Abstract
While much progress has been made in promoting inclusive finance through the ownership of a basic personal account, billions of people in developed and emerging markets are still underrepresented in financial services. Also, they are unable to contribute to the provision of better access to financial services. The purpose of this study was defined as to explore the contribution of digital financial services (DFSs) in promoting inclusive finance in China. This study presents a theoretical discussion on how DFSs play an important role in promoting China’s inclusive finance. This study uses the systematic review method of qualitative sampling to achieve the goal of this study. Different forces play different roles behind the promotion of inclusive finance. However, DFSs are considered to be one of the most influential forces in the development of inclusive finance in the present world. Many examples of how DFS can improve inclusive finance are discussed in the literature. In addition, different contributions to DFS usage are presented here to achieve the objectives of this study. The contents of the study contributed to a better understanding of the practical impact and implication of DFS tools in transforming the financial sector. In this study, first, a structured review method is followed; second, most important discussion on the contribution of DFS in promoting inclusive finance is presented and third, the relation between the topic and related research is identified.
Keywords
Introduction
The terms Internet Finance, Financial Technology and Digital Finance are almost similar in meaning and are used interchangeably in China and around the world (Shen & Huang, 2016; World Bank Group, 2018; Xie, Zou, & Liu, 2016). Here the term digital financial service (DFS) is used to mean all the financial elements or services accomplished by technological innovation. The use of only one term, such as FinTech, internet finance or digital finance, may limit the services, for that reason the word DFS is used here to cover wide range financial services and innovations. Gabor and Brooks (2017) stated that ‘If we solve these large problems of inclusive finance, it will be with new business models, technologies and innovations. Data allow us to know which innovations work and which don’t’. Another study, Radcliffe and Voorhies (2012), identified DFS as ‘greases the wheels’ of the economic activity which makes the financial products and services cheap and easy to send and receive payments. After involving with the DFS, the poor people experience several benefits through several channels. These are including payment connections to peers, access to a basic store-of-value account, access to promoted financial services and payment connections to institutions, such as utility companies, enterprises and governments. Also, the rapid development of DFSs and major technological innovations are pushing China’s government towards the expansion of their inclusive finance (Zhou, Arner, & Buckley, 2015, 2018). G-24 (2018, p. 12) mentioned digital payment as a powerful tool of the solution to financial exclusion. This report also stated that ‘A flourishing mobile money digital financial ecosystem is one contribution FinTech has made to inclusive finance in many countries, but new technologies and approaches focused on developing comprehensive digital financial ecosystems are emerging and offer significant promise’. Salampasis and Mention (2018) noted that financial innovations have a significant influence on sustainable economic development. It also works as a driver of economic inclusion. Usually, formal financial institutions fail to meet the financial needs of SMEs, agricultural businesses and other financial needs of rural areas. Also, it fails to satisfy the financial access policies of the consumers. On the other hand, in any case, DFS can fulfil the financial needs of those financial areas and help to satisfy consumers’ financial access policies. Also, it can directly improve the well-being of its customers by enabling a broader ecosystem with much more significance. Karlan et al. (2016) indicated that DFS is using cost-effective cash transfers to provide different types of traditional and DFSs. It has had impacts on public expenditure management systems. In addition, it helps to reduce extra expenditure on projects funding and to get control over the expenditures. Additionally, it reduces corruption in traditional financial services.
