【Taste of a Married Woman】

We always knew digital finance could Taste of a Married Womanrevolutionize emerging economies — we just didn't know how much.

A new report just quantified the potential: $3.7 trillion.

Increasing the availability and use of financial technologies in emerging economies could create around $3.7 trillion in growth by 2025, the McKinsey Global Institute said in a report released Wednesday. The report is the first to attempt to measure the potential of financial technology for the 2 billion people worldwide who are left out of the financial mainstream, without access to savings or credit.

Two-thirds of that increase would be a direct result of digital payments, with people who currently have access only to cash entering financial systems to both receive and make payments. The $3.7 trillion bump is 6 percent higher than a "business-as-usual" scenario, McKinsey researchers said.

It's not just emerging countries that stand to benefit. Widespread adoption of digital technologies like mobile payments, digital savings accounts and access to credit and loans could increase GDPs of middle-income economies by 4 percent each, while lower-income countries could see as much as a 12 percent increase.

"Digital tools allow us to reach people left out of financial services," said Michael Schlein, president and CEO at Accion, a global microfinance and fintech non-profit. "What's radically changing are disruptive new digital tools. All of a sudden far distances that used to be insurmountable and transaction sizes that were prohibitively small are no longer."

The new tools could be life-changing for a huge portion of the world's population, Schlein said. More than half of the 1.6 billion people who McKinsey researchers said can be reached by these technologies are women. And in addition to the individuals outside the financial mainstream, 200 million businesses also stand to benefit from access to financial systems.

"In a highly financially inclusive environment, you have ATMs, access to credit and debit, you can borrow money for school or to start a business and your expenses happen monthly," Schlein said. "But 2 billion people live in poverty and lack access. If there's a farmer in rural India, she's paid once or twice a year at the time of harvest, but she lacks a safe place to save. It takes her hours to make a utility payment. She lives in an area that has monsoons or droughts, but she can't get insurance."

The reason it's suddenly possible to provide access to those resources to a new population is simple: Mobile phones. In 2014, nearly 80 percent of adults in emerging economies had a mobile phone, but only 55 percent had financial accounts, the report said.

Fintech would also bring 95 million new jobs, $4.2 trillion in new deposits and $2.1 trillion in new credit to emerging economies. The technologies could eliminate $110 billion in government "leakage," or corruption and graft, by replacing cash transactions with digital ones.

Ethiopia, India and Nigeria are some of the countries with the most potential, the report said. But even middle-income countries like Brazil and China could still add 4 or 5 percent to their GDP through these technologies.

The $3.7 trillion the world stands to gain is equivalent to the size of Germany's economy and bigger than Africa's economies combined. The United States, for comparison, has a GDP of almost $17 trillion.

While it's certain digital finance will have some impact on emerging economies, there are steps governments, regulators and businesses need to take to realize the $3.7 trillion potential.

Leaders need to build strong mobile and digital infrastructure, a dynamic business environment for financial services and digital finance products that are better than what unbanked people worldwide are currently using.

"Digital finance offers a transformational solution, and one that could be implemented rapidly and without the need for major investment of costly additional infrastructure," the report said.