Nikki Kettles, Executive: Licences and Payments Regulation at Mukuru
Financial inclusion remains a pivotal conversation. It sits at the heart of transforming the narrative for the millions of unbanked and underserved communities across Africa, and it has the potential to reimagine the economic potential of the continent on multiple levels. It is also a conversation that has been had by the International Monetary Fund (IMF), the World Bank, and ongoing research, but there the gaps between those with access and those without remain extensive. There are ongoing issues inhibiting true financial inclusion as many still don’t have mobile devices, bank accounts, or access to the documentation or digital solutions that would allow them to become part of the global, financial community.
It is a complex topic, and it is one that requires multi-faceted solutions. If financial institutions truly want to understand and deliver on inclusion, they need to benchmark the steps they are taking against their innovations. They need to understand how they can show that the solutions they are creating are making measurable improvements to the challenges people are facing. And this can be established through clear benchmarking that allows for institutions to track progress, demonstrate impact and ultimately accelerate universal financial access.
But what does that actually mean? Establishing clear benchmarks is essential to measuring the success of financial inclusion initiatives. According to the World Bank, it means finding smarter ways of leveraging data to define innovation and its capabilities within the context of financial inclusion. The institution recommends that data is used as a form of empirical evidence to enhance consumer benefits across the key areas of policy, regulations and the private sector. This data needs to be collated in a way that also aligns with regulatory and policy expectations to minimise the risks of bias, and ensure privacy. Then, the data itself can provide insights that would further inform policy and regulatory planning which could provide balance to financial sector innovations. It becomes its own benchmark, enhancing how financial institutions can expand their services to meet the needs of excluded communities.
Traditionally, benchmarking hasn’t paid attention to the nuances that come with the widening digital divide. When looking at benchmarking through the lens of innovation and financial inclusion, it should go beyond simple metrics such as the number of bank accounts opened and instead prioritise nuanced indicators such as the active usage of financial services, how users are accessing diverse financial products, how solutions are influencing the gender gap when it comes to financial access, and the integration of informal financial activities into innovative solutions.
These approaches should also consider transactional diversity, financial health indicators, and the breadth and depth of financial services used by unbanked communities. Are they reliant on mobile money accounts? Are digital wallets gaining traction? How cash usage is changing within the context of widening digital accessibility and tools? This takes the conversation back to the data – using smart, emergent technologies such as AI, financial institutions can identify patterns and trends in behaviour across diverse populations and use these insights to adapt financial solutions to better serve their unique needs. When added to tools such as geospatial mapping – identifying areas of economic activity to assess how better to modify and enhance financial service penetration – and mobile network data – to track financial service usage, these insights can provide powerful insights that would inform innovation and best practice.
These innovations do offer exciting possibilities for benchmarking financial inclusion, but they need to remain cognisant of the challenges that come with them. Data privacy, security, and regulatory compliance must remain a priority, as must constant awareness of how bias can creep into the data and change the narrative for these communities. Ultimately, it is essential that financial institutions put people ahead of the cutting edges of technology but without sacrificing the potential of these technologies and the opportunity to change the unbanked story.
