Digital Transformation in the Commonwealth and the Opportunities for Fintech

 The digital transformation in the Commonwealth nations is profoundly impacting on the functionalities and operability of trade conduct and increase in commerce activities. This is extensively influenced by the advancements in the financial technologies (Fintech) in different countries presenting enormous opportunities that trade can be conducted. This leads to the expansion of globalization as a result of improvement in various ways of financial transactions through technology such as mobile banking, online banking, and use of digital currencies including bitcoins, among others. The facilitation of currency exchange through trade makes trade much easier and efficient between Commonwealth nations. However, despite the vast opportunities presented by the digital transformations in Fintech solutions, numerous challenges underlying in the different levels of development in these countries pose a great impediment to maximally utilizing the chances. This paper critically evaluates the state of play in exploiting the opportunities and maneuvering the challenges in the Fintech solutions presented by digital transformations in the Commonwealth countries. Furthermore, the paper examines the impacts of COVID-19 on trade and investments in the Fintech sector and provides recommendations on how Commonwealth governments can be encouraged to support the sectors growth and collaboration in their countries.

As part of the background, understanding of Commonwealth nations is integral to diffusing the significant role digital transformations in the Fintech solutions. The Commonwealth constitutes of an association of 53 independent countries that are both small and large, developed and developing, island and landlocked countries. The countries are different stages of social, political, and economic development presenting varying capacities in building the digital infrastructures to fully utilize the opportunities presented in the advances in trade and Fintech sectors. The analysis of the current trends and issues in the sector affecting the Commonwealth countries will be a fundamental sector for the paper. Thus, provide an extensively analysis of both opportunities and challenges affecting the sectors functionalities and operations.

State of Play and Opportunities and Challenges in Digital Transformation in the Commonwealth

Since the 2008-2009 global financial crisis, increase in trade in the world over has experienced profound growth over the years with the exceptions of 2012-2014 that witnessed a sluggish period (Commonwealth Secretariat, 2020, p. 4). 2015 to 2019 has been characterized in the expansion of trade driven by external demand for goods in the different countries around the world. The Commonwealth member states are no exceptions in the changes in trading operations and digital transformations that are a major contribution to the changes witnessed in the sector (Atkin, Khandelwal and Osman, 2017, p. 551). Figure 1 below indicates the varying figures presenting changes in the goods and services trade annual growth from 2006 – 2018. This is a comparative analysis of the world trade growth operations against the Commonwealth countries tendencies.

Figure 1: Goods and services trade (annual % growth), 2006 – 2018.

The analysis shows that annually, Commonwealth contributed 15 per cent to the global trade in 2014 to 2018 period. The high-tech solutions a major contribution in the increase in trade are a major contribution of the Commonwealth to the world. However, the Commonwealth constitutes of 53 member states among which 31 are small and developing states (Commonwealth Secretariat, 2018, p. 2). Particularly, the member states in the Caribbean and the Pacific have showed sluggish and weaker potential in growth of the GDP and GDP per capita contributing to draining or lowering of the annual overall average of all Commonwealth countries in high-technology exports. The annual average GDP of the Commonwealth constitute of 3.2 per cent with small countries such as Seychelles, Saint Lucia and Saint Kitts and Nevis contributing as high as 17, 9, and 35 per cent respectively. Only six countries in the Commonwealth including Australia, Canada, India, Malaysia, Singapore, and the United Kingdom made up 98.8 per cent of the total high-technology goods and services exports in 2017 (Commonwealth Secretariat, 2020, p. 8). Figure 2 illustrates Commonwealth trade performance over the years since 2010 – 2018. Figure 3 shows Commonwealth services trade share among the top countries contributing to the varying capacities of different countries.

Figure 2: Commonwealth trade.

Figure 3: Commonwealth services trade share.

The availability of digital infrastructure is profound feature to the advancement of high-technology solutions in the financial sector and trading activities. The Commonwealth countries in the recent years has experienced tremendous growth in the digital economy. Over 85 per cent of Commonwealth population in high-income countries have access to the internet as compared to 18 per cent in low-income countries (Commonwealth Secretariat, 2020, p. 10). Figure 4 shows internet users in percentage in varying contexts of the Commonwealth countries. This is compared to the international spread of the bandwidth availability facilitating digital transactions and conduct of trade, figure 5. As a result, this influences the capacity of the respective member states to conduct international trades through the utilization of the Fintech solutions experienced through digital transformations in the sector (Baller, Dutta and Lanvin, 2016).

Figure 4: Internet users (% of population).

Figure 5: Internet bandwidth (Mbit/s).

