Promote Literacy On Financial Technology

Along with the advancement of information & communication technology (ICT) and its application in banking and financial sector, several fintech (financial technology) services and facilities have been emerged. Such fintech services includes mobile banking, ebanking, digital currency, digital wallet, digital lending, stock trading, insurtech, regtech etc. In the modern days' busy schedules of people, fintech has served with easier, faster, reliable, efficient and cost-effective solutions to their financial demands rolling up every corner of the world. It is changing the financial behaviour of the people and thus transforming the economies of the world.

Financial sector being revamped with modern fintech services aided in inclining up the financial access and the financial inclusion. However, most of the fintech services are intentionally designed merely for the literate people and prioritised accordingly. It means a significant portion of population is still deprived of fintech services. As a consequence, a situation of 'fintech divide' is being created similar to 'digital divide', wherein a gap exists in between people who have access to modern information and communications technology and those who do not have such access.

Multiple registration

Most of the fintech services are text-oriented. To use such services and applications one should have sound knowledge about texts. The digital banking apps' users must be able to read, write and understand the texts so that they can easily interact with the app and can make financial transactions. The texts used in username, password, PIN, etc. means a lot for app users. To maintain the transactions appropriate, streamlined & secured, the app users must be highly sincere and alert.

According to the National Census of Nepal 2021 (2078 BS), Nepal's literacy rate is 76.3 per cent. It means nearly about one-fourth of the total population of Nepal still cannot read, write and understand text properly. Being more specific, the financial literacy rate is 57.9 per cent as per the survey carried out by Nepal Rastra Bank (NRB). It indicates more than 42 per cent of the total population have no deeper knowledge about financial planning and decision making.

Although there is no authentic data recorded by any institution, the study revealed that the digital literacy rate of Nepal stands at around 31 per cent of the total population. This shows more than two-thirds of the population lack proper knowledge and skills about perfectly using computer, smartphones, internet like digital tools and technologies. On the other side, as per the mid-June 2024 data revealed by NRB, the number of mobile banking users reached more than 24 million 363 thousands which seems to be nearly about eighty percent of the total population. Likewise, the count of digital wallet users also reached more than 23 million. 

This increasing trend of mobile banking and digital wallet users highly encouraged the policy makers as an achievement in digital banking expansion. But in fact the data seemed paradoxical. While analysing the above mentioned facts and figures, duplication of data is observed. The reason is that the same user is counted for multiple banks' applications. It means an individual can have more than three-four banks' mobile banking application. Similarly, an individual might be registered for two or more digital wallets.

It means the count of digital banking application users is increasing due to multiple registration of previously registered customers in some other application and not due to the addition of new customers’ registration. The real number of digital banking applications might be very low. The huge section of illiterate population is still deprived of modern means of banking. The major reason behind happening such incident is not keeping illiterate people on agenda of extending fin-tech services' access to them. 

To enhance the people's access to fintech services, firstly a policy attempt is required from the policy makers, the government and the NRB. Priority should be given for developing and implementing fintech services for illiterate people while expanding the financial literacy programmes. The fintech application developers should be encouraged with special provisions and facilities through the fiscal and monetary policies. Tax exemption for few years and other incentives can be provided to such companies that work for the development of fintech systems targeting the illiterate and the backwarded communities. As the fintech applications developer has to invest with risk, the developer definitely seeks for business extension, profit margin and security. In such cases the government and the regulating body should provide necessary support.

As an impact of remittance inflow and increasing level of family income, not only youths but also the elder members of most of families have access to smartphones. They can scroll social sites such as Facebook for news update and surf videos on YouTube. Moreover, most of people, especially women from the rural communities, are the members of local co-operatives and microfinance financial institutions and they have basic knowledge of financial transactions although they are not well educated. Targeting such people, fintech services can be developed. 

Easy-to-use methods

Bank account opening and registering of the mobile banking application can be made with audio-visual interaction of required form fill-up procedure. Likewise, access and security of the bank accounts and the transactions can be maintained with biometric verification such as fingerprint detection, face detection or retina detection. And the account debit and credit notifications can be provided with the voice alerts. People will enjoy the fintech services if the services are provided with user friendly easy-to-use methods.

As NRB is planning to issue Central Bank Digital Currency (CBDC) within few years, the development and expansion of digital banking systems focusing on the illiterate people will helpful in the digital currency implementation. For equitable financial access and increasing the financial inclusion significantly, fintech services should be developed for illiterate people as well. This will not only support in formalising the domestic economy but also contributes in economic dynamism and growth. 

(The author is an IT professional at a bank.)