WORLDWIDE, an estimated two billion people are living in poverty and are facing challenges in accessing basic financial services such as savings, insurance, pensions or loans.
This state-of-affairs is most prevalent in the developing world, particularly in Africa and observers have noted that the limited availability of financial services to the marginalised has been one of the major factors inhibiting sustained inclusive development.
While milestones have been achieved at providing financial services to the marginalised — the rural people and low income earners previously excluded from the formal banking system — the services have been largely limited to mobile money transfer.
Yet there is scope to broaden digital financial services to a wider population thanks to technology. Digital financial products have become important as they reduce the cost of financial services.
In a country like Zimbabwe where the informal sector is thriving and continues to grow, there is huge scope to roll out a wider range of financial service products. With over 60 percent of the population living in rural areas and the bulk of the urban population operating in the informal sector, embracing digital financial services can no longer be ignored.
That being the case, we would expect financial service providers to be more innovative and ride on technological advancement to come up with products suitable for the previously marginalised markets.
The latest 2014 FinScope consumer survey indicates that the proportion of the population accessing formal financial services increased from 38 percent in 2011 to 69 percent in 2014.
This is still lagging behind other countries such as South Africa and Mauritius, at 75 percent and 85 percent, respectively. To harness deposits and promote long term savings, Government is drafting the National Financial Inclusion Strategy which will be implemented this year.
This should also culminate in a SMEs Finance policy to help unlock financing for SMEs through the exploration of alternative collateral security options that are acceptable to banks and micro-finance institutions.
Within the strategy, Government is advocating for improved financial and other support to Small and Medium Enterprises which are critical vehicles for poverty eradication, inclusive growth and economic transformation. Access to finance has remained a perpetual constraint to their operations.
The thrust of the financial inclusion policy is to ensure that the unbanked public is banked, and for banking institutions to design products that do not exclude many people.
This should have the effect of improved financial intermediation, addressing the needs of specific segments of the population which are financially excluded, notably Micro, Small and Medium Enterprises, women and youth, among others.
It is encouraging that Getbucks, a micro finance company, intends to reach out to the unbanked population by embracing mobile banking.
Unlike the physical traditional way of expanding, it intends to make virtual banking easy, convenient, cost effective while customers to obtain loans online.
Getbucks estimates that there is an over one million bankable, but untapped market in Zimbabwe.
In terms of clients, the company said it was looking at the “bottom half of the pyramid”, mainly low income earners. As such, we urge other financial institutions to look for ways of increasing financial inclusion, which should see the unbanked sector getting banked.
We need the banking sector to rise to the occasion. Gone are the days of hiding behind brick and mortar. We are aware that currently technological products such as mobile money are on the high side.
But with more players and products introduced, the cost of the financial technology services should reduce significantly.