Digital Financial Inclusion
Digital financial inclusion (DFI) is the provision of financial services through online platforms, including mobile applications and over the Internet, to provide traditional banking services to individuals who are excluded from the traditional banking system. This integration significantly provides account balance inquiry, online payment, credit and debit card management and control of bank accounts. Integrating technology into traditional banking benefits financial institutions, governments, and the environment. This blog will explain how this integration matters for the environment.
What Is Environmental Sustainability?
In today's world, environmental sustainability is a major concern of all countries. It involves the responsible management and utilization of natural resources so they are preserved and available to the next generation. Achieving environmental sustainability requires green practices, including eco-friendly manufacturing and consumption processes. The primary aim of the world is to achieve this goal.
Nexus between DFI and Environmental Sustainability
The following points explain the nexus between DFI and Environmental Sustainability.
- Paperless banking and Carbon footprint
Traditional banking systems heavily rely on paper to maintain documentation, application forms, receipts, bank statements, etc. With the emergence of digital finance, paperless banking is promoted, which reduces deforestation and lowers the carbon emissions associated with paper production and disposal.
- Green finance and investment
The emergence of DFI also enables businesses and individuals to invest in environmentally friendly projects and engage in green growth, resulting in environmental sustainability. These investments involve eco-friendly manufacturing, producing renewable energy and its accessories, electric vehicles, and other environmentally friendly appliances and businesses.
- Cashless Financial Transactions
Digitalization in the financial system changes the business operations and service delivery processes of banks and other financial institutions. With digital fiancé, cash payment also becomes easy through online platforms. Customers can make financial transactions without visiting a branch or physically handling cash using the Internet and digital banking systems.
- E-Commerce and Remote work promotion
Digital finance also enables online shopping and remote jobs through its convenient payment system, facilitated by the Internet and mobile banking. This invention reduces individuals' physical movement, which benefits the environment.
- Rural development
A considerable investment is required to open a new bank branch for the traditional banking system. Due to this, most banks prefer to open their bank branches in urban areas. The rural population does not enjoy the banking system and cannot access finance and other banking products. With digital finance, the rural population can also get microfinance, start eco-friendly businesses and improve their living standard
- Financing for renewable energy projects
Digital finance enables small and medium enterprises to obtain loans and start renewable energy projects, elevating economic growth and protecting the environment from degradation.
- Reduction of Physical bank branches
With the emergence of DFI, customers can access all the bank services from their homes and offices and don’t need to visit branches. In this perspective, there is no need for physical branches. Reducing branches helps to reduce energy consumption, resulting in a low level of carbon. This reduction also helps to use less paper and a low level of transportation for banking services.
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