The digital readiness score for the selected Commonwealth members is crucial to understanding the different capacities that member states posit in utilizing the digital solutions in the Fintech sector. The capacity of respective countries is critical to high performance of the sector and digital solutions in the conduct of trade (Banga and te Velde, 2018, p. 2). ICT solutions are highly impacted in the availability of ICT infrastructure, experts, and spread of knowledge in taking advantage of digital opportunities. Figure 6 below summarizes the selected countries’ digital readiness and their capacity perform against other global players.

Figure 6: Digital readiness scores for selected Commonwealth countries.

Furthermore, the state of play in digital opportunities and challenges among Commonwealth member countries affecting the conduct of trade, Fintech solutions, and future competitiveness, are influenced by the following key factors (Banga, 2019, p. 3). These comprise of the factors that influence policy formulation and implementation to advance digital solutions in trading and Fintech solutions. The global changes different countries require Commonwealth member states to remain competitive to be at par with the rest of the world. Therefore, the following challenges sums up the issues affecting the sector.

  • Digital infrastructure and access to digital technologies. The varying capacities in the availability of digital infrastructure in the Commonwealth countries profoundly affects their competitiveness in utilizing the opportunities presented in the sector. Digital infrastructure disparities posit the biggest challenge in enabling Commonwealth countries to expand trade and digital solutions offered in the sector (Commonwealth Secretariat, 2018, p. 3). The lack of sufficient infrastructure posits a major impediment to the financial technologies and expansion of global trade. Therefore, developed nations with massive and well-established networks should aim at helping developing and small nations to build the infrastructure for the establishment of opportunities that they both can utilize.
  • Standards and regulations for digital world. The establishment of common, effective, and efficient standards and regulations for the digital world are critical for the expansion of trade. The financial technologies and trade regulations in a digital world are amiss of efficient standards that can control how businesses are conducted. The role of state falls short in establishing laws that can efficiently monitor and regulate digital solutions (Commonwealth Secretariat, 2020, p. 4). The vast nature of the sector makes it difficult to regulate. Hence, presenting a different challenge in the ways Commonwealth member countries can protect and regulate consumers utilizing the sector.
  • Digital security. The ICT sector presents a myriad of digital security challenges to infrastructure and data. The economies reliability on digital solutions are faced with profound challenges including privacy risks. The data security is in constant threat requiring proactive measures and regulations to protect economies from potential collapse (UNCTAD, 2017, p. 2). Commonwealth countries have a responsibility to develop better strategies and approaches that effectively protect their economies from digital security threats. As a result, concerted efforts and capacity building is fundamental to lowering the digital security risks.
  • Skills and digital competence. To fully utilize the opportunities in the sector, the development of ICT skills and expertise is paramount. This requires the Commonwealth member states to develop long-term strategies that seek to establish a competent human resource. The investment in human resource development is a major opportunity and challenge as well for the digital transformations in the performance of trade and Fintech solutions (Cytonn, 2020). This must be continuously addressed to provide continuity in the capacity of the respective member states to maximize on the opportunities presented by the sector. Therefore, the challenge in skills and expertise deficits must be addressed individually and collaboratively.
  • Consumer rights. The final challenge addressed in this paper comprise of the consumer rights that must be protected at all times. The digital transformations establish a new dimension in which consumers ought to be influenced positively in order to trust the systems and build confidence. Only this way can organizations, governments, businesses, among all stakeholders fully maximize the benefits of digital transformations. Hence, the guarantee of consumer rights must be continuously addressed as new trends are recorded in the sector.

Evaluation of the Impact that COVID-19 Has Had/Will Have on Trade and Investment; In Particular, on the Fintech Sector

The impact of COVID-19 on trade and investment, as well as, on the Fintech sector is characterized by the creation of both opportunities and challenges. The primary opportunities created on the Fintech sector is embedded on the Fintech’s solutions in reducing the risks associated with coronavirus. The facilitation of innovative ways to implement contactless exchange of cash, the Fintech solutions has led to accelerated emphasis on the use of cashless transactions through mobile payments and online transactions (Rowan, Miller, Zhang and Barton, 2020). This impacts on the capacity to support financial inclusion across the world especially in developing nations and enabling micro, small and medium enterprises (MSMEs) utilize more opportunities. This has an effect beyond the pandemic duration and creates more opportunities within which Fintech impacts on the financial services and trade operations.

