Last month the Centre for Financial Inclusion published its latest research into the financial inclusion landscape with a particular focus on how technology has made it easier to extend financial services. At Musoni our goal is to use technology to revolutionise the way in which financial services are delivered, and so we completely agree with the report that “without new developments in technology, there would be no financial inclusion movement today.” In today’s blog post we wanted to share what we saw as some of the key takeaway points:
Firstly, it’s clear that the technology space is moving very quickly. As can be seen in the graphic below, there has been substantial growth in the number of worldwide access points in recent years (apart from bank branches) and this is projected to continue. The report expects steep growth for all channels over the coming years (again except bank branches), which will then have a knock-on affect on the availability of financial services.
In addition to standard ATMs, the other channels include agents with fitted with POS devices, as well as SMS and internet based transaction solutions made possible by increasingly affordable smartphones and tablets. At Musoni we support all of these and have shown time and again our commitment to new transaction channels, integrating with MMT providers across the globe, providing an SMS module as standard to all its MFIs and developing the Musoni app for capturing data in the field. In the coming months we also plan to launch our client facing mobile-banking app, which will revolutionise how end-clients access financial services. Collectively, this rapid diffusion of technological advances has been so vast that the report concluded that the progress made thus far has been largely due to the technology driving the financial inclusion movement.
Secondly, investment in fintech quadrupled in the last year from $3 billion in 2013 to $12 billion at the end of 2014. While its unlikely that branches will ever be redundant (at Musoni we think its important for financial organisations to have a brick and mortar presence, both for building trust and improving customer service), the low cost of the new delivery channels means that the money being invested goes a lot further. This would not be possible without the advances in technology seen in the last five years.
The other main takeaway from the report is that the digitalization of payments is already a large driver in financial inclusion, and one we all expect to grow. The World Bank estimates that by facilitating digital government-to-consumer and business-to-consumer payments, the number of adults with bank accounts would increase by 160 million and 280 million, respectively. As the largest payment processors in the world, Governments adopting digital channels will encourage more and more people to move away from cash.
The report concludes by saying “We hardly need to call for action from Fintech companies – their innovations and experiments are already flooding in. We therefore can only urge them to continue, keeping a strong eye not just on their short term business success, but also on how they can contribute to building a more inclusive industry, moving the customer base from early-adopters to BoP customers and maintaining attention to the needs of customers.” At Musoni we promise to do just this.