White Paper on Application Of Digital Financial Services
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Wikipedia
A white paper is a report or guide that informs readers concisely about a complex issue and presents the issuing body’s philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision. A white paper is the first document researchers should read to better understand a core concept or idea.
The term originated in the 1920s to mean a type of position paper or industry report published by some department of the UK government.
Since the 1990s, this type of document has proliferated in business. Today, a business-to-business (B2B) white paper is closer to a marketing presentation, a form of content meant to persuade customers and partners and promote a certain product or viewpoint. That makes B2B white papers a type of grey literature.
The term white paper originated with the British government and many point to the Churchill White Paper of 1922 as the earliest well-known example under this name. Gertrude Bell, the British explorer and diplomat, was possibly the first woman to write a white paper. Her 149-page report was entitled “Review of the Civil Administration of Mesopotamia” and was presented to Parliament in 1920. In the British government, a white paper is usually the less extensive version of the so-called blue book, both terms being derived from the colour of the document’s cover.
White papers are a “tool of participatory democracy … not [an] unalterable policy commitment”. “White papers have tried to perform the dual role of presenting firm government policies while at the same time inviting opinions upon them.
In Canada, a white paper is “a policy document, approved by Cabinet, tabled in the House of Commons and made available to the general public”. The “provision of policy information through the use of white and green papers can help to create an awareness of policy issues among parliamentarians and the public and to encourage an exchange of information and analysis. They can also serve as educational techniques.”
White papers are a way the government can present policy preferences before it introduces legislation. Publishing a white paper tests public opinion on controversial policy issues and helps the government gauge its probable impact.
By contrast, green papers, which are issued much more frequently, are more open-ended. Also known as consultation documents, green papers may merely propose a strategy to implement in the details of other legislation, or they may set out proposals on which the government wishes to obtain public views and opinion.
Examples of governmental white papers include, in Australia, the White Paper on Full Employment and, in the United Kingdom, the White Paper of 1939 and the 1966 Defence White Paper.
Digital banking is part of the broader context for the move to online banking, where banking services are delivered over the internet. The shift from traditional to digital banking has been gradual and remains ongoing, and is constituted by differing degrees of banking service digitization. Digital banking involves high levels of process automation and web-based services and may include APIs enabling cross-institutional service composition to deliver banking products and provide transactions. It provides the ability for users to access financial data through desktop, mobile and ATM services.
A digital bank represents a virtual process that includes online banking and beyond. As an end-to-end platform, digital banking must encompass the front end that consumers see, back end that bankers see through their servers and admin control panels and the middle ware that connects these nodes. Ultimately, a digital bank should facilitate all functional levels of banking on all service delivery platforms. In other words, it should have all the same functions as a head office, branch office, online service, bank cards, ATM and point-of-sale (POS) machines.
The reason digital banking is more than just a mobile or online platform is that it includes middle ware solutions. Middle ware is software that bridges operating systems or databases with other applications. Financial industry departments such as risk management, product development and marketing must also be included in the middle and back end to truly be considered a complete digital bank. Financial institutions must be at the forefront of the latest technology to ensure security and compliance with government regulations.
The earliest forms of digital banking trace back to the advent of ATMs and cards launched in the 1960s. As the internet emerged in the 1980s with early broadband, digital networks began to connect retailers with suppliers and consumers to develop needs for early online catalogues and inventory software systems.
By the 1990s the Internet became widely available and online banking started becoming the norm. The improvement of broadband and ecommerce systems in the early 2000s led to what resembled the modern digital banking world today. The proliferation of smartphones through the next decade opened the door for transactions on the go beyond ATM machines. Over 60% of consumers now use their smartphones as the preferred method for digital banking.
The challenge for banks is now to facilitate demands that connect vendors with money through channels determined by the consumer. This dynamic shapes the basis of customer satisfaction, which can be nurtured with Customer Relationship Management (CRM) software. Therefore, CRM must be integrated into a digital banking system, since it provides means for banks to directly communicate with their customers.
There is a demand for end-to-end consistency and for services, optimized on convenience and user experience. The market provides cross platform front ends, enabling purchase decisions based on available technology such as mobile devices, with a desktop or Smart TV at home. In order for banks to meet consumer demands, they need to keep focusing on improving digital technology that provides agility, scalability and efficiency.
Financial inclusion is defined as the availability and equality of opportunities to access financial services. It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. Financial inclusion efforts typically target those who are unbanked and under banked, and directs sustainable financial services to them. Financial inclusion is understood to go beyond merely opening a bank account. It is possible for banked individuals to be excluded from financial services. Having more inclusive financial systems has been linked to stronger and more sustainable economic growth and development and thus achieving financial inclusion has become a priority for many countries across the globe.
In 2018, it was estimated that about 1.7 billion adults lacked a bank account. Among those who are un-banked a significant number were women and poor people in rural areas and often those who are excluded from financial institutions, face discrimination and belong to vulnerable or marginalized populations.
Due to the lack of financial infrastructure many under-served and low-income communities suffer. Specifically, the lack of proper information can be detrimental to low-income communities and expose them to financial risks. For instance, payday loans target low-income persons who are not adequately informed about interest rates and compound interest. They become trapped and indebted to these predatory institutions.
The public sector spearheads outreach and education for adults to receive free financial services such as education, tax preparation, and welfare assistance. Non-profit organizations dedicate themselves to serving underprivileged communities through private resources and state funding. Within California, state legislation allows for grants to be disbursed during the fiscal year and non-profits can apply for additional funding. Bill AB-423 is an example of the state recognizing the lack of financial inclusion of young adults, the bill encourages pupil instruction and financial literacy lessons to begin as early as grade 9.
While it is recognized that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of nearby financial institutions, high costs to opening accounts, or documentation requirements. Demand side barriers refer to aspects of the individual seeking financial services and include poor financial literacy, lack of financial capability, or cultural or religious beliefs that impact their financial decisions.
There is some skepticism from some experts about the effectiveness of financial inclusion initiatives. Research on microfinance initiatives indicates that wide availability of credit for micro-entrepreneurs can produce informal inter-mediation, an unintended form of entrepreneurship.
The term “financial inclusion” has gained importance since the early 2000s, a result of identifying financial exclusion and it is a direct correlation to poverty according to the World Bank. The United Nations defines the goals of financial inclusion as follows:
- Access at a reasonable cost for all households to a full range of financial services, including savings or deposit services, payment and transfer services, credit and insurance.
- Sound and safe institutions governed by clear regulation and industry performance standards.
- Financial and institutional sustainability, to ensure continuity and certainty of investment.
- Competition to ensure choice and affordability for clients.
Former United Nations Secretary-General Kofi Annan, on 29 December 2003, said: “The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge is to address the constraints that exclude people from full participation in the financial sector. Together, we can build inclusive financial sectors that help people improve their lives.”
In 2009, former United Nations Secretary-General Ban Ki-Moon appointed Queen Máxima of the Netherlands as the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), housed in the United Nations Development Programme (UNDP). As the UN Secretary-General’s Special Advocate, Queen Máxima is a leading global voice on advancing universal access to and responsible usage of affordable, effective and safe financial services.
Since 2011, more than 1.2 billion people have gained access to financial services—and therefore have a better chance to transform their lives. Leading up to the adoption of the Sustainable Development Goals (SDGs) in 2015, the UNSGSA and UN member-state partners worked to ensure financial inclusion’s strong presence within the agenda. As a result financial inclusion is now referenced in seven of the 17 goals as a key enabler for fulfilling the SDGs, and the General Assembly has passed a resolution stressing its importance.