BANKING
Banks grapple while nimble players eat their lunch
By Brian RICHARDSON
There ’ s an urgent need for strategic review to ensure mobile is at the top of the banks ’ strategic agenda
90 % OF THE 721 MILLION NEW ACCOUNTS OPENED BETWEEN 2011 AND 2014 WERE OPENED AT FINANCIAL INSTITUTIONS
Financial inclusion is a critical engine of economic development at both macro and micro levels . Technology – and access to mobile phones – could make financial services accessible and available to nearly 4 billion people who are ignored or underserved , without access to formal financial systems – thus depriving people of economic citizenship . It ’ s very sad that in 2016 , the majority of the world ’ s population still has no access to formal financial services , despite the known and documented advantages of having banked citizens .
Why accounts count
What ’ s interesting – and often goes unstated and unrecognized – is that 97 % of the 3.2 billion account holders keep their accounts with financial institutions – not Mobile Network Operators . According to the World Bank ’ s Global Findex database , 90 % of the 721 million new accounts opened between 2011 and 2014 were opened at financial institutions ( Centre for Financial Inclusion , July 2016 ).
Compare this with the 54 million mobile money accounts opened with Mobile Network Operators ( MNOs ) over the same period – also not a number to scoff at . Yet banks are ignored when credit is given for efforts at financial inclusion .
The reality is , banks can and do play a leading role in financial inclusion . It ’ s time they were recognized for their efforts . The Centre for Financial Inclusion report goes on to say banks can “ harness innovative technologies to transform banking services for their existing customers and more importantly to reach new ones at scale . There ’ s a sizeable market opportunity among low-income customers and the ‘ missing middle ’ of SMEs .”
Why , then , despite what ’ s happening in other parts of the world , is West Africa lagging behind in the financial inclusion challenge – particularly where the banks are concerned ? In Ghana , for example , the last five years have seen mobile money accounts triple to 22 %, whilst bank accounts have grown by a dismal 2 % to 36 % over the same period ( CGAP blog , December 2015 ). Based on interactions with banks in Ghana , perhaps the technology deployed is too complex . This is an easily fixable factor . Banks today can easily , seamlessly and cost-effectively replace platforms that aren ’ t meeting expectations . The critical factor for success is top management support and commitment , as well as decision-making skills and prioritization
The latest PWC 2016 Ghana Banking Survey ,
30 Business Times Africa | 2016