Digital Ventures

Back to blog

Financial Inclusion – access to financial services increased

January 09, 2017 7:58 AM


When looking at the differences between developed and developing countries, you may find many things that indicate the degree of development, such as education quality, infrastructure and quality of life. Access to financial services is another key indicator to tell the degree of development in a country.

Today about 2.5 billion people, or 36% of the global population, are unbanked. Many also have debts or inconstant income and limited knowledge of savings..

These problems have prompted something called “financial inclusion”. In other words, this is the financial service initiated to allow unbanked people access to financial services.

Financial inclusion has become a hot topic at the global level. It was included as a main topic of discussion at Money 2020, an important financial technology (FinTech) conference held late last year in Las Vegas.

Financial inclusion can be:

  1. Financial institutions or banks in cooperation with partners in expanding new channels to reach more customers. Partners are generally businesses with existing customer service channels. Such businesses are, for example, mobile phone network operators, retail or convenience stores. This is common because those businesses have the “Know Your Customer” process, enabling banks to save costs in branch expansion.

  1. Non-bank and non-financial institutions that can provide financial services to customers. These organisations have to apply for licences from regulators in that particular country. M-Pesa would be a good example for us to learn.

M-Pesa – an interesting case study in Africa

Mobile service operators worldwide have offered many other services apart from mobile phones and mobile internet. Mobile financial services are another area receiving increased popularity these days.

Mobile financial services have become more popular among unbanked people because mobile phone network coverage is much wider, providing easy access to mobile services.

M-Pesa is a mobile financial service initiated and offered in Tanzania since 2007. The service is offered on global telecom giant Vodafone’s network. Vodafone provides the service in Kenya under the SafariCom brand and in Tanzania under the Vodacom brand.

Vodafone customers in Kenya and Tanzania then have easy and convenient access to financial services through their mobile phones using an e-wallet. Customers can deposit, withdraw, transfer and spend their money buying goods and services.

Deposits, transfers and bill payment are nothing new to us as we do that through mobile banking. Withdrawing money, however, is not. Here M-Pesa allows customers to withdraw their money from ATMs or pick up their money from the bank’s agent with an M-Pesa licence.

Safaricom also cooperates with Equity Bank, a microfinance company, in developing M-KESHO. This service allows customers to have direct access to Equity Bank’s credit and insurance services using a mobile phone.

M-Pesa in Kenya has been ranked the world’s top financial inclusion service by the Financial and Digital Inclusion Project.

M-Pesa is expanding services to other countries including Afghanistan, South Africa, India, Romania and Albania.

CreditEase, an example from China

China is the world’s most populated country and has a unique market. Many FinTech companies in this market are Chinese companies that have a deep understanding of their own market and culture.

CreditEase is a consultancy company with a peer-to-peer platform providing small enterprises, farmers, people working in remote areas and students with easy access to credit without going to a financial institution.

The service provider offers a one-stop-service to farmers. In addition to credit consultancy, it offers agricultural insurance, asset planning and many more services. CreditEase has already expanded its service to cover 244 cities across mainland China and Hong Kong.

The emergence of FinTech has enabled people to enjoy more convenient, efficient and speedy financial services. In addition, it opens opportunities for people without access to financial services to enjoy those services for a better quality of life.

These are only a few case studies that demonstrate how financial inclusion benefits you and your business. Many more case studies are waiting to inspire you even more here on our website.