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The long awaited switch from using cash to digital money will deliver a remarkable transformation to the global economy, liberating the poor from the constraints of the cash economy and ushering in a new era of inclusive innovation, an RSA report published today has found.

From the Digital Divide to Inclusive Innovation found that smartphones, broadband wireless networks, and cloud computing, are combining to produce a cheap platform with universal reach for the first time to billions of the world’s poorest people.

View the From the Digital Divide to Inclusive Innovation report 

Some of the report's key findings are: 

  • Bills and coins now account for only seven percent of the USA’s and the Eurozone’s total economic transactions.

  • Mobile transactions are estimated to increase from $60bn in 2010 to $1.13trn in 2014 growing at 95 percent annually.

  • Currently fewer than 2 billion of the world’s 7 billion people have bank accounts.

  • But with around 6 bn mobile phones in use, just about everyone in the world has access to mobile devices.

The report concluded that the impact of digital money will have a profound effect on the world’s poor, alleviating them from the drudgery of dealing with bureaucracy, such as the relentless queuing for paying utility bills, and the need to transact face-to-face.

The availability of micro-finance on mobiles overcomes the problems of reach into rural and impoverished areas and allows the previously disenfranchised to participate in the broader economy, the report found.

The report concluded that although digital money will likely not eliminate cash (any more than a computerised office eliminated paper), it will help solve continuing problems with the cash economy.

Notes and coins are unhygienic in the ways they transfer germs, and inefficient in the cost of storing, guarding and moving, the report concluded. Cash based economies also have greater challenges with tax collection.

The report concluded that the trends are clear with less and less cash in circulation around the world. Consumers are readily embracing payments on smart phones, and banks and financial services are increasingly adopting mobile technologies to allow digital money transactions for millions for the first time.

Governments can also find efficiencies through processing digital rather than cash transactions, with the cost savings in delivering services such as social welfare payments expected to be substantial.

“The potential of digital money is extraordinary. As is usually the case with major paradigm shifts, it is difficult to anticipate the changes that digital money will bring about and how long they will take. At some point, a critical mass, or tipping point, will be achieved and progress will significantly accelerate, bringing with it innovations that we can hardly begin to anticipate.”

Commenting on the report, RSA Director of Programme Adam Lent said:  

“For billions around the world, digital wallets containing digital identities, money and accounts are a ticket to inclusion in the global economy. The innovations that digital money will induce will increase opportunities for wealth-creating entrepreneurship and the provision of highly localized innovations, thereby increasing standards of living and quality of life.”

From the Digital Divide to Inclusive Innovation concluded that:

  • Technologies that facilitate greater inclusion already exist or are in development, and the most difficult challenges to be confronted in its realisation are political and institutional

  • Universal participation requires resolving the incredibly complex problems of establishing secure digital personal identities and developing the capacity to privately store and process individual data

  • The transition to universal digital money, has to be accompanied by a similar transition to universal digital identity management and systems that people trust to guarantee their privacy

  • No technical standards have emerged that all vendors are willing to embrace. Decisions about who to collaborate with in ‘standards wars’ is an important element of strategic positioning in such emerging industries

The report concluded that these are hard problems to solve, requiring considerable innovation amongst large technology and financial service companies to provide robust technical systems, and in governments, especially in emerging economies where significant portion of citizens barely connect to their administrative or financial systems.

Future development and use of digital money is unpredictable, the report found, and is reliant on government policies and business models that involve extensive collaboration and experimentation, including the charitable sector.

View the From the Digital Divide to Inclusive Innovation report 

Notes to editors

  1. For more information email RSA Head of Media Luke Robinson or call him on 0207 451 6893 or 07799 737 970

  2. The authors of the report are:

  • Professor Mark Dodgson, Director of the Technology and Innovation Management Centre at the University of Queensland Business School.

  • Professor David Gann, Vice President, Development and Innovation at Imperial College London and Chairman on the Smart London board.

  • Dr Irving Wladawsky-Berger retired from IBM in 2007 and is now a strategic advisor to Citi. He is a visiting lecturer at MIT’s Sloan School of Management and Engineering Systems, and previous co-chaired President Clinton’s Information Technology Advisory Committee.

  • Professor Gerard George, Vice Dean of Imperial College Business School and Director of the Rajiv Gandhi Centre.



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