Are African Countries Underbanked?

According to the McKinsey consulting company, nearly 2.5 billion adults on the planet are not covered by financial services, with the vast majority of them living in Africa, Asia, Latin America and the Middle East. To maximize their reach to this population, financial service providers are increasingly adopting solutions that emphasize mobile service access. For this As for bank branches and ATMs, they are usually concentrated in cities and inaccessible to residents of rural areas. This creates significant obstacles for the latter, because in order to receive financial services, it is necessary to pass a check by the bank as part of the “know your customer” (KYC) procedure, and this is possible … only at the bank branch. Another alternative for the underbanked is a P2P Crypto exchange which operates worldwide and with no restrictions.

So how did some of the mobile payment schemes offered by non-classical financial players such as mobile operators come to be successful? In addition to having a customer base in a segment of the market that is underserved by financial services, their success is due to the fact that they have enabled their customers to use these services through local agents. Thus, they secured a unique opportunity to increase their share of the market, especially in rural areas, where, as a rule, most of the people who do not have access to bank services live. And because they are relieved of the need to be physically present at the point of service and do not incur significant costs for processing low-value transactions, they have been able to significantly reduce the cost of services provided.

In order to subscribe to any banking service or even to convert various crypto rates to local currency, such as LTC to INR, BTC to PKR, BTC to PHP and BTC to Naira, the client, as a rule, needs to personally arrive at the bank branch, where he will be asked to present identification documents and credit history. Modern mobile devices such as smartphones and tablets are usually equipped with cameras, and many of them support biometric identification functions. Therefore, they can serve as a reliable alternative to the checks that are carried out by the bank branch employees in compliance with the “KYC” rule. Mobile devices with built-in cameras allow agents to take photographs of applicants and their documents in order to register them as clients on the spot.

Agency banking helps not only banks but also micro-finance organizations, giving them the opportunity to scale up their activities. It provides obvious benefits to the clients themselves: thanks to agency banking, they can receive higher quality services, and with less risk to their security. Agents themselves also have powerful incentives to participate in such initiatives. Their services are usually rewarded with a commission. Moreover, by offering customers additional services, they develop their own business.

The benefits of agency banking should not be viewed only in the context of emerging market economies. In developed countries, banks are also forced to pay attention to customers whose interests are reduced to only one mobile service. In an environment where a service request can only be submitted by visiting a bank branch in person, banks that position themselves exclusively as mobile service providers will miss out on opportunities to attract new customers. And this applies not only to the technically literate part of the population, consisting of people who are not interested in any other banking services, except for digital ones. The social group of older people is growing, which means that banks should think about what other service channels, in addition to the traditional ones, can be offered to them.

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