Innovation

A blueprint for digital advancement and trust in a post-COVID world

December 01, 2020 | By Ajay Bhalla

The COVID-19 pandemic has tested nations in a number of ways, among them laying bare the digital divide between many countries.

Nations with robust capabilities — such as widespread internet access — have been able to adapt more easily as shopping, schools and work have shifted online. Countries with less developed digital resources have struggled.

As the virus marched across the globe, we vaulted five years forward in digital adoption in just eight weeks. A foundation of trust infused throughout the strongest economies — such as consumers trusting that their online orders would arrive on time, and merchants trusting that their suppliers would help them restock their shelves — was critical in making this sudden transition successful.

Mastercard teamed up with The Fletcher School at Tufts University to analyze these trends as part of the latest Digital Intelligence Index. This study draws on 12 years of data and assessments of 90 economies, covering 95% of the world’s online population, to identify which are best prepared for the digital future and which need more work.

Using this information, we’ve laid out proposals for each category of economy to ensure they can help their citizens benefit from a coming wave of new technology driven by 5G, AI and robotics.

As digital innovation spreads, people and countries have become wealthier, more developed and more resilient to economic shocks such as the pandemic. But the benefits have not reached everyone yet, nor are the gains made in some places guaranteed to last. The Digital Intelligence Index is crucial for focusing the resources of governments and businesses to encourage strong, transparent and inclusive digital economies around the world.

These insights can help governments make better decisions about how to nurture digital development and ensure their citizens embrace digital resources that will benefit every part of society. Prioritizing privacy, security and accountability should help build trust into every layer of these economies, from governments to store owners to consumers.

Mastercard is doing its part to help build this trust by ensuring consumers continue to be at the heart of our work as we build services to make their lives more convenient, their interactions more seamless and their transactions at every single stage more secure. We are doing this by investing in biometrics, contactless technology, cybersecurity and digital identity to protect trust in every interaction.

In the study, we identified four categories of digital evolution:

  • Stand Out economies are both digitally advanced and show strong momentum toward even more digital innovations. They have dynamic economies and high levels of available talent. They include Singapore, the United States, China, Germany, Estonia, Taiwan and South Korea.
  • Stall Out economies are digitally advanced despite slowing momentum. They typically trade off faster innovation for expanding digital inclusion. These economies exhibit some of the world’s highest rates of people using smartphones, internet banking and e-commerce. This group is exemplified by European economies such as Sweden, the Netherlands and Denmark, and also includes Canada.
  • Break Out economies are evolving rapidly, despite their more limited digtal advancement. These economies — including Uruguay, Chile, Russia, Poland and Bulgaria — can provide attractive growth potential for investors.
  • Watch Out economies have a number of infrastructure gaps that have made their response to the pandemic more difficult. They include Nigeria, Uganda, Colombia, Peru, Pakistan and Sri Lanka.

So what can these economies do to boost their Digital Intelligence Index scores and expand opportunities for their populations?

Watch Out economies, while the most challenged, benefit from a young generation that’s enthusiastically embracing digital payments and social media. These economies should take advantage of that excitement to find ways to promote digital inclusion across gender, class and geographic divides. Break Out economies should focus on a similar goal.

Stand Out economies should work on improving the quality of access to the internet — such as faster and more affordable internet services — since online connections are already broadly available. Meanwhile, Stall Out economies can safeguard against slowing momentum by working on new technological specializations and fostering economies that are friendly to innovation.

While we should expect and prepare for future disruption to the world’s economies, we have many of the tools in place today to meet these challenges and forge a more inclusive and thriving future. We can do these things by focusing on the needs of each kind of economy and supporting a foundation of trust for all of them.

Ajay Bhalla, President, Cyber & Intelligence