Economic development is well linked to inclusive finance (Long, 2016; Mitra & Das, 2018; Zhou et al., 2015, 2018) and promoted inclusive finance is broadly linked to the sustainable development goals (SDGs) (Tomilova & Dashi, 2017). Also, Siddik and Kabiraj (2020) specified that inclusive finance is deeply connected to inclusive growth. Over the past decade, less developed, developing and even developed countries have started to improve their inclusive finance in their respective countries. Many organizations around the world have been working to promote inclusive finance by developing specific sectors, collecting experiences and guiding related parties (World Bank Group, 2016). In terms of GDP growth and purchasing power parity (PPP), China’s economy is considered as one of the largest economies in the world for falling poverty rates and improving inclusive finance (World Bank Group, 2018). Also, China is the first country that rapidly promotes its inclusive finance through financial technology. This development began with the rapid growth and high acceptance of payment technology. More specifically, WeChat Pay and Alipay are the two biggest digital payment tools in China. Their rapid development was quite influential, referring to PayPal services in the United States. Although, PayPal started their journey years earlier compared to Alipay and WeChat pay, its development has not been as rapid as Alipay and WeChat Pay. Whatever, the revolution of the development of providing massive opportunity to financial access to rural people has been working as strong helping hand as their economic development. Now people have easy access to the formal financial systems. Even in the rural areas, access to finance is much easier than the earlier days. After joining the formal financial system, they are contributing significantly to the formal economic systems. For these reasons, China has the opportunity to hold the market leader position in diversified sectors. Another influential tool for their massive development of inclusive finance is their online shopping. More specifically Taobao & JD.com are their most commonly used online markets. People from all around can easily start their business in the online marketplace and ship their products across the country. This is also considered one of the most vital forces for their rapid development of the rural economy. Their digitalization of payment systems is working behind their rapid development. These are the most influential debate China’s inclusive finance.
Whatever, not only China, also the United Kingdom, United States, Singapore, Malaysia and some other developed countries are very successful in using DFSs. Also, the digital payment system is used as a payment method in many other countries, such as Ghana, Kenya, Philippines, Uganda and some other underdeveloped countries, but the success pathway of their digital payment is not consistent (G-24, 2018). Therefore, China’s strategies and policies of DFSs revolution will work as a successful pathway to other countries whose inclusive finance is in the developing stage.
However, despite this rapid growth, still, large numbers of people remain uneducated, without having a bank account and without the touch of financial technologies, which are considered to be one of the most influential obstacles to China’s further development (Ding, Chong, LEE Kuo Chuen, & Cheng, 2018; Gabor & Brooks, 2017; Long, 2016). Despite this, China is regarded as the pioneer in digital inclusive finance and is introducing its best practices to other countries. Digital financial services is the main force behind this success history. Many authors, such as Ding et al. (2018), Leong, Tan, Xiao, Tan, and Sun (2017), Milian, Spinola, and Carvalho (2019), Salampasis and Mention (2018), Sinha, Pandey, and Madan (2018), Sparreboom and Duflos (2012), Yang, Chen, Shi, and Wen (2017), Zhou et al. (2015) and Zhu, Zhai, and He (2018), have found out that the most influential forces of the development of inclusive finance is DFS. From this perspective, the need for a review study has created. Whatever, this study contributes to the existing literature by showing the importance of DFS in the development of inclusive finance, presenting the influence of DFS for the development of China’s inclusive finance, focusing the ways or initiatives DFS leading to promote China’s inclusive finance through DFS and identifying the challenges in promoting inclusive finance. Also, this study shows some new research areas on this inclusive finance. Those issues also will have a significant impact on future research on this field.
The structure of this study is as follows: the first section is introduction, the second section is review of literature, the third section is objectives and rationale of this study, the fourth section is theoretical framework, the fifth section is research design, the sixth section is findings of this study and the seventh section is conclusion and future research directions, and finally acknowledgements and references at the end of this study.
Review of Literature
Inclusive Finance
The first issue is inclusive finance, which is directly related to the accessibility of financial services to the rural people (Bhaskar, 2013; Helms, 2006; Patwardhan, Singleton, & Schmitz, 2018). It comprises a wide range of financial products and services accessible to low-income and unbanked people mainly living in the countryside. Traditional financial services and products mostly overlook these countryside people because of their meagre income. However, inclusive finance helps those countryside people to save money, support their business and families, hedge against every day’s risks and promote their financial activities (Sinha et al., 2018; Sun, 2017). Also, it denotes that all the adults should have access to appropriate financial products and services. Generally, this process starts with opening a bank account or account for financial transactions (Demirguc-Kunt, Klapper, Singer, Ansar, & Hess, 2017). Demirguc-Kunt et al. (2017) stated inclusive finance as ‘It encompasses access to credit from formal financial institutions that allow adults to invest in education and business opportunities, as well as the use of formal insurance products that allow people to manage financial risks better.’
