Financial Capability and Digitalisation

Digital technologies are increasingly integrated in the economy and making a significant impact in the financial sector. This includes new financial products and services as well as traditional financial products and services being offered through digital channels. Digital delivery is increasingly prominent in disseminating financial education and information in the form of websites, social media platforms and digital tools such as interactive mobile apps to foster greater interaction and engagement.

Some of the benefits of digitalisation to finance include:

  • Extending the potential reach and access of financial services
  • Offering more convenient, faster and secure transactions
  • Providing services that are tailored to individual needs.

However, digital access to financial products and services also presents risks:

  • The misuse of unfamiliar or new products to uninformed consumers
  • New types of fraud taking advantage of consumers’ unfamiliarity with digital environments
  • Excluding those with digital literacy or access barriers.

The growing digitalisation of daily life and of financial decisions is not necessarily matched by increasing digital and financial literacy levels, even amongst the younger population despite being more digitally engaged when compared with other parts of the population. [25] The Australian Digital Inclusion Index (ADII) 2020 identifies several population groups that experience comparative digital disadvantage. These include older Australians, as well as people with disability and disadvantaged CALD groups. [26] The Government is committing to develop digital capabilities for all Australians and particularly those who face barriers to inclusion with the development of initiatives such as the Indigenous Digital Inclusion Plan which is working towards addressing the specific digital access barriers experiences by Aboriginal and Torres Strait Islander people.[27]

Regulators and industry will need to continue to ensure that financial education is keeping up with the development of new financial technologies. For example, consumers need to be able to understand the features of new payment models such as Buy‑Now‑Pay‑Later (BNPL) arrangements which enable consumers to make purchases by paying in instalments. Technology is also enabling the emergence of new forms of money and digital currencies. While these are not yet significant elements of Australia’s payment system, they are emerging quickly and unpredictably and can present significant risks to consumers.[28]

Digital innovation does however present an opportunity to empower consumers to embrace technological solutions to help keep track of their finances, by increasing the visibility of their cash flows in an economy which is now largely underpinned by digital financial transactions. Technologies such as the use of apps and insights from behavioural economics including nudges can also play an important role in developing the capabilities of low‑income individuals by encouraging the development of positive money management behaviours.[29]

Digital solutions will not be appropriate for all Australians. Digital tools should complement traditional financial education and information provision to provide targeted information to consumers with actionable and digestible insights to help them navigate financial choices. The digitalisation of financial service offerings presents inclusion challenges which will be felt differently across the population. The Strategy recognises this and complements the priorities outlined in the 2030 Digital Economy Strategy to support digital inclusion, the digitalisation of the Australian economy and efforts to improve digital literacy.[30]


[25] OECD 2018, G20/OECD INFE Policy Guidance on Digitalisation and Financial Literacy.

[26] Thomas, J, Barraket, J, Wilson, CK, Holcombe‑James, I, Kennedy, J, Rennie, E, Ewing, S, MacDonald, T, 2020, Measuring Australia’s Digital Divide: The Australian Digital Inclusion Index 2020, RMIT and Swinburne University of Technology, Melbourne, for Telstra.

[27] For more information on the development of the Indigenous Digital Inclusion plan, visit  ~‑affairs/economic‑development/indigenous‑digital‑inclusion‑plan

[28] Australian Government 2021, Payments system review.‑08/p2021‑198587.pdf

[29] Good Shepherd Microfinance Advisory Services 2019 in Russell, R., Kutin, J. & Marriner, T. (2020) Financial Capability Research in Australia. RMIT University.

[30] Australian Government 2021, Digital Economy Strategy,‑05/digital‑economy‑strategy.pdf