Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Technology

Challenges of digitalisation in the developing world – and how to overcome them

Published : , on

By Frank Molla, MD Sub Saharan Africa for BPC

The more the world becomes increasingly reliant on digital technology to power daily services and markets, the more digitalisation and development become further intertwined for emerging economies. As the second-largest banking market in the world for growth and profitability, Africa is an area that holds critical lessons when it comes to examining digitalisation in the developing world and its hurdles.

There have been several key obstacles that continue to haunt the African continent in terms of accelerating digital development: access, infrastructure and regulation. However, three new innovative banking players show how these challenges can be overcome.

Access to banking services

The first challenge has been access to banking services. A significant proportion of the African population is still unbanked: 57 per cent do not have any kind of bank account. There is still a firm reliance on cash. This is encouraged by the fact that approximately 90 per cent of employment in Central, eastern and western Africa could be categorised as informal, according to the International Labour Organisation.

Cash naturally lends itself as a simple payment method when it comes to informal employment. However, with an exceptionally young population (the median age of Africa’s 1.1 billion population is 19 years old), and an urban population that is expected to triple, it is also likely that younger generations will embrace convenient new banking methods and normalise them for future generations.

Network infrastructure

A second challenge regarding financial inclusion in sub-Saharan Africa is the lack of infrastructure. Historically this referred to bank branches and physical access points for banking services, but now this refers to insufficient internet and network infrastructure required for digital banking services.

Related to this issue is that prospective customers are still asked to confirm their identity before formally joining digital financial services. In Africa, a considerable amount of the population still does not have proper identity documents. Sub-Saharan Africa makes up over half of the one billion ‘unregistered’ people worldwide, according to the World Bank. Yet these documents are crucial when it comes to registering new users online.

Standardised regulation

There is no standardised regulation to encourage fintech innovation in the continent, with regulators giving different financial services activities different regulatory treatment across jurisdictions. This makes it extremely hard for digital platforms to extend their services regionally. Ideally, there would be a more open approach to banking and financial services.

Right now, a digital-only bank can only operate by acquiring a full banking license or partnering with an existing bank to exist under a third party licence. In contrast, lighter regulatory frameworks like the E-money licence in Europe would accelerate digital development. The hope is that the African Continental Free Trade Area (AfCFTA) will encourage a standardised regulatory approach to help the growth of fintechs and digital banks.

How several new players have overcome these challenges

Innovative new digital leaders have overcome the above obstacles by localising product offerings and distribution around local demand and infrastructure.

TymeBank

With no monthly fees, pay-as-you-go-banking, up to 10 per cent interest on savings, and a straightforward account opening process, South Africa’s first digital bank has signed up more than four million consumers and business customers since its 2019 launch.

To overcome challenges around access and infrastructure, it introduced a network of over 700 self-service kiosks placed in retail outlets that their target customers visited frequently. While doing their regular shopping, customers could open accounts and immediately access their own debit cards.

Orange Bank

This subsidiary introduced its digital banking proposition in sub-Saharan Africa a couple of years ago with the offerings of mobile money operator Orange Money. This has been important as that business boasts over 20 million active customers. This has been key, as it allowed Orange Bank to leverage over a decade of customer behaviour insight around money transfers.

To open an account, an individual simply needs a smartphone or USSD, a communications protocol in GSM networks that allows the sending of short text messages. This helps to mitigate the lack of sophisticated network infrastructure in parts of the region.

Kuda

As Nigeria’s first mobile-only bank licensed by the Central Bank, it is often referred to as ‘the bank of the free’ and it focuses on providing an optimum banking experience for anyone in the country. This licensed digital microfinance bank helps Nigerians maximise their money by decreasing banking fees.

With a current account and a debit card, account holders can deposit money in over 10,000 outlets across the country for free. There are also tools to help customers track their spending and saving habits. An intelligent budgeting feature shows a visual analysis of expenditure helping customers to efficiently manage their finances, which has proved popular among the bank’s local base.

There remain key hurdles to the continued widespread adoption of digital technologies across the African continent. However, as several new players have demonstrated, enormous and rapid growth can follow when inventive ways around these hurdles are incorporated into the launch and operation strategies.

About BPC

Founded in 1996, BPC has transformed over the years to deliver innovative and best in class proven  solutions which fit with today’s consumer lifestyle when banking, shopping or moving in both urban and  rural areas, bridging real life and the digital world. With 350 customers across 100 countries globally, BPC  collaborates with all ecosystem players ranging from tier one banks to neobanks, Payment Service  Providers (PSPs) to large processors, ecommerce giants to start-up merchants, and government bodies to  local hail riding companies. BPC’s SmartVista suite comprises cutting-edge banking, commerce and  mobility solutions including digital banking, ATM & switching, payments processing, card and fraud  management, financial inclusion, merchant portals, transport and smart cities solutions. 

www.bpcbt.com

Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post