The growing digital divide and the importance of digital financial services
With funding support from the Citi Foundation, the Griffith Asia Institute (GAI), the Asian Development Bank Institute (ADBI), and MSC (MicroSave Consulting) have partnered to conduct a major study that will deepen our understanding of how the digital divide impacts those at the base of the economic pyramid (BoEP), and identify practical approaches to promote effective adoption and usage of technology.
The digital economy represents a major driver of economic growth. However, realising its full potential is often hindered by unequal access and capabilities to use digital tools. This is particularly the case among poor individuals and households at the BoEP which is predominantly represented by the most vulnerable segments of society including women, youth, the elderly, and the disabled. Addressing this digital divide and promoting inclusive digital economies has become a core development strategy of many governments.
One of the most prominent technological innovations which have the potential to support the BoEP to have meaningful participation in the digital economy is digital financial services (DFS). However, as with any digital service, many among the BoEP struggle to take advantage of the benefits of DFS due to multiple structural or social issues including prohibitive costs to using technology, limited or unreliable digital infrastructure, lack of digital or financial literacy, lack of trust in technology, or broader security concerns.
Facilitating technology adoption and measuring the impact of the digital divide
This study will focus on smartphone usage among the BoEP across multiple villages in Bangladesh and Indonesia. Through the implementation of randomised controlled trials, the research team will investigate factors influencing the adoption of DFS and test the effectiveness of social support mechanisms that will inform, persuade, and upskill low-income household money managers to adopt digital payments. While several studies have investigated the factors for adopting DFS and the importance of social support, they tend to evaluate the effect with single-snapshot studies. The current study adopts a consultative approach with potential DFS users and fills the need for longitudinal data by monitoring the effect of interventions through participant diaries completed over a 12-month period. The final results of the study will include important new insights into how digital financial and non-financial exclusion impacts those at the BoEP and provide practical guidance to policymakers and practitioners on how to support technology adoption and effective usage among the BoEP and create more inclusive digital economies.
Cross-sectional surveys
To inform the randomised controlled trial experiment-based intervention, the study will first administer a cross-sectional survey with 1000 respondents per country. The survey results will be used to identify distinct personas among the BoEP based on their financial behaviours, perceptions towards DFS , local support networks, and demographic profile.
Diaries and RCT
Based on the survey findings, 60 individuals will be identified in each country to participate as diarists. Each group will be divided into test and control groups of 30 each to be part of a randomised controlled trial (RCT). The RCT will be used to capture the results of an intervention designed to increase adoption and effective usage of digital financial services.
Program partners and supporters
With funding support provided by the Citi Foundation, the project is implemented by the Griffith Asia Institute (GAI) in partnership with the Asian Development Bank Institute (ADBI) and MSC (MicroSave Consulting).
