The digital economy has been growing for years. We’ve seen smart jurisdictions, governments, and businesses around the globe embrace and implement emerging technologies in order to:
Why? Because in the world economy, as in the natural world, the golden rule is adapt or perish. And while we typically think of digitisation strategies as a means of increasing productivity – of making systems and workflows better, faster, or cheaper – the COVID-19 pandemic has proven that these strategies are required to maintain productivity.
Worldwide, COVID has resulted in:
Regardless of industry, businesses must learn how to remotely engage with their customers, and that can lead to a host of obstacles. For example: Financial institutions are now tasked with performing their know your customer (KYC) due diligence remotely, something that has been a mandatory in-person process until now. How can they do this effectively online?
Governments are scrambling to create digital currencies and distribution systems to get crucial COVID-19 support to citizens in a world that no longer favours nor allows for cash and checks. How can they do this efficiently?
The pandemic and its associated shutdowns, process changes, and health emergencies have made it plainly clear to everyone what we have known for years – the old, outdated models and systems underpinning the paper-based economy are incredibly vulnerable to unexpected challenges.
But what about those businesses that were ahead of the technological curve and preparing for the digital economy? For them, it was essentially business-as-usual. They had the processes and tools in place to maintain productivity and mitigate the fallout from this and future crisis. For some, it produced an increase in business.
Technological evolution normally happens in leaps and bounds rather than baby steps, and the COVID-19 pandemic has accelerated that evolution even further. The rapid changes of 2020 have placed businesses and industries that are not ready for change in stark contrast with those that are leading the charge.
The economy at its simplest is the buying and selling of products and services. More specifically, we can examine how consumers interact with businesses and how money then flows back to the government.
A digital economy, on the other hand, is the mixture of public and private services collaborating within a digital infrastructure. The G20 Digital Economy Development and Cooperation Initiative defines it as “a broad range of economic activities that include using digitised information and knowledge as the critical factor of production, modern information networks as a vital activity space, and the effective use of ICT as an essential driver of productivity, growth, and economic structural optimisation.”
However, it goes deeper than just buying and selling.
A true digital economy allows for all economic activities to take place within that infrastructure: business registration; digital identities for each citizen and digital currencies for ironclad accountability; collection, sharing, and protection of related data; digital channels for major responsibilities like voting or taxes, down to minor ones like paying a parking ticket or utility bill; and applying for and receiving government services like employment insurance, pensions, or grants.
The Caribbean economy has been severely impacted by the pandemic:
“With the sector screeching to a standstill, the repercussions are already enormous. In a worst-case scenario, in which tourist arrivals drop by 75% in the last three quarters of the year, the GDP of The Bahamas would fall by more than 10 percentage points relative to pre-crisis expectations.”
But here’s where we find the silver lining: before the pandemic it was estimated that 30% of remittances would be fully digital by 2030. That number will undoubtedly go up while that timeline shrinks as people stay home and businesses migrate online.
And that’s not all.
Necessity is the mother of invention, and nothing accelerates invention like pressing need. Accelerated digitisation plans are better for business, better for government, better for individuals, and make any region with widespread adoption more competitive on a global scale.
Tourism has taken a massive hit and may never be the same, but the financial sector is poised to blaze a new trail to the digital age in the region. While the Caribbean is just starting on the journey towards full-scale digitisation, others have already arrived and are leading by example.
Estonia transitioned to a completely digital economy and estimates it saves 820 years of working time per year because of increased efficiencies, convenience, and accessibility.
Through its e-Residency program, each citizen receives a digital ID that grants them complete control over their data and with whom they share it. They can vote online, pay their taxes, register a business, review health records, make appointments, access social safety nets, and more.
Estonians do all of their banking online: paying bills, opening new accounts, applying for loans, transfering cash, and more. In fact, most banks in Estonia have either closed their physical branches or moved to much smaller locations, resulting in reduced operating costs and increased competitiveness. Perhaps most importantly, these digitisation efforts have created a virtually pandemic-proof national economy.
As Caribbean nations continue to digitise, Estonia provides a great example for what to do – and not do – in order to keep pace with the emerging digital economy.
The Caribbean is in need of digitisation. The tourism dollars that are pivotal to island economies will take a long time to replenish and may never reach pre-pandemic levels. If full-scale digitisation was a good idea before COVID, it is a critical component for recovery moving forward. While it is encouraging to see efforts to digitise currencies like The Bahamian Sand Dollar and the Eastern Caribbean Central Bank DCash, there is still a long road to full-scale digitisation for Caribbean countries. It is therefore no longer a question of if Caribbean nations should digitise, but when.It is no longer a question of if Caribbean nations should digitise, but when. Click To Tweet
The right answer is now.
Governments, individuals, and businesses of all shapes and sizes stand to benefit from a digital approach.
Liquidus aims to be the all-in-one solution to make it happen. The digital platform enables:
Customers will have a personal “mobile bank in their pocket,” while banks and other financial institutions will have greater access and control of those identities via Identity Master technology.
If you’d like to find out more, you can read about the Liquidus identity verification system, AML solution, and digital asset possibilities, or request a demo to speak with a member of the Liquidus team.
A true digital economy is not just a possibility. It’s here.
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