Financial inclusion in Africa has been one of the biggest success stories in the last decade
According to a report published by the International Finance Corporation, the implementation and expansion of digital financial services have resulted in an exponential rise in the number of people who have access to formal financial services.
Africa now has more digital financial technology implementations than any other country in the world, accounting for nearly half of the world’s 700 million individual users. Mobile money solutions and agent banking are now providing inexpensive, instant, and dependable transactions, deposits, credit, and even insurance opportunities in rural villages and urban communities where no bank has ever opened a branch.
According to field studies, access to mobile money services has increased households’ daily per capita consumption rate, lifting them out of severe poverty.
Mobile money services have also improved people’s lives, such as assisting women in transitioning from subsistence farming to business occupations and healthy livelihoods as we now understand, more than ever, financial inclusion is merely a means to an end.
The aim of Financial Inclusion has always been to boost the financial sector’s capacity to better serve all citizens in Africa.
In Sub-Saharan Africa, 43 percent of the population is now financially included, and in countries such as Kenya, Tanzania, and the Democratic Republic of the Congo, the pace of financial inclusion has more than doubled in the last six years.
Mobile money and agent banking have been the primary drivers of Sub-Saharan Africa’s remarkable growth in financial inclusion over the last few years.
Traditional financial institution growth has lagged in general.
Though East Africa has long been the standout performer in terms of digital financial services evolution, West Africa is the latest growing market.
The spectacular growth of financial inclusion in Sub-Saharan Africa over the last ten years would not have been possible if financial service providers did not see a compelling opportunity in expanding their service scope.
Depending on the needs of the organization, there are various ways to interact with the opportunities provided by digitization since there are three specific interaction models for banks: become a digital bank, launch discrete digital channels or goods, or launch subsidiaries to operate digital banking operations.
All three digitization paths allow institutions to embark on a digital journey with large or small investments and with large or small risks.
In the banking industry, there is increasing interest in moving toward an omnichannel strategy, in which digital is simply part of the overall business and encompasses anything from back-end customer relationship management to front-end mobile apps for consumers, open access to fintech partners, and a seamless user interface for clients across all digital platforms.
To get there, significant investments in technology and culture are needed, both of which have proven difficult to alter.
A decade after the launch of M-PESA, DFS is an established part of the daily routines of millions of Africans, employing hundreds of thousands of agents and making a significant contribution to the business of banks, MNOs, and MFIs, as well as national economies.
The extraordinary growth of digital financial services in Sub-Saharan Africa has created an entirely new demand for affordable, open, and long-term financial services.
This has resulted in a significant increase in financial inclusion, which has aided in the improvement of millions of people’s livelihoods and lives.
People in Africa live predominantly in a cash economy, and the potential benefits that DFS can bring to people, companies, and governments are enormous.
It is projected that widespread use of digital finance has the potential to raise emerging economies’ annual GDP by US$ 3.7 trillion come 2025.