76 REAL-LEADERS.COM / SPRING 2022 LEADING LEADERS Money Digital IDs Are the Catalyst for Our Financial Future Digital identities continue to improve across digital banking and payments. Most business leaders like to focus on earning the money, but many ignore the efficiencies of how to send or receive it. To ignite the spark of commercial and humanitarian progress, every person should have a unique digital identity so that they have full access to the digital world in the economic, social, and political realm. India does digital ID very well. The Aadhaar system, a 12-digit unique identifier based on biometric data, increases inclusion for over 1.2 billion Indians. World Bank Chief Economist Paul Romer calls it the most sophisticated ID system in the world, and despite some drawbacks, it delivers highvelocity access to government and private sector services, with each unique ID linked to one of a billion bank accounts. When COVID-19 struck, the system enabled $1.5 billion to be transferred digitally and quickly to the bank accounts of 30 million people. Compare that with the United States, where 90 million paper checks were laboriously sent through the mail in 2020, or in Asia, where many of the most vulnerable citizens did not have access to income support, mainly because no one knew who they were. One billion people globally are without access to a formal proof of identity, so governments should pay closer attention to systems such as Aadhaar if they want to enable people to transact in the digital economy. Such a system would streamline the delivery of services and payments and massively increase financial inclusion. With digital IDs in place, digital banking can How your money and spending can change the world for the better become ubiquitous. In this paradigm, payments, credit, savings, and other banking services can be handled in farflung corners of the planet, cheaply and at the swipe of a button. Having solid data-sharing mechanisms in place and the proper regulations and governance, a digital banking ecosystem can flourish — one that cultivates stability, transparency, fairness, inclusion, and interoperability. The holy grail of payments would be an omnichannel system that helps merchants accept any kind of payment through any channel, whether at a checkout counter or on a mobile device. As emerging markets catch up to Europe and the United States, cross-border payments will also flourish, with vendors offering global businesses compelling cost propositions and better services. However, for this to take place, automation must ensure instant payments are compliant with cross-border anti-money laundering regulations. Get it right, and some studies show that B2B cross border payments alone could grow by 30% over the next year, reaching $35 trillion by 2022. None of this will be easy. Both good and ill practices will flourish in this new future, making global prosperity difficult. Get it right, however, and initiatives like digital identity may raise global gross domestic product by as much as 13% by 2030. Further, effective digital infrastructure and payment processes will not only benefit poor communities by giving them faster access to needed resources, but also ensure e-commerce and trade finance is not stuck in the 20th century. n Huw van Steenis is senior adviser to the CEO at UBS Switzerland and a contributor to the World Economic Forum’s report Three Ways to Accelerate a Digital-Led Recovery. 76 MONEY 77 CLIMATE ACTION 78 SOCIAL IMPACT 74 INNOVATION & TECHNOLOGY 79 INVESTING
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