Digital Financial Services
Another term DFS is very popular in the present times in the financial market, and its rapid development is an emerging issue in the world of finance (Casanova, Cornelius, & Dutta, 2018; Gai, Qiu, & Sun, 2018; Gimpel, Rau, & Röglinger, 2017). Mostly this word supports the activities of financial technology (FinTech), which is the combined form of ‘Finance’ and ‘Technology’ (Zavolokina, Dolata, & Schwabe, 2016). Beyond the traditional financial systems, the involvement of DFS in the inclusive financial sector is reflected by the emerging issue ‘FinTech.’ It refers to products delivered via technology or innovative financial services and considers the fastest growing innovations in the technology industry and financial markets (Long, 2016). Moreover, it relates a wide range of financial services, such as online banking, third-party payment, direct sales of funds, online insurance, crowdfunding and so on (Claessens, Glaessner, & Klingebiel, 2002; Hill & Hill, 2018; Salampasis & Mention, 2018). Specifically, Gomber, Koch, and Siering (2017) stated digital financing, digital investments, digital money, digital payments, digital insurances and digital financial advice as DFSs in The Digital Finance Cube and its Dimensions framework. Furthermore, it is directly linked to financial innovations and entrepreneurial phenomenon (Zavolokina et al., 2016). Also, another renowned researcher Ozili (2018) stated broadly the DFSs as
while there is no standard definition of digital finance, there is some consensus that digital finance encompasses all products, services, technology and/or infrastructure that enable individuals and companies to have access to payments, savings, and credit facilities via the internet (online) without the need to visit a bank branch or without dealing directly with the financial service providers.
Relation Between DFS and Inclusive Finance
Topology of Previous Studies
Comprehensive Findings from Previous Studies
Objectives of the Study
The objective of this research is to explore the ways of promoting inclusive finance in China. The year-to-year and step-by-step initiatives to promote China’s inclusive finance are also specified here. Therefore, after examining the findings of related studies, the subsequent stages of the development of China’s inclusive finance are presented in this research with the importance and influence of financial technology on inclusive finance development. The view of different authors, researchers, fellows and others have gathered and considered here to accomplish the research objectives. Also, this research aims to provide an essential discussion from the understanding of DFSs and inclusive finance.
Rationale of the Study
Still, the researches on promoting inclusive finance are not so extended. Few studies have precisely addressed the DFSs context in promoting inclusive finance. Therefore, a systematic review study is important for the readers and researchers who are working on this topic. All the targeted reader will get the integrated concept of digital financial inclusion from this study. Even, this research is also important for Chinese researchers who are working on DFS and digital financial inclusion.
Theoretical Framework
It is important to develop a conceptual framework for the relationship between DFS and inclusive finance. Gomber et al. (2017) specified digital financial business functions. These are digital financing, digital investments, digital money, digital payments, digital insurances and digital financial advice. These functions directly influence on the transforming process of promoting traditional inclusive finance to digital inclusive finance. Ozili (2018) elaborates an organized digital financial inclusion framework that highlights the important roles that the government, financial technology and banks play significant roles in promoting inclusive finance and reducing poverty. Ozili (2018, p. 334) also talked about a sequence that the availability of a mobile device should be ensured first. After that, this may lead forward to the data financial inclusion as well as digital finance. Finally, the data financial inclusion and digital finance lead the traditional inclusive finance to promoted inclusive finance. Whatever, in this research, the implications of DFS on promoting inclusive finance are presented on a theoretical framework. This theoretical framework shows the connections between traditional financial services and promoted inclusive finance. Figure 1 illustrates a theoretical framework to clarify the ways how DFS affects financial services and inclusive finance.
