AN OMNICHANNEL APPROACH TO BANKING THE UNBANKED

More than a quarter of the global population still does not have access to banking facilities. That’s 1.75 billion people without a simple bank account through which to make and receive payments.^[1]

You’d be forgiven for thinking this is just a problem for emerging and third world economies. Yet the UK has anything between 770,000 and 3 million unbanked citizens depending on which estimates you believe. In a developed country where there are more mobile phones than people this is astonishing, not to mention the negative draw on the economy.^[2]

This excludes people from simple financial services we all take for granted such as much needed short-term credit, or a way to receive wages or benefits. This is despite basic accounts being available to most people, even those with a poor credit history. Clearly, action is required.

To help reduce the number of unbanked and to support Government plans to increase access to financial services, banks can play a crucial role. The key is to make financial services as accessible as possible – even for “hard-to-reach” individuals.

The growth of mobile

Over the last couple of years, banks have recognised the unlocked potential in building their online and mobile presence. While 2.5 billion people worldwide do not have access to financial services at all, even digital banking, a staggering 1.7 billion of those has access to a mobile phone.

These devices are creating new opportunities for banks to interact with the previously ‘unbanked’ population through digital payment services. According to recent research the number of active mobile money users increased by an astounding 41 per cent to over 100 million worldwide between 2013 and 2014 alone. With over 255 different mobile money services already available globally, the number of users is only expected to rise.

In Sub-Saharan Africa, distance to financial institution is a major barrier to account ownership. The challenge is providing a solution that meets the needs of the unbanked to make using an account as easy, convenient and affordable as possible. With mobile phones a leading communication device in the region, due to the lack of physical telecoms infrastructure, digital payment services can provide an important first entry point for the unbanked community. In recent years, the service has grown in popularity among mobile users in the Sub-Saharan region, with almost a third of account holders owning a mobile money account, and 58 per cent of mobile users interested in using mobile banking and mobile wallets in the future.^[3]

As the mobile market continues to grow, there are numerous opportunities for expanding financial service outreach. Banks and network providers are working ever more closely to enable people at all levels of society to access and explore the financial services system.

Combining solutions

Today, one of the major challenges mobile money solution providers face is providing an efficient and convenient way to load and unload the customer’s mobile wallet with cash. To resolve this, banks and network operators must combine solutions to bridge the gap between the newly developing mobile money ecosystems and the world of cash. Whilst in developing markets this is achieved through mobile money agents, upgrading current ATMs with mobile money functions and implementing ATM-based money, payment and self-service transactions on mobile devices will provide customers with a greatly enhanced service.

For example, smartphones can now be used as an interface to ATM services, meaning customers can stage a withdrawal, deposit and receive cash around the clock through a secure code sent to their device. The preauthorised transaction is meanwhile stored in a transaction safe, waiting to be released upon entering the secure code at the ATM service.

Customer experience and service adoption is all about ease of use of any given service. Valued service solutions, such as the mobile wallet, focus on making the whole transaction process simpler, faster and more convenient to meet the ever-demanding needs of the digital consumer. In the long term, this means banks will be capable of generating greater loyalty with existing customers, as well as building new relationships with the ‘unbanked’ society.

Attracting the unbanked community

Inevitably, customer experience will more than ever be the decisive factor for the success of a bank. Developing segment specific solutions will enable banks to profitably tap into the unbanked community.

One could argue ‘a chain is only as strong as its weakest link.’ With end consumers no longer loyal to an individual channel or service provider, particularly among the unbanked, banks will only appeal to new customers if they can ensure a seamless service across all channels to meet all individual requirements. This should incorporate mobile and tablet to ATM and in-branch services. By establishing a truly omnichannel service, banks will be better positioned to make the financial system accessible to people all over the world.

[1]Wincor Nixdorf report

[2]Computer Weekly article

[3]Ericsson mobility report 2014