Accessibility of Financial services is a factor that ensures growth in the economy and also hopes for independence among the members of a family. Easy access to insurance, loans, and credit guarantees some level of security as well. Estimations, however, have shown that not more than 20% have access to financial services on the African continent.
That appears to be poor statistics, considering the population explosion on the continent? On the flip side, however, it is an opportunity for such service provider to jump into the less existing market. Africa is set for growth in this service.
Reports from McKinsey indicate the retail banking sector is the second-fastest growing in the world. According to Mckinsey, the number of banked Africans increased by 43.33% from 2012 to 2017.
With this potential, a significant number of financial service providers in recent years, have increased their efforts to extend their services to the unbanked on the continent.
Despite this effort, the change appears not to be fully effective, as the population explosion is alarming. This increase is taking its toll on the number of unbanked because; the explosive growth is out-pacing the bankable population. This results in a situation which leaves many of the population unbanked.
With these reasons, the financial technology ecosystem is fast becoming the new deal on the continent; it has, even, become an avenue for the emergence of Startups now providing solutions to financial services with the application of technology, notably, blockchain.
Now, we see small loans delivered to those in need of the facility, through their mobile phones without owning bank accounts. This process is called, micro-lending, a system already gaining mileage on the continent. With a USSD short code, SIM card and your phone, you get the job done.
Banks are not left out of this development, as they are the primary stakeholders in this regard.
Their services now include mobile banking. The unbanked, who may detest a working relationship with a bank, can work on a phone.
The use of remittance is also not far-fetched, through remittance, more money gets transferred globally. Existing agents, like Western Union, are battling it out with new Startups, who have made money transfer easy.
No visit to the station and no exorbitant charge. Remittances have provided an affordable and convenient way of achieving this.
Payments are also a significant part of fintech operations. A lot of financial transactions take place daily, on the continent of Africa and there, a need arises for prompt payment method. A Nigerian Startup, Paystack, is facilitating payments for users across board.
It has made some remarkable feats in digitizing financial transactions in some parts of the country.
There are many of them, but despite these numbers and their activity, the sector still needs investment for their services to reach the high unbankable population.