Report highlights progress in digital money adoption, explores the role of culture and human behaviour as drivers to change
Citi, in partnership with Imperial College London, has launched its third annual digital money report, which explores the current state of digital money adoption – the migration from cash to credit/ debit cards, stored value instruments and other non-paper based mechanisms – across the world and analyses the results of Citi’s 2016 Digital Money Index.
The report, titled “Releasing the Flow of Digital Money: Hitting the tipping point of adoption”, identifies five “flows” that represent the global movement of money between governments, businesses and consumers. The report highlights that addressing flows that have considerable reach and/or are repetitive in nature can help drive digital money adoption by shifting consumer behavior in the longer term.
Finland topped the index for the third year running followed by Singapore and the US, which have been in the number two and number three slot respectively since 2014. The UK rose three places in 2015 to fourth.
Overall, though, progress was slow in 2015 and the report noted that the journey towards digital money would be a “lengthy one”. Mr Dave said the latest research showed that customers’ attitudes were the main thing holding countries back — not market supports, technology or digital money products.
“We looked at six countries where we saw an improvement in digital money solutions . . . but countries only saw a change in rank where they were able to materially impact consumer ‘propensity to adopt’,” said Mr Dave. “Culture as a barrier came to the front.”
Citi’s Mr Dave said governments had a real role to play in emerging markets countries, where up to two-thirds of state disbursements are still done through cash or cheques. Citi estimates $150bn could be saved globally every year by digitising only a quarter of these payments, by eliminating the cost of cash transactions and reducing fraud.
Another $150bn annually could be saved if only a quarter of retail payments were digitised, while up to $100bn could be saved through digitising a quarter of SME collection transactions.
Tom Thackray, acting director of competitive markets for UK business lobby organisation the CBI, said: “Digital payment systems are an important tool for small businesses looking to scale up, particularly for improving cash flow and efficiently managing sensitive data. A continued focus on innovation, security and simplicity is crucial to getting more small businesses using these digital systems.”