Branchless Banking - The future of banking in Africa is banking

Feb 17, 2018

Fintech start-ups in the continent are channelling their focus on catering to the financially excluded Africans who do not qualify for traditional financial services. The World Bank has set an aim to provide universal financial access by 2020.

The target will ensure that adults everywhere have some form of transactional account to store, send and receive payments. The drive to provide financial service to an estimated 700 million unbanked Africans has led to a growth of fintech mobile innovations that are providing banking solutions in Africa. Some of the banking solutions aim to provide mobile platforms that give accessible options for saving money, transaction of money and digital book keeping for SME’s.

The success of Mpesa in East Africa has seen countries such as Kenya erupt with branchless financial services. While the likes of South Africa and Nigeria have followed suite with start-ups creating simple alternatives to traditional banking.

Leading companies

One of the current success start-ups is Suntrust bank launched in Nigeria 2016. The bank has shifted its focus from physical branches to providing 24/7 digital financing while also working on strengthening their cyber security to safe guard consumer doubts of digital finance. We will continue to see companies creating similar services to tap into the unbanked financial pool. Bank Zero founded by former FNB CEO Michael Jordan aims to focus on providing digital innovation to consumers. Scheduled to launch in the fourth quarter of 2018, the branchless bank will allow for consumers to use ATMs locally as well as internationally and also cash out at major retailers.

International competitors
International markets have shown an increased interest in fintech Africa investments. However the interest is not limited to financial assistance and skills developments. International fintech innovators have seen the potential in providing affordable services to the unbanked demographic.

UK based fintech ZaZu set up an equity crowd funding campaign in 2017, to prepare its launch of a digital bank in Africa. The company has set its sight on becoming a 21st century finance provider for Africa. With a monthly subscription of $2 and $2 for a card, the company aims to have 100 000 Zambian holders by December 2018. Another company tapping into African finance is Branch International. The company’s services are accessed through a free downloadable app which analysis information stored on the user’s phone. The company prides itself to catering to the mobile generation through digital modernisation. The bank was first launched in Kenya and now plans to expand its services to Tanzania.

The emergence of branchless banking may narrow the gap of the unbanked market within Africa. As mentioned in the I See Africa Fintech Africa report, financial companies are working on providing various digital services via mobile to cater to the large excluded demographic. The concept of mobile banking has progressed from the standard transaction of money to digital services that will enable saving, investments and digital loans, which legislation would need to adapt to. Aside from banking regulations that will need to adapt to the new ways of banking, we are likely to see further disruption of finance in Africa as branchless banking only caters to an isolated group of the unbanked demographic.

Branchless banking has shown that financial services are no longer restricted to the institutional providers within bricks and mortar structures.

 

Source: Khumo Theko from I See Africa

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