AFRICA NEWS AGENCY
D I G I TA L I Z AT I O N
AS A TOOL FOR FINANCIAL INCLUSION A new study commissioned by the World Savings and Retail Banking Institute looks at the opportunities that digitalization offers to strengthen financial inclusion for low-income customers in Africa. By Ange Iliza
low-income people and thus contribute to their financial inclusion. This is a particularly topical issue on the African continent: according to estimates by the African Development Bank, there are currently 332 million people in Africa, 60% of whom are women, who are excluded from digital financial systems.
ACCELERATING DIGITIZATION BY FINANCIAL SERVICE PROVIDERS
Released on September 30 by the World Savings and Retail Banking Institute (WSBI)-an international banking association of nearly 7,000 savings and retail banks worldwide-the report draws on management consulting literature to assess digitalization strategies pragmatically, including a review of actions taken by three African financial institutions: Morocco’s Al Barid Bank, Kenya’s Equity Bank and Ghana’s Consolidated Bank. Co-written with FinMark Trust, an independent non-profit trust based in South Africa that aims to make financial markets work for the poor, the study explores answers to a question many industry leaders are asking: what is the best way to digitalize a financial institution so that it reaches the broadest possible customer base? The goal is to identify the elements that enable financial service providers to serve
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Yet, in the context of the Covid-19 pandemic, the survey - conducted via WSBI’s Scale2Save program, in partnership with the Mastercard Foundation - highlights the importance of accelerating digitalization by financial service providers, not only in their service offerings but also as dynamic organizations and as part of a digital financial ecosystem. The study authors further note that customer-centric initiatives are a key success factor. For example, by providing remote access to formal savings and payments to people who have long been excluded, these new customers have the opportunity to improve their economic situation. They are able to smooth their consumption, build up assets, prepare themselves against risks and improve their ability to cope. In this respect, digitalization is revolutionizing the way financial service providers do business. In Africa, «the spread of cell phones over the past two decades has enabled the development of new mobile solutions», the authors of the study note, such as the Kenyan financial services platform M-Pesa (41.5 million users across the
continent by the end of 2020) or the competitor MoMo (46.6 million subscribers) of the South African telecom giant MTN.
THE GROWING USE OF CELL PHONES TO ACCESS THE INTERNET IS ENABLING THE DEPLOYMENT OF COST-EFFECTIVE DIGITAL SERVICES FOR LOW-INCOME CUSTOMERS Today, this digitalization of African financial service providers is entering a new phase, as «the growing use of cell phones to access the Internet is enabling the deployment of cost-effective digital services for low-income customers», the report explains, due to the scale effects involved. This dynamic is only expected to strengthen in the coming years. In a report published in September 2020, the GSMA, for example, recalled that, «in subSaharan Africa, the average annual growth rate of smartphone connections [was] 28% since 2015, and that they now account for [nearly] half of total connections.» The case study will be widely disseminated among WSBI member banks around the world, and through specialized financial inclusion and microfinance channels. WSBI’s Scale2Save program works with African banks and local institutions serving the most vulnerable in six countries across the continent: Côte d’Ivoire, Kenya, Nigeria, Morocco, Senegal and Uganda.