The COVID-19 has impacted on financial services need to profoundly adopt technology as a major solution to the disruptions created. For example, Fintech sector has changed as a result of the accelerated adoption of contactless and social distancing measures. The need to provide alternative innovative solutions that can minimize the spread of the virus through exchange of cash has seen increase in mobile money transfer (Deloitte, 2020, p. 2). This is a critical measure for all Commonwealth countries with the developed nations and other developing nations such as Kenya, South Africa, Rwanda, and Nigeria at the forefronts of the changes in mobile and online money transfer. These are major developments in the sector – opportunities that will spark on the sector and beyond the pandemic duration.

As well, government policies providing relief funds as a result of the spread of coronavirus is a major boost to the Fintech sector. This is attributed to the enormous recognition accorded to the sector by various regulators around the world. In a study conducted by Rowan, et al., (2020) involving 118 central banks and other financial regulatory authorities from 114 jurisdictions show a rising trend in the use of Fintech products and services during the pandemic period. This shows the profound importance given to the sector due to its crucial role. Therefore, leading to increased adoption of Fintech measures in the management of trading activities both locally and at international levels.

However, despite the extensive opportunities presented in the Fintech solutions as result of COVID-19, there has been numerous challenges sprouting. Such as include, the capacity to keep up with the rapidly changing dynamics of Fintech sector presents regulators with a major challenge (Deloitte, 2020). The primary challenge is embedded in the uncertainty created in the sector making regulators unable to race against understanding as well, as adapting to the new financial technologies for efficient services. Such include security challenges to maintain customers’ safety from hackers and scammers, regulation of financial institutions to provide efficient services, prevention of financial institutions taking advantage of consumers, among others (Hrushka, 2020). Therefore, as COVID-19 accelerates the need and demand to adopt Fintech solutions and creates numerous opportunities, a myriad of challenges must be addressed for the sector to serve its role and generate vast benefits to the societies around the world.

Critical Evaluation of Possible Challenges and Opportunities of the Fintech Sector in Commonwealth Country (Kenya) within the Context of Changing Global Trade Landscape

Over the years, Kenya has continuously expanded its capacity in both financial technologies and key role it plays in global trade. As a key study, Kenya’s agility in Fintech solutions is attributed to the profound expansion of mobile banking system that serves as a pioneer and impetus for the creation of other Fintechs (Cytonn, 2020). Kenya’s mobile banking system growth is based on the developments made by M-PESA enabling the country’s connection of its population. In a survey conducted by the Central Bank of Kenya (CBK), FSD Kenya, and Kenya National Bureau of Statistics (KNBS) shows that over 82.9 per cent of the country’s population has at least one financial product (Rowan et al., 2020). This is as a result of ease of accessibility of mobile phones allowing Kenyans who are 18 years of age to open at one financial account. This makes the ‘unbanked’ population to easily access financial services across the country –  a profound opportunity created by Fintech sector in the changing global trade landscape.

Also, Kenya’s adoption of e-commerce has been a major boost to global trade serving a geopolitical pioneer of the initiative. This comprises of the country’s onset in utilization of Fintech solutions to provide e-commerce services and connection of international business with operation bases in Kenya (Rowan et al., 2020). As a gateway to the East Africa region, Kenya’s trade landscape continues to diversify. This increases the need for Fintech to connect companies in the East African region and their partners in Europe, Asia, and the Middle East. The trading activities requires enormous developments in the expansion of the financial sector to adopt the use of technology as a solution and for business continuity in a changing world. Therefore, Kenya is a major source of trading activities and financial and technology hub in the region.

The primary challenge impeding the adoption of Fintech solutions in Kenya can be analyzed to consist of lack of effective regulations. Regulatory authorities lack the knowledge, capacity, and resources to provide efficient regulation of the Fintech sector. As a relatively new sector, Fintech industry possess numerous challenges from security measures, risk and mitigation assessments, policies and strategies formulation, consumer safety, among other issues related to the operations in the sector (McIntosh, 2020). This demands concerted efforts from the consumers, financial institutions, regulatory organizations, the government, among other related stakeholders. The intended objective is to ascertain smooth functions and operations of the Fintech sector in a rapidly changing world. Therefore, regulations are required to constantly update their policies and strategies to keep up with the advances of the sector.

Recommendations for Commonwealth Governments to Support the Fintech Sector and Encourage Collaboration Between Commonwealth Countries

The adoption of Fintech solutions is a contemporary aspect that presents numerous opportunities to Commonwealth economies. This presents an ongoing trend that will only expand and deepen its role in the society. As a result, there is profound need for Commonwealth governments to focus on the expansion of the sector and supporting each other in the process. Therefore, the following are the recommendations for Commonwealth governments to support the Fintech sector in realizing its potentials in the respective member states and the association in general.

