The introduction of new banking, investment, credit and insurance products using established mobile money solutions will be critical in including more Africans into the formal financial system, writes Ahmed Cassim, MD of Hello Paisa.
Currently, most adults in the region mainly use mobile money solutions to either buy airtime or make domestic remittance payments to relatives and friends.
However, after achieving great success in providing such a service to a large portion of the South African migrant population, the scope for Hello Paisa to launch a mobile money solution and convert an even larger fraction of the unbanked into not only users of digital payment offerings but other much needed financial services, remains extensive.
Hello Paisa’s 350 000 strong subscriber base is ample proof of the existence of an effective gateway for financial inclusion among the under serviced and unbanked, a demographic that stretches over 2 billion people globally – but most in Africa – according to statistics released by the World Bank.
There is no doubt that the access, trust and affordability foundation that Hello Paisa has already established in South Africa could further drive the sustainable conversion of this demographic into the formal financial system.
Hello Paisa’s efforts were recognised and was recently awarded the Mastercard Foundation “Clients at the Centre” Award for 2016, for basing its offering on three principles: offering a cost effective solution, client centricity and financial inclusion and have a high adoption rate of such service.
With 42% of the global adult population still absent from the formal financial system, World Bank statistics show, fintech operators on the continent, such as Hello Paisa, are in a rare position to drive not only economic and innovation change, but also social change.
Supporting such a development agenda is one of the mantras that Hello Paisa thrives on, and the move to go beyond international money transfer services later this year to address supplementary banking, lending, insurance, and the savings needs of the informal economy is a natural progression for the company.
Our initiatives to disrupt the existing financial order is further encouraged by the growing number of people with access to mobile phones, as well as our commitment to bring low cost, trusted solutions to a largely bypassed consumer base, who in most instances lack formal banking services altogether.
According to the World Bank by 2017, roughly 87% of all broadband connections in emerging markets will be mobile.
Increasing broadband access allows for faster communication and a better quality of service which improves engagement, a driving force behind the evolution of new technologies. It also makes a host of industries more inclusive and accessible to broader segments of the population.
At the heart of the ability to develop and introduce Fintech innovations in Africa is regulation. Hello Paisa continues to actively engage with regulators after being awarded the first “independent money transfer operator” licence by the South African Reserve Bank back in 2014. This allowed Hello Paisa to bring disruptive financial technologies to migrants in South Africa.
We bring our credentials and experience to the table and collaborate with authorities in finding ways to better include the estimated 5-million to 8-million people (out of a population of 54-million) in the country, which is currently excluded from the formal financial system.
Meanwhile, financial inclusion remains a global initiative with institutions including the IFC, World Bank and the Bill & Melinda Gates Foundation, the Mastercard Foundations amongst others strongly driving this agenda.
For one, current legislation prescribes that only traditional banking institutions are allowed to take deposits from account holders, and that is a restraint to financial inclusion that Hello Paisa is trying to address with the Regulators.
Regulating money flows in a digital savvy world is a daunting task for even the highest-profile, most technologically fluent of financial institutions or central banks, and it is imperative that a solution is found that will bring no additional risk to the national payments system, yet mitigate the risk associated with a cash only economy.