By Jared Oundo
Kenya should learn treasured lessons from what the Indian government is doing to draw more people into the banking system as a way of alleviating poverty. Indian government’s moves to bank its unbanked population by limiting how much cash that can be drawn at one time, identifying citizens with high potential to go cashless, and by subsidizing smart phones.
Financial inclusion of the underprivileged is key to poverty alleviation, and critical to its success is financial literacy. India is one of the fastest developing emerging economies but also with vast gaps between rich and poor.
India identified where her gradual potential cashless market lies. The population of India is 1.2-billion, of whom about 400-million people are included in the financial sector as they have bank accounts and are saving, investing or borrowing.
Nevertheless, 70% of the population remains unbanked. As the Indian government’s cashless drive gathers momentum these individuals will soon require bank accounts to send and receive money. With a smart phone and internet access or cell phone signal, all they need do is select a financial institution and the product and/or service they need. India’s maturity towards a cashless society is happening.
Kenya’s population is about 40 million. The current trend shows that Kenyans are moving straight to smartphones, skipping straight past laptops and PCs, because it’s easier and far more feasible for them. And, with going cashless comes bank-level security which has already proved a huge driver in the adoption of legitimate mobile money technologies by individuals and SMEs in Kenya. It would be worth noting the under exploited areas where a move to mobile has high potential.
The potential volume of cashless transactions makes India extremely attractive to fintech syndicates, as the rapid explosion of fintech startups in India has shown. The growth of fintech startups in Kenya providing alternative ways to receive payments is taking place. We see this by the number of service providers whose offerings to consumers and SMEs. Yet the scale and rate of successful startups has immense potential to grow here too. India is embracing young companies that will develop the relevant technology. Banks are leveraging off accelerators to get in touch with young fintech companies. With gratitude, we are seeing more innovation units being established in Kenya’s mainstream financial institutions.
Actually, it is the on the ground sales teams in India that are bringing about conversions to financial products and services. Even though this is slowly varying, critical to India’s financial inclusion drive right now are face-to-face relationships. The market is currently experiencing a significant growth in innovations that address the financial need-gap of the economy coupled with significant participation from companies.
The writer, Jared Oundo, is a published author, trainer and consultant