  • Call for developed and established to support emerging economies. Commonwealth governments constitute of the developed nations with well-established economies and Fintech infrastructure. The developed nations should share their expertise, support development of the developing/emerging economies to compete effectively in the Fintech sector, and create new opportunities for exploitation. This is fundamental for the overall growth of the Fintech sector in all the Commonwealth countries.
  • Strengthen investment in digital infrastructure. Commonwealth governments especially the developing ones should be encouraged to invest more on the digital infrastructure. This is bound to create opportunities for entrepreneurs and the growing economy. This is critical for expanding economies as it creates numerous benefits and returns on the investment. For example, Fintech solution goes hand in hand with economic growth and development. Companies and governments investing in the expansion of the sector are set to generate enormous profits. Governments are encouraged to set pace in conjunction with the growth of their GDP. Hence, create room for new transformations and adoption of technology as a key component of their economies.
  • Policy and strategies development for inclusiveness and closing of access and usage gaps. These primarily should focus on building a capable human resource that can drive Fintech entrepreneurial opportunities. The policy change and strategies are designed to outline a plan in which capable human resource can be developed for the long-term utilization of the Fintech advances and future. This is fundamental for the continuity of Commonwealth countries and future generations fully utilization of the Fintech sector’s solutions.
  • Building capacity, knowledge, and expertise for Fintech sector. Commonwealth governments are advised to invest in research and develop of the Fintech sector. This should focus identifying critical strategies that can facilitate knowledge, capacity, and expertise growth in the sector. As a rapidly growing and changing sector, continued investment in research is fundamental to identify new ways and approaches that can be utilized to ascertain continuity of Commonwealth countries’ competitiveness.
  • Boost standards and regulatory frameworks. Regulatory standards and frameworks are an integral aspect which is designed to enable financial institutions and regulators to monitor and adopt the best practices. Investment in the assurance of national privacy and security risk management is essential to build confidence and trust of the customers. As a result, consumers can continue relying on the sector as the current and most efficient ways of access their bank accounts and money.
  • Create a competitive environment for the ICT sector. This revolves on increased investment to support the SMEs in order to maximize on Fintech benefits. SMEs posit the driver for growth and development of the Fintech sector. Therefore, Commonwealth governments should create a competitive environment in which SMEs become a major part of transforming ICT solutions and Fintech industry.


Atkin, D., Khandelwal, A., and Osman, A. 2017. ‘Exporting and Firm Performance: Evidence from a Randomized Trial’, Quarterly Journal of Economics, Vol. 132 No. 2, 551–615.

Baller, S., Dutta, S., and Lanvin, B. 2016. The Global Information Technology Report 2016, Innovating in the Digital Economy, available at: , [Accessed December 28, 2020].

Banga, K. 2019. ‘Digital Technologies and ValueCapture in Global Value Chains: Empirical Evidence from Indian Manufacturing Firms’, UNUWIDER working paper 43/2019.

Banga, K., and te Velde, D. W. 2018. Digitalisation and the Future of Manufacturing in Africa, Supporting Economic Transformation, Overseas Development Institute (ODI), available at: [Accessed December 28, 2020].

Commonwealth Secretariat. 2018. Commonwealth Trade Review 2018: Strengthening the Commonwealth Advantage – Trade, Technology, Governance, Commonwealth Secretariat, London, available at:, [Accessed December 28, 2020].

Commonwealth Secretariat. 2020. The State of the Digital Economy in the Commonwealth, Commonwealth Secretariat, Marlborough House, London, available at: , [Accessed December 28, 2020].

Cytonn. 2020. Fintech Amid COVID-19, available at:

Deloitte. 2020. Beyond COVID-19: New opportunities for Fintech companies, Deloitte Center for Financial Services, available at: , [Accessed December 28, 2020].

Hrushka, A. 2020. “Banks need to push digital offerings during COVID-19 pandemic, experts say,” Banking Dive, March 18, 2020, available at: , [Accessed December 28, 2020].

McIntosh, R. 2020. “Coronavirus: New Challenges and Opportunities for Fintech,” Finance Magnates, March 25, 2020, , [Accessed December 28, 2020].

OECD. 2017. Key Issues for Digital Transformation in the G20: Report prepared for a joint G20 German Presidency/OECD conference, Berlin, Germany, available at: , [Accessed December 28, 2020].

Rowan, P., Miller, M., Zhang, B. Z., and Barton, M. E. 2020. COVID-19 Spurred a Rise in Fintech: Now regulators are catching up. World Economic Forum, available at: , [Accessed December 28, 2020].

UNCTAD. 2017. World Investment Report 2017: Investment and the Digital Economy, Chapter IV, New York, available at:  , [Accessed December 28, 2020].

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