Integrated Conceptual Model on Digital Financial Literacy, Inclusion, and Services for the Digital Economy

Abstract

Digital transformation in financial systems has reshaped consumer behaviour, economic participation, and access to financial services. This paper explores the interrelated constructs of Digital Financial Literacy (DFL), Digital Financial Inclusion (DFI), and Digital Financial Services (DFS). Through an integrated conceptual model, the determinants and effects of DFL on financial behaviour and access to DFS, and how these together promote DFI. We propose measurable indicators, with particular attention to farmers, the vulnerable population, and youth populations in developing economies

Introduction

Digital innovation through technologies like mobile banking, digital wallets, blockchain, and AI has transformed financial systems, enabling broader access to financial services (Digital Financial Services, DFS). However, access alone is not enough—Digital Financial Literacy (DFL), encompassing financial knowledge, digital skills, risk awareness, and decision-making ability, is crucial for responsible and effective use of these services. DFL directly influences digital financial behavior and adoption of DFS, which in turn drives Digital Financial Inclusion (DFI), helping underserved populations gain access to formal financial services.

Research highlights that while financial literacy can improve inclusion, its impact varies and is influenced by socio-economic factors and cultural barriers, particularly in regions like the Middle East and North Africa. Behavioral interventions targeting trust and cultural issues are increasingly important alongside improving literacy and infrastructure.

The Theory of Planned Behavior supports the idea that positive attitudes and digital confidence promote responsible financial behavior and DFS adoption. DFI enables economic growth by offering affordable, accessible, and tailored financial products through digital platforms, benefiting low-income, rural, and excluded groups. The COVID-19 pandemic accelerated DFS adoption by enabling remote financial transactions.

DFS includes mobile banking, digital credit, e-payments, and other digital tools that expand financial service reach beyond traditional banks, supported by fintech and telecom innovations. However, adoption also brings risks like fraud and privacy issues, underscoring the need for enhanced digital and financial literacy.

A conceptual model links DFL to increased DFS use, leading to improved financial inclusion and economic growth through better saving, spending, and investing behavior.

Conclusion

Digital Financial Literacy (DFL) is a cornerstone for Digital Financial Inclusion (DFI) in the era of Digital Financial Services (DFS). Strengthening DFL through education and awareness can promote responsible financial behavior, broaden access to digital finance, and drive inclusive economic growth. By focusing on behavioral, contextual, and technological competencies, stakeholders can ensure that digital transformation benefits all segments of society. Introduce DFL modules in schools, organize public campaigns that raise awareness about digital and financial subjects, make sure the right tools for DFS literacy are given to socially disadvantaged groups, and give advantages to financial technology firms to maintain simple and clear web pages designed equally for all segments of the population. This leads to economic benefits among users in savings, Investments, and financial transactions. In the early 1990s, the word microcredit reached its peak before it was replaced by the word microfinance, which was described as the supply of different types of financial services which including savings, insurance, and loans [24]. [28] claim that digital financial inclusion could reduce poverty in China. They reviewed how digital financial services can help to ease poverty. They reported that DOFI helps fight poverty and that the impact of DOFI depends on how poor users. According to the proposed conceptual model, DFL plays a key part in determining how people use DFS. When people are better at using digital technologies, they tend to use DFS platforms more. Because of this, people may reach Digital Financial Inclusion while building their habits in saving, spending, and investing with the help of digital services. Because of these habits, consumers can engage with DFS more often and for a greater period of time. Reloading DFS becomes more regular for users, making them more confident and likely to depend on formal financial services over time. As a result, the model demonstrates that reinforcing DFL can help make it easier for many to access and take part in financial services.

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Copyright © 2025 Devaraju SR, Asraar Ahmed. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.