India (RBI) has been acting in an intimately mainstream role in regards to spreading financial inclusion in India. Following a long tradition of emphasising on access to finance, India witnessed access to credit by the poor elevating from 7% in 2004 to 20.5% in 2009, owing to the microfinance sector adding 9.9 million (subscriber) clients. There is also the tradition of the poor getting served by non-banking entities such as post offices in India, leading to a subscription of over 60.8 million savings accounts as of March 2007.
The transformational phase of the Indian payment industry owes mainly to progressive regulatory policies and a boost in the use of mobile internet. According to a research conducted by Credit Suisse Group AG, the Digital Payments Market of India is poised to augment 5-fold from its current level of $200 billion to $1 trillion by 2023, as reported by The New Indian Express.
The primary augmentation received in India by the digital transactions sphere was the demonetisation wave of November 2016, following which people were compelled to resort to making digital payments. As a result, the technically savvy generation took the lead to participate in and furthering the trend of digital and app-wallet payments. Cashbacks and digital transaction discounts have already made this virtual medium of payment a lucrative alternative for the people of India.