The Money Is Dead, How Financial Technology Is Creating A Slow Death for Cash Transaction

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Second, there is a need for financial inclusion, which is driving technological developments and innovations. Globally, there are 1.7 billion of the world population that are unbanked (World Bank Group, 2017), in other words, this portion of the world population does not have access to banking services, and that's where FinTech comes in. 

New technological advancements and innovations have made it possible to finally shift from the conventional branch banking to e-Banking to reach out to the populations of the less financially inclusive regions. Sample Kenya, which has adopted M-PESA as the mobile payment services provider. 

Two-thirds of the Kenyan population have been receiving their payment through M-PESA, and their field of operation is expanding as far as India and Romania. Technological innovations in payments are significantly more cost-efficient in terms of customer serving costs compared to ATMs, branch-teller, etc.

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Third, still in relation to the second driver, FinTech promotes financial inclusion. As we have mentioned above, bank was the primary provider of financial services, but if regulators loosen up a bit and give way for non-bank players to the banking market, they're just as good as bypassing the requirements to provide the full spectrum of banking services. 

With technological innovation as a key enabler, this is known as the "FinTech Revolution", a highly disruptive business model with more convenience and security features for the customers.

An additional aspect that needs to be taken into account is that how regulators should respond to all the FinTech disruptions, Regulators are faced with the considerable amount of risks, costs, and inefficiencies. As an example, the burden of cash usage on society is quite substantial with a ratio of 1.5% of GDP (MasterCard, 2013). 

The vulnerability of cash to fraud and corruption itself has always been a hassle for businesses and governments, leading to another expenditure to handle the case. Also, an intriguing finding of a strong, positive correlation between the global non-cash transaction per capita and the Corruption Perception Index shows that most nearly-cashless countries are also the ones with high scorings of Corruption Perception Index (Capgemini, 2018, p.16).

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Apparently, adoption of FinTech innovations in payment services should be considered to be included in the effort to combat fraud and corruption. Of course, it will not be a task that can be done overnight, but every effort done is well worth the results. Governments of the world have a long road ahead, and a future to strive.

The world and its people are shifting in terms of the finance landscape. Disruptions of FinTech are no longer a forecast or a projection of the future. They will become a reality at a certain point in the future. They are not to be fought, let alone extinguished, instead, the world needs to embrace it. A collective effort of governments, financial institutions, regulators, business entities and individuals, and also the world population is quintessential to a more financially advanced society.

The Money Is Dead, Long Live The eMoney!

(By : Zaki N. Hawasi/KASTRATBEMFEBUGM)

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