Promoted inclusive finance policies aimed at channelling inclusive finance and other DFS to less privileged people in society. Some forces are working behind this channelling such as the expansion of formal banking system usage, fostering electronic payment acceptance, easier payment method and making financial services more affordable especially for the vulnerable people in the society. The functions of DFS comprise influential activities towards promoted inclusive finance from traditional financial services. The digitalization of the financial systems and the ultimate development of ICT have helped to achieve the primary goals of inclusive finance by providing DFSs.
Services related to DFS promote the desired inclusive finance by creating multi-dimensional channels by providing a variety of DFSs among a large number of users. Here, DFS plays as the indicator that promotes inclusive finance in this era along with the rapid development of ICT and other factors of inclusive finance. Also, with the help of diversified digital services, people can do different types of transaction, investment and also get the required advice from the experts for making the proper financial decision. It also allows users to make the rapid transaction and fast services, which make life easier. The standardization of the formal banking systems and other DFSs is playing roles in promoting inclusive finance continuously. Here, digital currency is an ideal example of promoting inclusive finance by accessing the financial system framework. Nowadays, people always prefer to use digital currency instead of cash. People feel unsecured with carrying cash, which is the most traditional medium of financial communication. The security issues are also influential matters in carrying cash. From these aspects of digital currency, digital payment is the most revolutionary step to make life easier, especially in China; digital payment is much easier at present than it was 10 years ago. Here, WeChat and Alipay are the most commonly used medium of digital payments and financial communications. From these perspectives, the widespread use of WeChat and Alipay in China has influenced the promotion of inclusive finance across the country. In addition, digital insurance is also influencing the development of inclusive finance. For example, online marketplaces, especially Taobao and Jingdong are the most useful online marketplaces in China. People from all around China (even from the most rural areas) also open stores in these marketplaces. Therefore, the product delivery system is also a vital issue. Here digital insurance plays a very important role in providing product safety when shipping to various places within China. Compared to before 2013, it makes life especially safer for businesses. Also, another digital service is digital financial advice, which also plays a vital role in promoting inclusive finance. Now all the parties can take appropriate advice from digital consultancy firm for their rural investment and rural business development. Therefore, both the service providers and receivers benefit from such kind of digital financial consultancy.
Research Design
This study was followed by a systematic literature review to explore the articles related to DFSs, financial technology, digital finance and inclusive finance. In line with these studies, this research was completed based on some previous related studies (e.g., Ding et al., 2018; G-24, 2018; Long, 2016; Loubere, 2017; Makina, 2019; Patwardhan, 2017; Tsai, 2017; Zhou et al., 2015). Also, many studies related to inclusive finance and FinTech have been analysed as based on articles, such as those conducted by Hao (2017), Siddik and Kabiraj (2020), Sparreboom (2011), Sparreboom and Duflos (2012), Tam and Hanh (2018) and Zhou et al. (2018). Whatever, different phenomena, the impact of change and the relationships between the financial technology are analysed here from different perspectives to explore the influence of DFS to inclusive finance (Cukier, Ngwenyama, Bauer, & Middleton, 2009).
The databases for DFS or internet finance or FinTech are not as rich as other financial topics, as well as the database of digital inclusive finance is also not so widespread. That is why most of the articles collected from secondary sources (Hasan & Mahmud, 2017; Hasan, Nekmahmud, Yajuan, & Patwary, 2019; Hasan, Parven, Khan, Mahmud, & Yajuan, 2018; Shen, Shen, & Chen, 2016: Hasan, Mahmud, & Islam, 2017; Nekmahmud & Rahman, 2018). This study mostly based on finding out the critical phenomenon of DFS and inclusive finance with an interpretative approach from the secondary data analysis methods (Zavolokina et al., 2016). Many research articles, review articles, case studies and conference papers have identified and collected from secondary sources. Data were collected by following a systematic process. At first, the two best-indexed databases Scopus® by Elsevier B. V. and Web of Science Core™ were selected to maintain the quality of the collected articles. After that, we followed the search options of Elsevier, Emerald, Springer, Taylor & Francis, Wiley and SAGE Publication to collect the quality research articles. These publishers usually publish most of the prominent journals of business, finance and economics. Different studies based on financial technology, inclusive finance, rural finance and inclusive finance are centralized here. Also, some articles have collected from the World Bank database, which is regarded as one of the best databases for inclusive finance.
