While about 85 per cent of Kenya’s population have formal financial access, statistics show that one in every 10 Kenyans is financially excluded.
Mobile banking, internet banking and digital platform integrations have been highlighted as tools for creating financial inclusion for the unbanked.
Ralph Opara, Country Managing Director at Access Bank Kenya notes that unlike traditional banks, mobile banking eliminated the traditional barriers to having access to finance for the unbanked.
“What mobile banking and digital banking did is to ensure that you eliminate distance and cost to the customer where they can transact or access a financial service through their mobile phones,” Mr. Opara said, noting that distance was a barrier for people seeking financial services.
He notes that mobile banking provides convenience, allowing lenders to reach customers through mobile forms, and awarding them an opportunity to tailor credit facilities.
“Gave opportunities to look at creating products using alternate data-driven credit models to structure credit programs that would make it bankable for people that otherwise would not have fit the traditional banking credit models to gain access to finance and credit,” Ralph Opara said.
Despite the notable financial inclusion reach, to reach the 15 per cent that are unbanked, banks have been urged to partner and collaborate with fintech, telcos, regulators and other agent networks.
Also, the use of USSD Codes, use of voice prompts that can help customers in terms of savings, literacy programs, and lending programs, and creation of a one stop shop can ease the burden of accessing financial services.
In creating impactful products, banks have been tasked to embed financial literacy in their products.
“We live in a very dynamic environment where consumer changes and requirements change rapidly. So as you even design products you have to keep monitoring it and tweaking it to ensure that it stays relevant to its end users,” Opara said.
With the increased uptake of mobile banking and digital banking, Ralph Opara reckons that there is a need for consistent revenue, cash streams and collateral.
“Digital banking looks at alternate data-driven credit models to come up with a lending product and by using these alternate credit models like mobile money transactions, utility payments and supplier invoices basically create a credit worthiness profile for the user,” he said reiterating that digital and mobile banking is reshaping credit scoring models.
In Kenya today, many small and medium sized enterprises have limited access to credit.
The use of data-based credit models to profile SMEs has been highlighted as a critical tool for structuring products that would ordinarily not be available for SMEs.
“Most SME businesses require working capital type financing and so that helps us create things like pre-approved overdraft programs, invoice financing requirements for their needs and pay later type lending solutions to support them,” Opara said.
He notes that SMEs require digital literacy and digital lending programs that will teach them the basic accounting and record keeping requirements to help them keep their business on a sustainable basis.
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