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Defining Digital Financial Services

Digital Financial Services

Digital Financial Services (DFS) are financial services that rely on digital technologies for their delivery and utilization by consumers. These services leverage digital platforms, such as mobile devices and the internet, to provide convenient, accessible, and secure financial solutions. DFS encompass a wide range of financial activities and products, including electronic money, digital wallets, and digital payment platforms, loans, savings, insurance, and investment. By harnessing digital technologies, DFS enable individuals and businesses to conduct financial transactions, access financial products, and manage their finances more efficiently and effectively. The use of digital technologies in DFS promotes financial inclusion by reaching underserved market segments, and drives innovation in the financial sector.

Fintech (Financial Technology)

Fintech (Financial Technology) is a broader term that encompasses the use of technology to innovate and transform various aspects of the financial industry. Fintech utilizes digital technologies like data analytics, quantum computing, cloud services, machine learning, artificial intelligence, and distributed ledger technology, to enhance financial activities.

DFS provider

A DFS provider is a financial service provider that delivers digital financial services to customers. In this guide, a DFS provider may include traditional financial sector intermediaries like banks and insurance companies in cases where considerations and tools may be applicable. More broadly, DFS providers may include electronic money issuers, fintech firms, and other regulated entities delivering DFS.

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DFS And Financial Inclusion

DFS has the potential to overcome long standing barriers to access and usage faced by unserved individuals and firms. It can also provide convenient access to faster, cheaper, more customized products to those who are underserved.

Banks and non-banks are leveraging digital technologies to innovate with delivery mechanisms as well as products. Policymakers and regulators are building capacity to leverage opportunities to enhance financial inclusion and to understand incremental risks to financial sector stability and integrity.

Photo Credit: World Bank
Source: World Bank
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Basic DFS Enablers

Growth in DFS has expanded the range of actors in the chain of financial services, from design to delivery. The following factors distinguish DFS from traditional financial services in a financial inclusion context: