The ‘Unbanked’ are individuals who lack access to banking options. They rely on easy, informal, and traditional systems, such as the trade-by-barter system, to meet their daily needs.
These people are farmers in rural areas in Kenya, miles away from banks. They are market vendors in Lagos, selling goods for cash, unable to save securely. There are also young people in Ghana with smartphones who cannot access credit or investment opportunities.
Globally, approximately 1.4 million adults remained unbanked in 2024, making them the sixth-largest bankless population worldwide. This report shows that the poor masses are the largest group of the financially excluded population because, according to a World Bank report, the majority of the report comes from the poorest of homes. Thus, achieving financial inclusion in Africa is challenging.
When it comes to fintech, Africa remains one of the most unserved regions.
Highlighted below is a table of the 10 top-ranked countries without bank access.
| Rank | Country | Population (Millions) | % Unbanked |
|---|---|---|---|
| 1 | Morocco | 36.9 | 71 |
| 2 | Vietnam | 97.3 | 69 |
| 3 | Egypt | 102.3 | 67 |
| 4 | Philippines | 109.6 | 66 |
| 5 | Mexico | 128.9 | 63 |
| 6 | Nigeria | 206.1 | 60 |
| 7 | Peru | 33 | 57 |
| 8 | Colombia | 50.9 | 54 |
| 9 | Indonesia | 273.5 | 51 |
| 10 | Argentina | 45.2 | 51 |
Source: Business Insider Africa
The Problem: Financial Exclusion
For decades, millions of Africans have not had bank accounts. This is due to poor infrastructure, high banking fees, and distrust in banks. Some of the causes for these people not having access to financial services are;
- In rural areas, the nearest bank might be hours away. This makes traditional banking difficult.
- The requirement of high documentation, especially for people who can’t provide proof of income or a fixed address.
- Women, who are critical drivers of economic growth, are 20% less likely than men to own a bank account in developing countries.
You can imagine the result. People had to rely on unsafe, inefficient methods, including cash savings and high-interest informal loans.
The Solution: Insights for Product Development and Sales
Before creating financial products, institutions must know key details to create products that resonate with customers.
- Segmenting the market
Key personas:
- Rural Farmers: They wake up early, cultivating crops that feed nations. But when the harvest is over, they lack a safe space to secure their income or afford loans to grow their farming business.
- Informal Workers: Street vendors, artisans, and day labourers are the backbone of the economy. They earn salaries but struggle to access financial services due to unpredictable income patterns and lack of documentation.
- Women: Women are excluded from financial systems due to cultural and systemic barriers.
- Youth: They are tech-savvy and ambitious, ready to leverage technologies. But then, their jobs aren’t stable.
- Leveraging Technology
Key personas
- Mobile Money: Platforms like M-Pesa will continue to help ensure easy savings, credit, and payment through mobile phones.
- Digital Wallets: Provide secure use interfaces for transactions and savings.
- Blockchain-Based Solutions: Facilitate low-cost, transparent cross-border transactions.
- Agent Banking: Expand Agent networks in remote areas to provide in-person support for digital services.
- Addressing Specific needs
Key personas
- Simplified Access:
- Reduce the complexity of account opening processes by using alternative IDs like voter cards or biometrics.
- Enable onboarding with minimal literacy requirements through voice and visual aids.
- Building Trust
Key personas
- Community Engagement:
- Partner with local influencers, traditional leaders, and cooperatives to promote services.
- Host community workshops to demonstrate the safety and benefits of financial products.
- Financial Education:
- Invest in education campaigns to teach users about saving, borrowing, and using digital tools.
- Use gamification in apps to improve financial literacy while keeping users engaged.
- Expanding Distribution Channels
Key personas
- Agent Networks:
- Empower local agents to act as intermediaries in rural and underserved areas.
- Offer commission-based incentives to motivate agents to onboard more customers.
- Digital Onboarding
- Develop mobile-friendly platforms with step-by-step account setup.
- Enable remote customer verification through video or biometric tools.
- Ensuring Affordability
Key personas
- Pay-As-You-Go Models:
- Allow users to access financial products like insurance or loans with small, regular payments.
- Flexible Pricing:
- Tailor pricing to income patterns, such as seasonal farmers or gig workers.
- Offer promotions or discounts for first-time users to build initial adoption.
What actions can we take to boost financial inclusion further?
It is expedient that we ask ourselves this critical question: what can we do to improve the access to financial products for the underserved? To meet the needs of consumers in developing countries, fintech industries and product developers must understand the needs of these people. Regardless of how much they earn or where they live, these underserved ones should be able to participate in and benefit from the financial ecosystem fully. This is so that even a farmer has the same opportunities to save, invest or ensure their livelihood as an entrepreneur living in the city.
One of the most powerful tools to boost financial inclusion is Technology. Mobile banking, for instance, has transformed how people interact with money. In regions where brick-and-mortar is few or doesn’t exist, mobile platforms would act as virtual banks, therefore bringing financial services right to their doorstep. Companies like M-Pesa in Kenya have shown us what is possible. Their services allow users to transfer money, pay bills, and even access credit, even with just a basic mobile phone. In other words, expanding this initiative to other developing countries can be a game changer, eliminating physical barriers and reducing costs.
Technology without educating them on its usage is futile. Imagine giving someone a smartphone with a banking app without explaining how they should use it and telling them why it matters. These individuals have little or no knowledge of how to make digital transactions, which is why they need empowerment to make informed decisions about their money. Through Community outreach programs, people can be taught about saving, budgeting, and borrowing responsibly so that they can build confidence and trust in a system that many may find intimidating or unfamiliar.
Also, the Government and financial institutions need to collaborate to create policies that make financial services accessible and affordable, such as reducing the cost of maintenance, introducing low-interest microloans, and simplifying identification requirements.
And finally, infrastructure. Lack of internet connectivity or electricity can be an obstacle to financial inclusion. Hence, investing in infrastructure is crucial for the growth of communities, providing them with tools that will help them thrive in multiple areas of their lives.
This is a reminder for financial institutions to provide easy banking services quickly. There will undoubtedly be challenges; however, the solutions in this article can close the gaps, offering opportunities to unbanked individuals. Essentially, as Africa’s financial institutions seek to include more in finance, we await the results of this initiative.