CAPE TOWN - Financial inclusion in the tech space was another discussion at the #MESTAfricaSummit.
Arguably the biggest tech sector across the continent falls in the category of FinTech.
This is a vertical which continues to receive the greatest amount of funding and proven cases of disruption.
FinTech start-ups are the solution the traditional banking sector has been looking for. This was the main sentiment at the summit among guests.
“The traditional banking model is not suited to the average consumer,” comments Nvalaye Kourouma, Chief Digital and Innovation Officer of Barclays RoA, “FinTechs need to start looking at specific needs in the finance industry and how to address them.”
Evidently the traditional banking model is too daunting for the majority of the market, with strict regulations, complex systems, fees and penalties.
Education is at the heart of financial inclusion in Africa. Monique Baars, CEO of Fineazy, stated: “Financial illiteracy is the greatest barrier to financial inclusion.” The majority of Africans are unaware of even the most basic financial concepts, such as what compound interest is or what constitutes good debt versus bad debt. If FinTechs can drive education, they will drive financial inclusion as the traditional banking model is slowly becoming obsolete.
Marc Herson, from Investment at Investec, added: “Banks are simply not efficient as they are so highly regulated. Financial inclusion to anyone means building trust – this does mean trust from both sides. The consumer needs to know their money is safe and the financial institution needs to ensure profit.”
Rostan Schwab, the Head of Africa FinTech at IFC, continued: “Banks in the traditional sense and form is a dying species. The largest wealth managers in the world are not banks. This is the space for FinTech to play. Mobile money is the most active in Africa, this is the continent with the highest mobile money numbers. FinTech can drive inclusion for Africa.”
FinTech for financial inclusion means providing a means to the vast majority of Africans that are still unbanked to become creditworthy.
“We need to move away from financial inclusion and towards financial empowerment,” added an enthusiastic Kourouma.
But financial exclusion is still an incredible problem that needs to be urgently addressed.
Over 500 000 Kenyans were blacklisted due to non-payment of loans as little as $2.
Monique Baars added, “acess is only one piece of the financial inclusion puzzle. If one does not fully understand access that can lead to dormant accounts and default. We need to be teaching the basic concepts otherwise we are moving towards the space of financial exclusion rather than inclusion.”
The panel discussion concluded with a heated debate on blockchain. Banks are currently using blockchain exclusively for internal transactions. However, the more experimentation like this that happens the more promising blockchain can become for the average consumer.
Renee Hunter, Senior Research Analyst at i2i and moderator of the panel, concluded the session with the evocative statement: Blockchain is a solution looking for a problem.
Reflecting on the panel, guest Stuart van der Veen, Nedbank CIB Head of Disruption and Innovation, commented “the financial inclusion discussion needs to progress to focus on accessibility and how this can be facilitated at scale.”
-BUSINESS REPORT ONLINE