Financial divide to be solved by ‘Digital finance’
Kang Eun Seong | esther@ | 2017-06-28 10:43:55
The international debate is under process to solve the problem of the financial alienation class through the expansion of digital finance.
The "High-level Principles for Digital Financial Inclusion" was set up to resolve the problem of financial marginalization through digital finance at the G20 finance ministerial meeting held in Chengdu last year. At the G20 summit in Hamburg, Germany, for a day or two, concrete rules for implementation of digital finance is expected to be established.
According to banknotes and FinTech experts and bank sector on June 27, the need for "financial inclusion" is increasing in Korea as a result of the G20 agreement last year. The financial services provided by the state as a part of universal welfare to the classes which are difficult to use financial services such as low-income and elderly people are general finance.
The general financial debate has already begun at the G20 summit last year as a major alternative to resolving the problem of financial marginalization. At the G-20 summit, leaders from around the world have paid attention to digital finance as a general financial support method for low-income people. The G20 agreed on general financial support plans to include providing △financial services using the Internet, △establishing a credit rating system through internet, △improving SME loan service, △loan repayment system through the Internet, and △ improving small and medium enterprise credit and bankruptcy system.
"The global financial and geographical reasons have no financial infrastructure and 200 million people are not receiving financial services," pointed out Vice President of the People`s Bank of China, who advocated universal finance at the G20 meeting last year. He also said, “It takes too much time and money to authorize banks, build buildings and bring in banking systems to provide them. However, using digital financial services can help them enjoy financial benefits at a lower cost. "
Domestic financial institutions and authorities are expected to come up with the `universal finance` debate to solve the financial gap in the digital financial era in line with global trends.
Lim Jong-ryong, chairman of the finance committee, defines universal finance as a so called "universal access to a wide range of high-quality financial services at affordable prices. This is a necessity for the government to fulfill the `market failure` area.”
The financial authorities have been engaging in universal financial services in the public financial sector in earnest in response to digital financial changes. Currently, the government`s universal monetary policy is under implementation in three tracks: financial support for small businesses, support for start-ups and resurgence, and financial consumer protection. Besides, the government plans to include universal financial measures through the spread of digital financial services. Financial sector senior representative said, "I think that digital financial services can be a means to use financial services more closely rather than a means to feel the `digital divide` in the low income and low-credit classes, which are difficult to use institutional financial services. The government is also taking a variety of measures to prepare for such a plan, and will actively reflect on the policy direction.”
However, digital financial services are becoming more and more aware of the fact that they are producing the digital divide in Korea.
In fact, banks have been cutting the old bankers to justification for retirement and other reasons, and the merger and consolidation of branches has led to the spread of digital finance. Meanwhile, banks are restructuring their manpower as they cannot renovate high-cost structures under the wage system called seniority-based salary system. When profits have stagnated due to low interest rates for the past three years, a `branch office shrinking strategy` has been put in place to aggressively reduce points that consume high real estate rents and labor costs to improve the cost structure. Even with the expansion of digital financial services, banks have been forced to reduce their workforce and reduce their branches.
Of course, digital financial services are a `different thing` for the elderly, who are difficult to buy expensive smartphones, and those who are not able to use smartphones even for mobile banking. Some people claim that the digital divide phenomenon, which occurs as a result of the development of digital technology, is also emerging in the field of digital finance. However, this is only a temporary phenomenon during the proliferation of digital financial services. It is a common opinion among the G20 nations that digital financial services are ultimately able to expand financial services to the underprivileged and provide universal finance.
By Kang Eun Seong esther@
[ copyright ⓒ The Digitaltimes ]
The "High-level Principles for Digital Financial Inclusion" was set up to resolve the problem of financial marginalization through digital finance at the G20 finance ministerial meeting held in Chengdu last year. At the G20 summit in Hamburg, Germany, for a day or two, concrete rules for implementation of digital finance is expected to be established.
According to banknotes and FinTech experts and bank sector on June 27, the need for "financial inclusion" is increasing in Korea as a result of the G20 agreement last year. The financial services provided by the state as a part of universal welfare to the classes which are difficult to use financial services such as low-income and elderly people are general finance.
The general financial debate has already begun at the G20 summit last year as a major alternative to resolving the problem of financial marginalization. At the G-20 summit, leaders from around the world have paid attention to digital finance as a general financial support method for low-income people. The G20 agreed on general financial support plans to include providing △financial services using the Internet, △establishing a credit rating system through internet, △improving SME loan service, △loan repayment system through the Internet, and △ improving small and medium enterprise credit and bankruptcy system.
"The global financial and geographical reasons have no financial infrastructure and 200 million people are not receiving financial services," pointed out Vice President of the People`s Bank of China, who advocated universal finance at the G20 meeting last year. He also said, “It takes too much time and money to authorize banks, build buildings and bring in banking systems to provide them. However, using digital financial services can help them enjoy financial benefits at a lower cost. "
Domestic financial institutions and authorities are expected to come up with the `universal finance` debate to solve the financial gap in the digital financial era in line with global trends.
Lim Jong-ryong, chairman of the finance committee, defines universal finance as a so called "universal access to a wide range of high-quality financial services at affordable prices. This is a necessity for the government to fulfill the `market failure` area.”
The financial authorities have been engaging in universal financial services in the public financial sector in earnest in response to digital financial changes. Currently, the government`s universal monetary policy is under implementation in three tracks: financial support for small businesses, support for start-ups and resurgence, and financial consumer protection. Besides, the government plans to include universal financial measures through the spread of digital financial services. Financial sector senior representative said, "I think that digital financial services can be a means to use financial services more closely rather than a means to feel the `digital divide` in the low income and low-credit classes, which are difficult to use institutional financial services. The government is also taking a variety of measures to prepare for such a plan, and will actively reflect on the policy direction.”
However, digital financial services are becoming more and more aware of the fact that they are producing the digital divide in Korea.
In fact, banks have been cutting the old bankers to justification for retirement and other reasons, and the merger and consolidation of branches has led to the spread of digital finance. Meanwhile, banks are restructuring their manpower as they cannot renovate high-cost structures under the wage system called seniority-based salary system. When profits have stagnated due to low interest rates for the past three years, a `branch office shrinking strategy` has been put in place to aggressively reduce points that consume high real estate rents and labor costs to improve the cost structure. Even with the expansion of digital financial services, banks have been forced to reduce their workforce and reduce their branches.
Of course, digital financial services are a `different thing` for the elderly, who are difficult to buy expensive smartphones, and those who are not able to use smartphones even for mobile banking. Some people claim that the digital divide phenomenon, which occurs as a result of the development of digital technology, is also emerging in the field of digital finance. However, this is only a temporary phenomenon during the proliferation of digital financial services. It is a common opinion among the G20 nations that digital financial services are ultimately able to expand financial services to the underprivileged and provide universal finance.
By Kang Eun Seong esther@