Digital Finance for All: Powering Inclusive Growth in Emerging Economies

While the benefits of digital finance have been widely noted, this report seeks to determine just how large the economic impact could be. The report takes a comprehensive approach to quantifying the economic and social impact of digital finance in emerging economies. The authors use McKinsey’s proprietary general equilibrium macroeconomic model and detailed inputs from field research in seven emerging economies that cover a range of geographies and income levels: Brazil, China, Ethiopia, India, Mexico, Nigeria, and Pakistan.

Some of the main findings of the report include:

• Digital finance has the potential to provide access to financial services for 1.6 billion people in emerging economies, more than half of them women.
• Widespread adoption and use of digital finance could increase the GDP of all emerging economies by 6 percent, or USD 3.7 trillion by 2025.
• Digital finance could increase the volume of loans extended to individuals and businesses by USD 2.1 trillion and allow governments to save USD 110 billion per year by reducing leakage in spending and tax revenue.

Businesses and government leaders will need to make a concerted effort to secure these potential benefits. Three building blocks are required: widespread mobile and digital infrastructure, a dynamic business environment for financial services, and digital finance products that meet the needs of individuals and small businesses in ways that are superior to the informal financial tools they use today.