The young population in Africa are less likely to have a bank account compared to adults on the continent. At the same time, they are more prone to mobile phone, always trying out new things and be knowledgeable of the various digital channels that we have nowadays. This seems to suggest that digital banking could be a winning strategy for advancing financial inclusion among the youth. The youngsters in Sub Saharan Africa have no access to the traditional financial services despite their active financial lives. As per the World Bank survey, 51 % of young adults across the African continent saved money; 44 % borrowed money while only 26 % have an account at a banking institution. Subsequently, this shows that the youngsters prefer to use informal options to meet their financial needs.
Digital Financial Services (DFS) has been considered as a solution to banking the youth. The youngsters in Africa are more proficient in the use of modern technology and curious about digital channels. According to World Bank Report, research shows that there are about 650 million mobile users in Africa, exceeding the number in the United States and Europe. It has been stated that youth’s ability to use mobile phones has attracted them to mobile money. As per Global Findex Database in 2017, Statistics shows that 30% of youngsters across Sub Saharan Africa received digital payments compared to 37% of adults. Evidence shows that the young generation in Zambia and Uganda have a good understanding of how to use digital Financial Services. Youngsters are particularly more familiar with technology compared to the adults, and thus have easily adapted to digital platforms. It is therefore that youth would have low aptitude for using DFS.
Banks are recognizing the potential of reaching out millions of prospective customers, especially the rural population who account for more than 60% of Africa’s total population and have limited access to banking services. Commercial bank branch network in the rural areas is still underdeveloped. However, according to the Global Findex report, more than 50% of the adult population in Africa has access to mobile telephone, and thus, mobile banking could enable the rural population to have access to financial services.
Mobile technology is particularly an important factor when considering financial inclusion of young people and children. 2/3 of the world’s population has a mobile subscription and this is predicted to increase to ¾ by 2020; with regional penetration rates of 50% in Sub Saharan Africa. In developing countries mobile phone penetration rate is higher among youth of the age 15-24 years compared to those who are 25+. This is why it is particularly important to engage this demographic and tailor Fintech and mobile banking solutions towards their specific need.
Partnering with NanoBNK
Even though a range of mobile financial services are available, NanoBNK can help young people to more easily meet the requirements for accessing financial services. Banks partner with NanoBNK to address this segment of the population. The key is to form smart partnerships and share useful knowledge in order to increase financial inclusion within Africa.