How is technology achieving Financial inclusion in Africa
Technology has demonstrated a strong potential to help improve access to and quality of financial services for the unbanked and under-banked. in Africa.– Digital connectivity is key, but it is only a starting point for successful digital development.
The Rapid increase in penetration of smartphones and internet, along with emergence of new-age technology companies in the payments space, has made this dream look much more real. Multiple technologies have emerged to replace cash. Plastic money has been around for some time and now we see mobile wallets emerging as a popular alternative.
Banking is changing like never before, and largely because of the rapid advancement of technology. Automated teller machines, internet banking and other advances have already made dramatic differences to consumer experience. Now, payment wallets, mobile banking and other advancements are going to revolutionise it further.
It is as important to strengthen other factors that interact with technology – such as responsible regulation and accountable institutions – in order to make digital technologies work for the poor. The World Development Report calls these other factors the ‘analog complements’ to digital technologies, which fall into three categories: regulation, skills, and institutions.
The introduction of technology has made it possible for banks to start de-emphasising brick and mortar banking, which is very cost-intensive.
What is Financial inclusion
It’s appropriate financial services and products – including savings, payments, credit, and insurance –are readily available to adults of all income groups, at a cost affordable to the customer and sustainable for the provider, and provided in a responsible manner. The benefits of financial inclusion are wide-ranging: it helps people better manage their lives, smooth their cash flows, overcome income shocks, and invest in their skills, health, or new businesses.
The ability to pay and receive money is a basic need. Physical currency or cash has been at the core of fulfilling this need for centuries. Cash as the primary medium of payment has led to setting up of an expensive cash management infrastructure.
A lot of innovation has happened in streamlining cash management systems and making them more accessible and efficient. Bill collection centres for utilities, network of ATMs and cash deposit machines, cash-in/ cash-out counters in banks are some examples of cash management systems. However, in past few years, people have started questioning the very existence of cash itself. The idea of replacing physical currency with digital payments is not new.
It will be interesting to see which technology takes centre stage in transaction settlement. Cost, convenience and reliability will be the key factors driving adoption of these products. The winning technology will be one that can take on the huge unorganised retail market in Africa
Financial inclusion is incomplete till people have access to credit.Digital payments can emerge as a way of making traditional unbanked and under-banked sections of society more creditworthy. In Africa, millions of small traders have got access to loans based on their online trade and digital payments data.