- Access to informal financial services has increased significantly, and this is majorly attributed to non-bank financial institutions such as mobile money and savings and credit cooperatives (SACCOs). Does this mean that commercial banking is on its deathbed with more women opting for alternative banking solutions?
Over time, commercial banking has grown, with some financial institutions converting to fully-fledged banks due to stable economic growth and development. Today, banks provide several modes of money transfer from internal funds transfer (within the same bank) to RTGS (Real Time Gross Settlement), where funds are transferred to other banks within the same day, EFT (Electronic Funds Transfer) funds are transferred within 3-4 working days.
With the emergency of technological innovation through mobile money transfers services that allow one to transfer money without necessarily having a bank account, it necessitated the commercial banks to rethink again. On the other hand, non-financial institutions have grabbed this new technological innovation, and financial institutions (banks) have found themselves competing with them for services.
The continued prominence in the country of the mobile money services resulted from it considered convenient; fast, paperless, accessible to all phone holders, and it can reach the remotest areas where the banks have not penetrated yet. Moreover, any individual, regardless of their cadre: low or high income, literate or illiterate, can access the services without any form of discrimination.
Whether the emergency of non-bank financial institutions poses a threat or not to the commercial banking industry is yet to be established; however, the service cannot be ignored or taken for granted by the banking industry.
Does it mean that the commercial bank is on its deadbeat and women opt for alternative banking solutions?
According to studies conducted in the past, including consumer adoption of mobile phone banking, internet banking technology adoption to challenges in the external environment, none of the studies have specifically focused on mobile transfer and banks.
Banks had to introduce mobile money transfer to the account to get in line with the know your customer policy (KYC) to remain competitive with the non-bank financial institutions.
The introduction of mobile money transfers by banks affected the previously offered money transfer services on different levels.
From surveys conducted by researchers, 53 percent of commercial banks do not offer mobile money transfer services to their clients. However, 47 percent do offer mobile money transfer services. It followed that most banks collaborated with mobile money service providers such as Safaricom to enhance and adapt the services.
Arguably, the studies showed that banks did not view the mobile money transfer services as a threat to the banking industry despite their fast-paced moves. Again, the reception of the commercial banking industry’s service was positive as customers visited the bank for both services.
Notably, the factors that led to some commercial banks adopting the mobile money transfer varied from response to customer demands to allow for extensive network coverage, enhancing and maintaining market share and profitability.
Final thoughts
Organizations react to the environment differently for various reasons, and commercial banks are not an exception. It emerged that by introducing mobile money transfers, commercial banks had to respond with combined strategies to remain relevant and ensure profitability. This means that commercial banks are here to stay for a long period of time. And with continuous innovation in mobile money, technology is poised to offer more sophisticated banking services, making a real difference to commercial banks.
- How do we adopt mobile money services in Africa and ensure they meet women’s unique financial needs?
- Allow women to meet the requirements for accessing financial services more easily.
Tedious requirements for both SIM registration and account opening can be obstacles for women who hardly have formal IDs and other documentation. For digital financial services to work for women, the service providers need to simplify account opening processes, and regulators need to permit simplified know-you-customer (KYC) preferences. And by leveraging existing SIM registration processes such as M-Shwari (Kenya) and M-Pawa (Tanzania) for Safaricom and Vodacom, respectively, where users can link up bank accounts via their mobile phone and confirm loan terms and conditions with their existing M-Pesa PIN.
- Package savings with digital financial services beyond payments and transfers to enable women’s lifecycle needs are entirely met.
Women often have short and long-term savings goals that may include investing in their households, children’s education, and other financial needs, such as insurance. Through digital savings, accounts can go a long way in helping women achieve their savings goals by providing long-term savings accounts and savings “buckets” structured for particular goals. For instance, Safaricom and KCB “KCB M-Pesa Account is one such savings offers. The good thing is that it allows users to set aside small adjustments into a target savings sub-account (e.g., school fees) and earn higher interest. Women can easily manage unpredictability in their finances by directly dissolving the account to access the money.
- Bringing financial services closer to women
The fact that digital financial services are evolving presents an opportunity to bring financial services closer to women. Through mobile gadgets or POS devices that connect the client or agent directly to the provider can minimize the risk, distance, and cost of women’s financial transactions. Furthermore, providers have gone all their way into doorstep collection services through travel agents, and collaboration with existing savings groups has succeeded in in-filed accounts opening. The National Microfinance Bank (NMB) “ChapChap account” (Tanzania): has greatly increased its client numbers with an affordable and immediate access account dubbed ChapChap (“FastFast” in Swahili). With their dedicated sales force, the client information is captured through POS and smartphones. The client receives a starter kit with a pre-registered debit card connected to mobile banking. The good news is that all ChapChap clients have access to multiple channels to transact, including agents.