Banked:  Mobile banking apps favour urban people with access to smartphones, such as this customer of Sidian Bank in the Kenyan bank’s headquarters in Nairobi.  Picture: REUTERS
Banked: Mobile banking apps favour urban people with access to smartphones, such as this customer of Sidian Bank in the Kenyan bank’s headquarters in Nairobi. Picture: REUTERS

In Africa, banking the unbanked remains a pressing need. Roughly 700-million Africans are financially excluded – denied economic citizenship.

Discussions on the issue raise the same question, time and again: why aren’t traditional banks offering mobile solutions to potential customers who desperately need them?

The American Bankers Association claims it costs between $150 and $250 to open an individual bank account through traditional channels. Over more than a decade, around the world, it has been proven that alternative, disruptive technology such as mobile and branchless banking can reduce this cost by more than 90%, while still complying with local regulations.

From 2011 to 2014, banks opened more than 700-million accounts for the previously unbanked, which goes largely unrecognised, yet so much more can and should be done.

Another obstacle thwarting the growth of mobile banking in Africa is the exorbitant price of data. Handsets are status symbols at the lower end of the market. People naturally upgrade from a feature phone to a smartphone as soon as finances allow. Without access to data, the functionality of the phones is rendered useless.

This shows the futility of banks offering mobile banking on application-based platforms. Without Wi-Fi or data, the apps are inaccessible.

A MOBILE BANKING PLATFORM THAT EXISTS AS AN APP SERVES THE SAME PEOPLE WHO WOULD BE BANKED ANYWAY.

Vast parts of Africa remain unconnected. In countries where connections are offered, the cost of data is often sky-high and connections are typically available only in urban areas — not rural areas or the locations of the mass unbanked.

The view of some that unstructured supplementary service data (USSD) — also known as "quick codes" — is dead may well be misplaced.

As a financial technology and financial service innovator, Wizzit International is constantly requested to deliver USSD platforms to support the app-powered efforts of banks falling short of expectations.

According to the recent ICT Africa report, released as the #DataMustFall campaign gains traction in the region, Tanzania has the cheapest data rates: 1GB at $0.89. In SA, it is $5.26.

In Kenya, a gigabyte of data reportedly costs an average of $5, Egypt $2.8, Nigeria $5.26 and Malawi $5.8.

The exclusive nature of this pricing structure has driven the #DataMustFall campaign, which calls for fairer prices and access to connectivity.

True economic development at all levels is impossible without financial inclusion. It is at the core of improving the lives of people and families in the modern world, where financial transactions underpin so much of social existence.

Most families in more rural or isolated areas don’t have access to computers or smartphones, let alone data. If they can access a smartphone, the price of data excludes them from banking anyway – and that is if a forward-thinking bank even offers the service.

It is a multipronged problem, with a lack of truly innovative systems at the core. A mobile banking platform that exists as an app serves a certain portion of the population — the same people who would otherwise be banked anyway, because they have the financial means and access to bank branches and ATMs.

App-based mobile banking certainly serves a purpose, but it is a far cry from meeting the needs of the mass market in terms of them becoming financially empowered and included.

Traditional banks across Africa need to rethink how they offer mobile banking to the masses — and quickly. The cost of data is out of their control, and shows no signs of being driven down.

The solution is mobile banking that is operational through any mobile device, simply with a SIM-card and even with a minimum data balance — using USSD, for example.

This is offered by all mobile network operators and is incredibly cost-effective to consumers working with any kind of handset – either a smartphone or a feature phone.

The evolution of banking functionality goes beyond the platform, to the heart of the process. Access to mobile banking in its current iteration requires a bank account, which has to be set up through a process of endless paperwork, proof of residence and proof of employment or income.

Rigorous, ill-fitting requirements are set for the masses in emerging markets, many of whom cannot read or write, work part-time jobs informally and do not have a fixed or documented address. Knowing this, regulators still claim regulation and compliance requirements are not designed as impediments to financial inclusion.

It remains a harsh and cruel reality that people who cannot provide the required documentation are denied access to financial services.

For marginalised people and families, inclusive mobile banking will be transformative. It will empower the masses to become active participants in a market from which they are otherwise excluded — but within which they are still expected to operate.

It means safer banking and transactions for informal traders, women and rural communities. And it is a golden egg waiting to hatch for the banks agile enough to act.

Richardson is the CEO and cofounder of Wizzit International.

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