Next-generation financial services are driving global financial inclusion

With the World Economic Forum warning of a growing digital divide that will deepen global inequality, the role of intuitive digital financial services platforms in bridging this divide is becoming more important.

Next-generation tools that provide financial services such as savings accounts, global money transfers, and loans to customers in an accessible way, are becoming a powerful force for change by driving financial inclusion in developing economies.

The global health crisis and national lockdowns have illustrated this point. When informal cash-out services became less accessible to communities, for instance, people were able to turn to intuitive digital financial services platforms, supported by physical distribution infrastructures, to send and receive money. And after interacting with these digital channels for the first time, many users discovered they can fulfil other financial aspirations and needs by following the user journey and providing feedback.

Today, these seamless and increasingly digitised user journeys, supported and driven by incremental, customer-led fintech innovation, are disrupting the financial services ecosystem, effectively banking the unbanked and elevating financial literacy.

Beyond fintech: an empowering journey to financial freedom 

Recent trends in remittance flows show the growing role of digitised banking services in empowering marginalised communities and people with new financial tools. For instance, despite predictions by the World Bank that global remittance flows would dramatically decline in the wake of the pandemic, evidence in countries such as SA, Zimbabwe, Malawi and Zambia suggest that formal remittance flows across African borders have actually increased and are proving to be more resilient than many other financial services.

Yet remittances are only the beginning of a digitised and customer-led journey to financial inclusion and upliftment in many of these economies. When fintech banking platforms can provide multiple channels such as USSD, an app, WhatsApp and live chats, where customers can transact and sign up without having to physically interact with a bank or branch, then the opportunity for self-empowerment and financial emancipation is amplified.

At Mukuru, we listened to customer feedback and provided this opportunity in the form of self-sign-up channels. This was met with a surge in interactions with Mukuru’s next-generation financial services platform. In SA, up to 30% of users are engaging with the platform by signing up to the service via self-help channels, up from 0% this time last year.

Added to this, more than 86% of money transfers generated on the Mukuru platform are self-service initiated transactions. The Mukuru app, which has recently been relaunched with new features and capabilities, shows how digitised user journeys are a powerful and equalising force within global financial services.

Meeting customers where they are

As we have seen across our own digital banking channels, grassroots financial services innovation is about meeting customers where they are, and providing intuitive ways to transact, save and send on various channels, and with any device. When users engage with an app or tool that provides a visual, multi-stranded presentation of financial information, they are immediately empowered by the decision-making capabilities that this engaging interface engenders.

In the long term, this is about going beyond fintech and providing an ecosystem that empowers users on a gradual but progressive journey to financial inclusion. As customers embrace elements such as self sign-up and digital onboarding, they begin to build up a comprehensive and detailed financial transaction profile. Over time, diaspora remittances and this increasingly robust digital footprint can be harnessed as a strong indicator of creditworthiness, and these profiles could be leveraged to gain access to credit for capital accretion (vs consumption). 

The security aspect of emerging digital banking platforms is also becoming a focus point as financial crime and cyber theft spike worldwide. Mobile money electronically records all transactions, which improves the security of payments and their transparency, the consequences of which are far-reaching for every economy.

Providing this layer of safety, transparency and accountability to users for everyday transactions is paramount to both financial upliftment in the short term, as well as the longer-term goal of greater financial inclusion.

Mukuru has been listed as one of the leading 150 cross-border companies globally in the 2020 FXC intelligence Incumbents vs Challengers in Cross-Border Payments.

For more information, visit the Mukuru website.  

This article was paid for by Mukuru.