This study followed the systematic review framework of Banomyong, Varadejsatitwong, and Oloruntoba (2017), Hemingway (2009), Leonidou, Christofi, Vrontis, and Thrassou (2018), Rhaiem and Amara (2019), Snyder, Witell, Gustafsson, Fombelle, and Kristensson (2016), Witell, Snyder, Gustafsson, Fombelle, and Kristensson (2016), Siddik (2019) and Bulis, Kabiraj, and Siddik (2019). Specifically, this study followed the research methodology process of Hasan et al. (2019), Milian et al. (2019) and Witell et al. (2016). Figure 2 shows a research framework that mentions the systematic method of this study.
Several articles on DFS and inclusive finance are used with alternative key terms, such as ‘FinTech’ (Dapp, 2016; G-24, 2018; Long, 2016; Mackenzie, 2015; Milian et al., 2019; Salampasis & Mention, 2018; Tsai, 2017), ‘Internet finance’ (Chen et al., 2017; Loubere, 2017; Shen & Huang, 2016; Wang, Shen, & Huang, 2016; Xie et al., 2016; Yang et al., 2017), ‘digital inclusive finance/digital financial inclusion’ (Castri & Gidvani, 2014; Patwardhan, 2017; Sun, 2017; Zhou et al., 2015) and ‘digital finance’ (Ozili, 2018; Siddik & Kabiraj, 2020; Zhou et al., 2015). Here, the data coding system is divided into three parts: the first one is that data should be related to DFSs, the second one is that data should be related to China and the third one is that data should be related to inclusive finance. Also, three steps of qualitative data analysis model were followed here. These are classification, coding and text analysis. In addition, researchers used self-judgement approach to summarize important articles. Since the data are collected based on three criteria, data are analysed by following those three criteria.
Findings
Importance of DFS in the Development of Inclusive Finance
In China, DFS provides different opportunities by offering technological usage in diverse financial services to develop inclusive finance by persuading financial companies, credit companies, bank and such (Zavolokina et al., 2016). It also presents different opportunities for individual empowerment, such as reducing cost and increasing transparency (Anagnostopoulos, 2018; Thompson, 2017). Technology plays a very vital role not only in China but throughout the world in the development of inclusive finance (Shim & Shin, 2016). The significance of the financial technologies in economic growth emphasized the role of reducing the risks and costs of the financial sector better than traditional financial trading options (Frame & White, 2012). Also, it makes inclusive finance more profitable to encourage banks and other financial institutions to provide services to their target low-income customers (Helms, 2006; Patwardhan et al., 2018).
Most of the Chinese financial institutions are delivering financial services using different technological innovations, such as ATMs, POS terminal, Instant mobile applications, mobile networks, trust management, mobile embedded systems, cloud computing, image processing and data analytic techniques (Shen & Huang, 2016; World Bank Group, 2016). These DFSs significantly lower the transaction costs, enhance the efficiency of risk-based pricing and risk management, reduce information asymmetry, expand the sets of possible transactions and increase the transparency of the institutions. Besides, the use of technological innovations in inclusive finance, it creates competition among financial institutions. In some cases, some companies that use technological innovations are making more profit than the companies are not using these technological advantages. Even using financial technologies, companies overcome many obstacles by helping those institutions to improve the service quality to meet the demands of their customers (Hao, 2017). Therefore, poor people can also benefit from the use of technological innovations.
