Fintech and Sustainability by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9783031406478
Publisher: Springer Nature Switzerland

Increased ability to access from remote areas that are generally not served by physical branches of traditional banks (Demirgüç-Kunt et al., 2018).

Lower transaction costs (Maurer, 2012).

Banna et al. (2022) describe the case of Wizzit, a provider of microfinance services that has partnered with the World Bank Group to establish itself in sub-Saharan Africa with its smartphone-accessible microloan offering targeted at unbanked or low-income individuals who lack access to traditional financial services. Since 2004, Wizzit has offered South Africans a low-cost bank account that they can access to make and receive payments via any cell phone or phone network. More than 400,000 people in the country have adopted this solution and opened accounts with the mobile banking company. As reported by the World Bank Group, by setting up such services and interacting with the platform’s officials, people can better manage their finances and control the future of their businesses.

In several countries, the proliferation of electronic payments and digital money has enabled faster and broader access to government assistance. Indeed, digital payments enable governments to provide subsidies through low-cost cash transfers rather than through water and food deliveries. Such government-to-person (G2P) payment systems have been widely used in Brazil, Colombia, and Pakistan (Arner et al., 2020).

Telecommunications companies have mainly driven fintech developments in Africa. Vodacom and Safaricom, two private mobile phone companies, launched the most successful project, M-Pesa (mobile money in Swahili), in East Africa. This project is based on providing payment services with electronic money registered on a cell phone. They launched the project in Kenya in 2007. In 2016, there were more than 100 million mobile money users in sub-Saharan Africa. Between 2006 (the year before M-Pesa was launched) and 2019, the percentage of the population with bank accounts in Kenya more than tripled from 26.7% to 82.9% (Central Bank of Kenya, 2019). The financial inclusion recorded in these geographic areas was also characterized by high gender inclusion. Compared to other emerging regions, the gender gap in mobile money use is 19.5%, about half the average for all low- and middle-income countries (Makina, 2019). This process of financial inclusion subsequently saw the introduction of other mobile money services such as loans, savings, and insurance, for example, through the M-Shwari service, a lending service introduced by the Commercial Bank of Africa and linked to M-Pesa, which allows you to save and borrow money via smartphone without having to visit a bank or fill out forms (Bharadwaj & Suri, 2020). This service stipulates that amounts must be repaid within 30 days and credit approval involves a rating based on data about the user’s spending by phone.

In addition to mobile-based services, there has been a rapid growth of fintech in Africa related to bringing innovative financial products to market. In Kenya, Tala was the first to launch its mobile app to offer credit and unsecured loans to consumers and has disbursed more than $2.7 billion in loans to date. FairMoney, launched in Nigeria in 2017, has followed a similar path. Starting as an

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