Consumers are increasingly shifting towards digital finance, with transactions on mobile devices rising and bank branches and ATM machines slowly disappearing in many parts of the world, according to the latest data.

The value of mobile money transactions now accounts for 70% of the GDP in low-income economies as of 2021, up from 40% a year ago, the International Monetary Fund (IMF) said in a new report. In other markets where mobile money is not as popular, the use of mobile and internet banking services has increased significantly.

In middle-income markets alone, the number of mobile and internet banking transactions doubled, while the value of mobile and internet banking grew from 225% of GDP to 324% of GDP between 2019 and 2021.

A greater adoption of digital finance is also observed in low-income countries, where the number of mobile money accounts per 1,000 adults has grown by about 30% over the same period.

Shift to digital

According to the Washington-based lender, the importance of digital financial services increased during the onset of the pandemic, "given the minimal physical contact permitted during lockdowns and the high levels of mobile money penetration among the unbanked populations".

"This trend seems to have continued in the second year of the pandemic," the IMF said in its Financial Access Survey (FAS) report.

With more consumers now opting for non-traditional channels, the number of commercial bank branches per 100,000 adults and ATMS per 100,000 adults has been declining in recent years.

Countries in Europe have seen the largest reduction in the number of ATMs.

The decline in banks' physical presence is also a result of cost-cutting measures by financial institutions.

"The pandemic has disrupted the traditional way of accessing financial services, prompting greater use of digital finance," the IMF said.

"[Data show] a transition from traditional financial access points such as bank branches and ATMs to mobile agents and retail agent outlets in some developing economies since the onset of the COVID-19 pandemic."

(Reporting by Cleofe Maceda; editing by Seban Scaria)

cleofe.maceda@lseg.com