Influence of DFS for the Development of Chinese Inclusive Finance
The overlooked peoples from different financial services are treated as a burden for economic expansion. In most cases, this burden is also the same for China. To this end, day by day, the Chinese government is trying to develop inclusive finance. The government, as well as many private institutions, has taken many initiatives to promote inclusive finance. Even so, not only formal financial institutions but also the informal financial institutions play vital roles in meeting the demand for inclusive finance (Hao, 2017). At the heart of the internet finance industry, mobile internet use, big data use and cloud computing are all components of digital finance, and financial technology is used here to identify and manage financial risks (Huang, Lei, & Shen, 2016). In addition, all companies are working in the rural areas of China to promote inclusive finance. Since most of the rural people live in villages, providing different financial services to these people are very expensive, in part, because they have small amounts of money, often live in sparsely populated areas and few recorded credit records. In this situation, different DFSs have brought with blessings in China to develop their inclusive finance to promote their financial accessibility and inclusive growth (Siddik, 2019; Siddik, Ahsan, & Kabiraj, 2019; Siddik & Kabiraj, 2020). Whatever, FinTech is not a new concept in China. It has been used for nearly a decade (Shen & Huang, 2016). However, most of the people in China, even the rural people, are using virtual money within a second for the transaction purpose (Long, 2016). The development of FinTech depends fundamentally on the growth of the total economy as a whole, which is linked to the traditional financial sector (Guo et al., 2016).
In this consideration, China has strong financial and advanced technology options for future financial growth with many FinTech tools. They are also active in providing services in a technologically innovative manner, such as large distribution outlet like ATMs, providing closer services to the poor people even to the underbanked people and enabling them to provide services within the scope baking service (Helms, 2006). Whatever their journey started after the development of PayPal in the west in 1998. There are some other platforms from where China got inspiration, such as Zopa.com (UK) and Lending Club (US). Since then, initially, its development began in 2013 with the genesis of Yu’E Bao, a money market product of the Alibaba Group (Guo et al., 2016). They got remarkable growth for their technological money transaction systems and online lending services to small entrepreneurs for different purposes (Casanova et al., 2018; Yan et al., 2018).
FinTech typically provides six services in China, such as Internet payments (Alipay, WeChat pay), Internet lending (Webank, MYbank), Internet money market funds (Yu’E Bao), Internet insurance (Shipping insurance on Taobao.com), Internet credit investigation (Zhima Credit) and Internet investment (Yi Rendai, PPmoney) (Guo et al., 2016). These services are going with a rapid growth rate. According to the Peking University Internet Finance Development Index (IFDI) ‘since January 2014, Internet financial activities have been growing at around 100 per cent a year. The growth was very fast such as in 2012 the P2P Company was 200, which increased 4029 in April 2016’ (Shen & Huang, 2016). In some cases, rapid growth is part of the debate over whether this growth is sustainable. However, financial analysts are positive about this rapid growth in China’s financial sector. They think this is not only an initial technological advance but also a better integration between real life and financial technology (Anagnostopoulos, 2018; Shen & Huang, 2016).
Here, some technological tools are commonly used in developing inclusive finance. These are information systems (financial applications and information systems software), connectivity (different network connections such as broadband, dial-up or satellite), credit scoring (computerized analysis of credit), personal digital assistants (PDAs), ATMs, internet banking, POS devices, biometrics, smart cards, mobile phones and so forth (Claessens et al., 2002; Gomber, Kauffman, Parker, & Weber, 2018; Helms, 2006). From these tools, internet finance, especially mobile payments, is considered the most useful and influential for the development of China’s inclusive finance. Also, internet finance is one of the major media of using technological innovations for the financial transaction.
How DFS Leads to Promote Inclusive Finance in China?
Year-wise Initiatives for the Development of China’s Inclusive Finance
The development of China’s inclusive finance through DFSs is one kind of blessing for China’s economic development. If you look back, you may see that China’s GDP growth has started to increase after 2000. Their entire economic success history may represent the contribution of digital payment and the development of FinTech. Thus, FinTech development leads China’s promoted inclusive finance.
Challenges in Promoting Inclusive Finance
Despite the rapid development, there are different challenges in China at all stages of the development of inclusive finance through DFS. China Academy of Financial Inclusion (CAFI), Duoguang (2018) specifies some of the challenges of inclusive finance through DFS in its report. These are barriers in rural areas (rural education, single child policy, urbanization and so on), large variance in personal financial literacy, unequal development among different DFS elements (e.g., the growth of insurance and wealth management is still comparatively slow) and balance between risk and development. Whatever, some specific challenges and critical issues are also identified in this study. These are stated in the following section.
