The Solution for Africa’s Financial Inclusion

Updated On : February 2021

For over a decade now the World Bank has been persistently advocating financial inclusion in the developing countries with an objective to fuel economic growth and consequently reduce poverty.

In 2015, the CGAP (Consultative Group to Assist the Poor) defined digital financial inclusion as "digital access to, and the use of, formal financial services by the excluded and underserved population."

With significant innovations in Technology, enhanced connectivity and digitization of banks, entire banking and financial industry has underwent a paradigm shift in the way the business is being done and the way a service is delivered to the Customer.

While the digitization has been the mantra for developed countries it is noteworthy to witness the enthusiasm for digital banking solutions in sub-Saharan Africa. This can be a source of inspiration for the rest of the world.

Low level of banking penetration coupled with increased connectivity and rising mobile phone usage has created a powerful leverage effect for the banks in Africa. On the Contrary for regions like Europe or other developed regions, the market is mature, and the population is largely banked.

The deployment of 3G technology and exponential rise in the number of smartphones users in Africa (smartphone adoption is expected to reach 463 million by 2020) are opening new opportunities and democratizing access to banking services.

The absence of existing system in Africa is taking a technological leap forward by deploying digital banking to serve the population. Therefore, digital banking is the solution to traditional banking that makes it possible to overcome the shortcomings in banking infrastructures and thus accelerate financial inclusion in Africa!

Thanks to the development of Internet and mobile payment applications for eliminating the complexities, challenges, limitations and huge investments needed for setting up the infrastructure in order to reach to the end customer. The growing penetration of Internet access via mobile phone has favorably changed the customer behavior in Africa; going online has become an important part of people’s daily life in Africa.

Additionally, the development of smart Android terminals, like Wiseasy’s WPOS-3 which can be embedded with various banking functions such as account opening, deposition, money transfers, multi-channel payments, etc.., makes it possible for banks to branch out to a larger population and provide both banking and non-banking services.

Today, more and more banks are adopting digital solutions to increase its span of customer reach and give an upward thrust to their growth trajectory. Digital finance has proven to be the right path for the Banks by making banking services affordable, convenient & secure to the larger customer base (i.e., low income individuals in Africa).

The adoption of digital banking has accelerated the process of financial inclusion in the developed economies and for the developing countries it will be no different. The objective of financial inclusion can be achieved by leveraging the digital medium and digital banking is certainly an effective way to realize it.