Thursday, August 22, 2019 /06:58PM / By IMFBlog / Header Image Credit: Ejs9/Istock By Getty Images
Peoples connection to new technology is built on the backbone of electrical and fiber-optic cables running beneath our feet and under oceans.
In 2010, most economies that were not connected to the modern, cabled internet could be found in the Pacific. However, this is no longer the case, and by 2020 the region will be almost completely connected.
Our chart of the week shows the technological transformation taking place in the Pacific island countries, where the completion of submarine fiber-optic cables will facilitate technology-enabled financial inclusion.
The spread of innovative financial technologies, known as fintech, has expanded financial opportunities to more and more people.
It is sometimes easy to forget that these new technologies depend on connectivity.
Faster connectivity provided by higher network bandwidth will accelerate the adoption of more sophisticated fintech applications. More advanced, smartphone-enabled fintech applications use a large volume of data and require fast connectivity through higher-bandwidth 3G, 4G, or 5G networks. In many Pacific island countries, however, older and lower-capacity 2G connectivity predominates.
Higher-network bandwidth will allow Pacific island countries to exploit the benefits of technologies beginning with faster and more efficient payment systems.
But governments could also harness technology to improve tax collection, government transfers, trade financing, and land registries.
Households and businesses will obtain enhanced and more secure access to finance using modern authentication techniques like biometric identity, combined with other authentication factors, to conduct financial transactions through blockchain-enabled mobile wallets on their smartphones.
The financial sector will also leverage biometric technology to comply with know-your-customer requirements and use big data to build out their clients credit information and assess their creditworthiness.
A new IMF paper discusses how fintech solutions in the Pacific islands can complement existing efforts to promote financial inclusion, enhance financial sector development, and increase inclusive growth potential, thereby reducing poverty.