Supporting governments as users and regulators
In recent years, governments around the world have been focussing on the structure of the financial services industry and the value it delivers to the economy. Some of the key themes include financial inclusion initiatives, modernisation of payment systems, decreasing the use of cash and cheques for payments and lastly promotion of competition within the financial services industry. Fundamentally it is about how citizens and businesses interact, through information and payments, with government in an efficient, economical and convenient way.
Where funds are needed quickly, immediate payments provide a sophisticated solution. Where some traceability or control over how the funds are used is important, the mobile channel enables an electronic audit trail of usage. Simply by avoiding the use of cash and cheques, time and cost is removed from the process of making payments. Emergency payments in the case of a national disaster, can be made directly and immediately into bank accounts. This allows the recipient to make payments via mobile, online or even to withdraw cash from an ATM. Digital technologies enable convenience for users and more specifically the benefits of instant notification and confirmation, budgeting and financial management and scheduling.
Richer data for efficiencies
In the case of Universal Credit, an initiative to simplify the welfare system in the UK, payroll data can be used to inform the government in real-time on exactly what benefits to pay. There are also obvious benefits in terms of fraud and error reduction but the fundamental aim is to ensure that people are getting benefits that they are entitled to. There is an amount of data that is required before a payment is effected and data that is acquired after a payment is made. By extracting the data or shaping reports to examine specific variables, government stands to gain much more than liquidity. Better understanding of the patterns of usage offers several advantages. Richer data, highlighting the activities of individuals and organisations can provide policy-shaping insights and the means to enhance forecasting and planning activities.
Towards new use cases
Improving access to payments systems for people, businesses and even banks plays to the government agenda of financial inclusion and competition. Overlaying digital payments initiation services allows for a conducive environment to promote financial inclusion and enable the move away from cash and cheques in both directions (government-to-person, person-to-government). The resources required to manage the process used in cheque payments is costly, not to mention hugely inefficient.