Digital finance can deliver long-term financing of SDGs, UN report says

26th August 2020 By: Tasneem Bulbulia - Senior Contributing Editor Online

The unprecedented social and economic crisis caused by the Covid-19 pandemic has put a spotlight on the role of digital finance in providing relief for millions around the world, supporting businesses and protecting jobs and livelihoods.

While the pandemic demonstrates the immediate benefits of digital finance, the disruptive potential of digitalisation in transforming finance is immense, the United Nations (UN) Secretary-General’s Task Force on Digital Finance states in a new report.

Mobile payment technologies have transformed mobile phones into financial tools for more than a billion people. Digital is supporting big data and artificial intelligence in advancing cryptocurrencies and crypto-assets, peer-to-peer lending, crowdfunding platforms, and online marketplaces.

Banks have invested more than $1-trillion in developing, integrating and acquiring emerging technologies. In 2018, fintech investment reached $120-billion, one-third of global venture capital funding.

The new report, titled 'People’s Money: Harnessing Digitalization to Finance a Sustainable Future', sets out an ambitious, practical action agenda.

Centrally, it spells out how digital finance can be harnessed in ways that empower citizens as taxpayers and investors in envisaging a digital transformation at scale that better aligns people’s money with their needs, collectively expressed by the Sustainable Development Goals (SDGs).

The report highlights how billions of people around the world are responding to the Covid-19 pandemic using digital tools to work, spend and socialise.

It argues that there is a historic opportunity to harness digitalisation in placing citizens, the ultimate owners of the world's financial resources, in control of finance to ensure that it meets their needs, today and in the future.

The Task Force identifies five catalytic opportunities for harnessing digitalisation in aligning financing with the SDGs.

Together, they cover much of global finance, mainly, aligning the vast pools flowing through global capital markets with the SDGs; increasing the effectiveness and accountability of public finance that makes up a major part of the global economy; channelling digitally-aggregated domestic savings into long-term development finance; informing citizens how to link their consumer spending with the SDGs; and accelerating the lifeblood financing for the employment and income-generating world of small and medium-sized businesses.

The Task Force’s Action Agenda is a call to action to businesses, policy-makers and those governing finance to do what it takes to deliver on these opportunities.

"It spells out not only the what, but also the how: investments, new capabilities and governance innovations can get the job done," the report notes.

The Task Force concludes that harnessing digitalisation for the good is a choice, not an inevitability driven by technology.

Its action agenda points to actions needed to overcome digital risks that, unmitigated, could deepen exclusion, discrimination and inequalities, and separate finance further from the needs of inclusive, sustainable development.