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