Chapter 1: Digital Finance: An Overview

The field of digital finance is emerging fast, revolutionising the financial sector with new opportunities for financial inclusion, innovation and effectiveness. This overview explains what digital finance is, its evolution and the various forms of digital financial services available. In this chapter, the drivers of digital finance adoption are discussed in detail: technological advances, changing consumer behaviour, financial inclusion, regulatory support, innovation in fintech and partnerships. The effects of digital finance on traditional financial services are also discussed, such as increased competition, disintermediation, greater customer expectations, improved efficiency and financial inclusion. The last section examines challenges and risks involving digital finance, which refer to cybersecurity, fraud, compliance and operational risks. The focus and range of this overview allow for an integrated understanding of the digital finance landscape and some opportunities and challenges associated with this exciting and fast-evolving field.