The World Bank (WB) has set an ambitious goal of securing universal access to formal financial services by 2020. Although 700 million people have signed up for a bank account since 2011, about two billion worldwide remain unbanked. As the WB seeks to expand financial inclusion, banks and other financial institutions need to look at how technology can reach rural clients.
Sub-Saharan Africa (SSA)has harnessed mobile money technology through mobile money services, around 12% of adults in the region have a mobile money account. But in South Africa, 37% of its 55 million citizens have access to smartphones, however, using their phone to make payments isn’t their default choice. Cash continues to be the trusted and most-widely used payment method, with over half of consumer transactions still being paid in cash.
“Giving consumers the option to pay in cash along with alternate forms of payments is, a necessity for businesses to unlock their full potential,” remarks RubiBlue MD, Chris Ogden. “Cash is such a trusted form of payment, we’ve all seen the queues by the ATMs on payday, it’s a cultural nuance that exists here. Africans tend to not use their bank accounts for finanacial inclusivity, but take out funds as soon as they land in their account. And this behaviour won’t disappear even if the World Bank has a goal to secure universal access to finance by 2020.”
A case in point is the success of easiPol within the insurance sector. The software handles over five million policies, and it records over R200 million in cash installments monthly. “The ambition to give people access to formal financial services is a positive move for the financial security of individuals, but it isn’t entirely realistic,” adds Ogden.
While the developed world has adopted the concept of a cashless society, Africa as a whole lag behind on the taking up the idea, but Kenya and Tanzania buck the trend. Financial institutions need to take a multi-channel approach to giving access to formal services: mobile banks, banking apps, technology such as easiPol to efficiently manage policies and policy holders as it is a collaborative, integrated solution that uses cloud technology. And to rapidly expand access to the unbanked market, easiPoint uses technology to allow sales to be made in the field and transactions receipted and recorded inline with financial services regulations.
Time, the influence of early adopters and growing trust in technology will improve access to financial services, but for financial security, there needs to be an education amongst the vulnerable and those in developing communities in order for the WB to effectively achieve its vision. And it’s the responsibility for financial service providers to do this.