Building a healthy digital ecosystem

Lara Gilman

Snapshot 12: “Building the infrastructure for a healthy digital financial ecosystem” addresses one of the key questions of FiDA’s Learning Theme 12. Each Learning Theme addresses a range of topics within the digital finance space. The FiDA Partnership synthesizes the digital finance community’s knowledge of these learning themes as “Snapshots” that cover topics at the client, institution, ecosystem, and impact levels to present “What we (in the digital finance community) know” about the topic in question, highlight “notable new learning,” and call attention to “implications” for future research and investment.

One of the most disruptive innovations in digital finance has been the development of mobile money agent networks. This model enabled financial services to shift away from the costs of  “brick and mortar” banks to a more accessible, trusted, and pervasive network of retailers that act as the ambassadors of mobile money. However, as noted in FiDA’s Snapshot 8, “What is the commercial landscape of digital finance?,” building and managing an agent network is a heavy investment, and, unfortunately, the growth and uptake of mobile money has been hampered, in part, by a lack of adequate agents in hard to reach, rural areas (i.e., the last mile). Nevertheless, as the industry evolves, new and more inclusive delivery models will emerge.

The agent network is simply one component of the larger digital finance “ecosystem” that needs to be both reliable — to build trust with consumers — and flexible — so that it can adapt to new consumer demands and technologies. Three core infrastructure pillars collectively define, at least from a supply-side perspective, the digital finance ecosystem: operational, technical, and regulatory. Digital finance will only thrive if the ecosystem infrastructure is robust, reliable, and dynamic. FiDA’s Snapshot 12 focuses on the challenges that the ecosystem currently faces and the infrastructure improvements that need to take place to deliver digital finance successfully. Although digital finance has evolved at a remarkable speed over the last ten years, its growth is at risk due to some persistent challenges across all three aforementioned pillars as discussed in the Snapshot.

Read Snapshot 12 to learn more about the infrastructure challenges digital finance faces, the implications for the ecosystem as digital finance evolves, and the top 10 must reads in this space this year.