Are data prices a barrier to financial inclusion in Africa?
MAY 15, 2017
By Brian Richardson, CEO and Co-Founder, WIZZIT International
In Africa, banking the unbanked remains a pressing need. Roughly 700 million people in Africa are financially excluded – denied economic citizenship. Discussions on the issue beg the same question, time and again: why aren’t traditional banks offering mobile solutions to potential customers who desperately need it?
The American Bankers Association claims it costs between $150 USD and $250 USD to open an individual bank account through tradition channels. Over more than a decade, around the world, it’s been proven that alternative, disruptive technology such as mobile and branchless banking can reduce this cost dramatically, to less than 10% of the original amount. While remaining compliant with local regulations.
Between 2011 and 2014, banks opened over 700 million accounts for the previously unbanked – which goes largely unrecognised – yet so much more can and should be done.
Playing to problem-solve
This brings to light the futility of banks in offering mobile banking via application-based platforms. Without Wi-Fi or data, the functionality is inaccessible. And you don’t have to be an expert in topography or technology to know vast parts of the African continent remain unconnected. The areas that do offer connections often come hand-in-hand with sky-high data prices and are typically reserved for the urban areas – not rural areas or the locations of the mass unbanked.
The view of some that USSD is dead may well be misplaced in light of these considerations. As a FinTech and financial service innovator, WIZZIT International is constantly requested to scope and deliver USSD platforms to support the app-powered efforts of banks falling short of expectations.
The real cost of data
True economic development at all levels is impossible without financial inclusion. It’s at the core of improving the lives of individuals and their families in the modern world, where so much of existing in society is based on financial transactions.
Most families in more rural or isolated areas don’t have access to computers or smartphones, let alone data. If they do have access to a smartphone, the price of data excludes them from banking anyway – and that’s if a forward thinking bank even offers the service.
Systems built to exclude
App-based mobile banking certainly serves a purpose, but it’s a far cry from meeting the needs of the mass market in terms of them becoming financially empowered and included.
Drive inclusive innovation
The solution is mobile banking that’s operational through any mobile device, simply with a sim card and even with a minimum data balance. Via USSD, for example. This is offered by all Mobile Network Operators (MNOs) and is incredibly cost effective to consumers working with any kind of handset – both smartphones and feature phones.
Know your customer
Rigorous, ill-fitting requirements for the masses in emerging markets, many of whom can’t read or write, work part-time jobs informally and don’t have a fixed address. Knowing this, regulators still claim regulation and compliance requirements weren’t designed as an impediment to financial inclusion. It’s a harsh and cruel reality that people who can’t provide the required documentation are denied access to financial services.
The power of mobile
It means safer banking and transactions for informal traders, women and rural communities. And it’s a golden egg waiting to hatch for the banks agile enough to act.
Brian Richardson is a world-renowned expert in banking innovation, with a particular focus on mobile banking and financial inclusion in emerging markets. Richardson is the CEO and co-founder of WIZZIT International, a partner and innovator for banks looking to expand service offerings in line with the latest technology.
For an opportunity to interview Brian Richardson about the future of banking in emerging markets, email Nthabiseng@gullanandgullan.com.
Of all the market segments, the least serviced is the SME market – despite small business being the backbone of any economy. WIZZIT has developed a new tailor-made solution to address this gap.
Introducing the WIZZIT International Smart ESB. Developed over the last 10 years, it’s the ultimate solution for seamless integration with all existing and third party banking systems while maintaining complete security.
We can now offer an exciting range of end-to-end technology products for banks to service retailers and merchants in new ways.