Recent reports suggest that health technology (healthtech) – from implants to apps which predict oncoming illness before you even have symptoms – might be having unintended consequences for our health and might be better news for private sector health providers than for patients. Much the same has been said of so-called advertising technology (adtech) where personal data has become a commodity and where unaccountable private sector companies decide which bits of our history to keep and which to delete.
The Unintended Consequences of Fintech
In the same vein, could it be possible that financial technology (fintech) is having unintended consequences on digital cashMoney in physical form such as banknotes and coins. transfers for societies in crisis?
To discuss this, Cash Essentials convened a panel of experts from the cash managementManagement and control of cash in circulation. industry, academia and the non-governmental community on 20th November 2020 to debate some of the pro’s and con’s of electronic transfers, digital payments and mobile moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... in humanitarian action.
The Complementarity of Cash and Digital
After a short introduction which reminded everyone that the subject was not about cash OR digital, but the complementarity of cash AND digital, panelists were invited to discuss this topic from their own perspective and then engage in a moderated discussion with questions from the floor. They were:
- Belinda Baah, Insights Manager for Mobile for Humanitarian Innovation at GSMA, an industry body that represents the interests of mobile network operators worldwide, who discussed ‘The potential benefits – and key considerations – of using mobile money for cash assistanceThe term cash assistance refers to direct cash transfers to individuals, families and communities in need of humanitarian support in lieu of in-kind commodities or direct service delivery. The term can be used interchangeably with ‘cash-based interventions’ (CBI), ‘cash transfer programming’ (CTP), ‘cash and voucher assistance’ (CVA), and ‘cash-based programming (CBP)’. It does not include fund transfers from donors, payment of incentives to the staff of local authorities, paymen... programmes in humanitarian and low-income contexts’.
- Will Galvin, Director and Founder of Last Mile Technology, a fintech focused on providing access to mobile wallets for humanitarian and development purposes, who discussed ‘Fintech Innovation and Mobile Money’
- Simon Levine, a Research Fellow at the Overseas Development Institute in London who discussed ‘The Pros and Cons of Digital Transfers’.
- Ron Delnevo, Chairman of Cash and Card Consultants and CaLP who discussed ‘The Utility of Cash in Crisis Situations, and Generally’.
The presentations can be downloaded at the bottom of this page. The panel was joined by 79 online attendees from various UN agencies, USAID, international NGOs and a range of commercial and central bankers.
Themes, datapoints and questions to pursue included:
- Interoperability between banks, MNOs and accounts
- The need for long-term strategic partnerships and investment in mobile and payments infrastructure
- Transfer costs, including of agent networks
- Encroachment of social media platforms into the retail payments space and introduction of private (crypto-) currencies
- Cultural barriers to gender inclusivity
- Elite capture and the role of political power
- The social imperative for paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. choice
- Economic and social multiplier effects
- Cashing out and assumed liquidityDescribes the extent to which assets or rights can be converted into cash without causing a significant decrease in the asset’s price. Accordingly, liquidity is often inversely proportional to the profitability of the asset and involves the trade-off between the selling price and the time needed to convert it to cash. In finance, cash is considered the most liquid asset and cash is sometimes used as a synonym for liquidity (e.g. cash reserves; cash pooling…).
- Breakage and unspent balances on pre-paid cards
- The need to invest in digital and financial literacy
Digital Transfers don’t have to be Cash-less
After a fascinating discussion – including taking over twenty questions from the floor – it became clear that each topic warranted further unpacking in recognition of the fact that the digital and analogue financial ecosystem is evolving fast. By the end, all agreed with Simon Levine’s closing comment that “Digital transfers don’t have to mean cash-less.”
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