At the end of 2018, from the total population of 1,415 million, 575 million people do not use a smartphone (Source: Statista, Worldometers). At the end of 2018, from the total population of 1,415 million, 600 million people do not use the internet (Source: Statista, China Internet Watch). Nearly 266 million people live in urban areas, and nearly 332 million rural people do not use the internet for any purpose. These people lag utilizing the internet in every case, especially in financial communication (Source: Statista, China Internet Watch). From the total 815 million people who are using the internet, nearly 21 per cent of the 815 million internet users (54% of the entire populations) do not use mobile and online payment systems. Nearly 20 per cent of people (age 15+) do not have a bank account. Still, they are out of banking financial services (Source: Global Financial Inclusion Database, Global findex data exclude Tibet and Xinjiang, representing less than 5 per cent of the population. Unless otherwise noted, data for China do not include data for Hong Kong SAR, China; Macao SAR, China or Taiwan, China). Many financial services, such as ATMs, agent banking, POS device and so on, are not available in rural areas. Customers are not aware of and not financially educated. Therefore, financial education is still treated as one of the most influential hinders of the development of inclusive finance. Different risks, such as loss of funds, inadequate disclosure of information, data privacy violations and false promotion, are creating problems in the development of FinTech and inclusive finance.
Conclusion
Poverty reduction and economic maintenance through financial development are the most important issues to be considered. As it affects a country’s socio-economic development, financial sector authorities should give increasing priority to promote innovation and the use of technology to improve inclusive finance and consumer protection. In China, mobile payment systems are regarded as one of the best tools for the development of inclusive finance. Also, it is treated as the main point of their digital success history. Since most of the underdeveloped and developing countries financial and economic systems are still standing below the developing stage. In those countries, digitalization of inclusive finance can play very significant roles in their financial transformation. Since, China is the pioneer in digital financial transformation, therefore, those countries that are standing below the developing line can follow Chinese policies and strategies as standard. The history of Chinese digital transformation of inclusive finance is not so extended and deep-rooted, that is why the initiatives and strategies are not so scattered. Thus, this research has pointed out the initiatives and policies that have been used to promote China’s inclusive finance. These initiatives and strategies will help other countries to promote their inclusive finance with the proper digital transformation of the financial products and services. Yet, some noticeable challenges exist that working as drawbacks. After considering the challenges that are stated in the above sections, concluding remarks of this is that China should go a long way and provide better financing channels for all financially excluded people. Another important factor is that as a global leader in digital financial transformation, they have been demonstrating the ways to promote inclusive finance through DFSs. These methods of the digital transformation of inclusive finance will particularly lead to the development of inclusive finance worldwide.
Future Research Direction
Financial access is one of the most important forces to promote inclusive finance. People get financial access through three methods, such as formal banking, microfinance and mobile banking or internet finance. To promote inclusive finance, all the ways of providing financial access should be developed equally. In this perspective, more empirical research should be done with the integration of financial education, financial access and use of digital financial products and services. Also, more specific research should be done on especially informal finance and mobile banking, and the use of FinTech products and services. In addition, inclusive finance of the third world’s populous country is not developed even not developing in most cases because it is difficult to provide better financial access to countries with larger populations. Therefore, how the populous and underdeveloped countries huge population can contribute to promoting their inclusive finance as well as high economic expansion should be empirically explored in future research.
Footnotes
Acknowledgements
The authors are grateful to the anonymous referees of the journal for their extremely useful suggestions to improve the quality of the article. Usual disclaimers apply. Also, the authors are grateful to Dr Md. Nur Alam Siddik (Associate Professor, Department of Finance and Banking, Begum Rokeya University, Rangpur, Bangladesh) for sharing his profound experience in this research field.
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The authors received no financial support for the research, authorship and/or publication of this article.
