Updated: Oct 7, 2020
Despite the continent’s rapid growth throughout the years, Africa remains mostly rural, meaning a lot of its areas are hard to reach especially in terms of banking. This is why Africa is known for its Digital Financial Services (DFS), and almost half of the DFS users around the world live in this continent — making it the home of the most DFS deployments across the globe.
Digital Financial Services are financial services such as payments, credit, savings, remittances, and insurance that are accessed and delivered through a variety of digital channels. DFS is revolutionary because it is banking at your fingertips and your convenience.
One of the many positive results of DFS is that it has lifted many people out of extreme poverty as it increased the consumption levels of low-income households. The launch of mobile phone-based money transfer service M-Pesa in Kenya, for example, reduced the country’s poverty rate by 2%. Due to the experience and insights recorded by The Partnership for Financial Inclusion, IFC and the Mastercard Foundation have deduced that the future of Africa’s financial sector and financial inclusion is in Digital Financial Services.
The Future of DFS According to Industry Leaders
When financial service providers were asked about the future of DFS in Africa, their answers all point to essentially the same thing: DFS will only grow in the future, and this will eventually result in more financially included people in the region.
According to Francis Matseketsa of Airtel Money, a provider of telecommunications and mobile money services in East, Central, and West Africa, DFS will touch most sectors of the economy to the remotest part of Uganda. All of this possible within five years. Julien Mahe of microfinance institution Advans Cameroun predicts the same. He says that more and more financial institutions will offer DFS and this in turn will make it easier for customers to access banking services.
On the industry side, Mamadou Cissé of Baobab, a digital financial inclusion group that offers easy to use financial services, said that a lot of DFS actors will connect businesses or governments to different payment platforms — in this case, through digital channels. There will be the development of products for DFS and this will be advantageous to the mass market.
As for preferred digital channels, Frank Adu Jr. of CalBank, an innovative commercial bank in Ghana, said that it would be mobile devices. There is a high usage of mobile phones and mobile banking, and this will continue on in the future as this is a great way to reach different geographic sectors of the market.
To sum up the future of DFS, Godwin Ehigiamusoe of LAPO Microfinance Bank said that any financial institution that desires to reach a large number of clients in an efficient manner cannot afford to ignore the emerging DFS revolution.
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