This is where fintech has been a game-changer on the continent. However, we are far from having arrived at a place of full formal financial inclusion, which means leading financial services companies underpinned by the best fintech technology must continue to champion digital transformation across the continent’s financial ecosystem.

It starts with a deep commitment to interoperability. In our world, interoperability means you are agnostic towards the type of money that people use.

So, whether it’s cash, digital wallets, or cards, it starts with opening your network to all the players in the ecosystem.

In our business, this philosophy underpins our belief in a “two-sided network” wherein customers and enterprises alike stimulate flows through initial payment interactions, which in turn stimulate subsequent flows and through network effects increase the speed at which the payment fly-wheel turns!.

Interoperability ensures that the customer has a voice, and the consequence of this is that weak propositions get overlooked at best and squashed in the theatre of public opinion at worst.

This interoperable customer-centric approach stands in stark contrast to the walled-garden mentality that has plagued some financial institutions, where – it could be argued – the focus is on maintaining control rather than serving the needs of the people.

When considering the bigger picture of unlocking the untapped growth potential in Africa, the vision of a leading financial services provider needs to extend beyond the non-negotiable interoperability and encompass the vast opportunities presented by the continent.

Africa continues to be a huge focus for us at Mukuru precisely because it is a massive untapped growth area, and so the orientation is geared towards continuing to monetise this potential.

We are constantly asking ourselves: How do we continue to capture more and more of the existing, and growing, remittance flow and secure it in a formal context?

This requires constant innovation and a finger tightly on the pulse of what the customers are saying and asking for. This cannot be overstated.

In a sector awash with well-used jargon, digital transformation will continue to be front of mind. This is because digitisation is sweeping across the African financial landscape.

Of course, certainly, from our perspective, we have witnessed a massive shift in the numbers of people adopting a digital store of money and interacting and transacting with the digital economy.

This should always remain front and centre – walking the journey of financial inclusion with customers… but, as already mentioned, only if it is built on giving customers solutions to their existing problems. There is little logic in creating a shiny service and hoping to create demand.

No discussion about the flow of money in Africa is complete without understanding the importance of mobile wallets. From our perspective, working towards having a wallet in each market where we operate ensures seamless operations.

This is strategic in addition to being pragmatic, as it enables a unified customer experience, which – when good – drives customer loyalty and trust.

Our business is also pragmatic, in that it recognises the importance of addressing the demographic shifts and labour shortages in the global north, where an ageing population and a dearth of workers in certain sectors create a demand for migrants.

By facilitating the flow of remittances and fostering financial inclusion, we work to capitalise on this dynamic and drive sustainable growth in the region, while also playing a big part in ensuring critical funds reach families for basic requirements such as food, education and housing while helping these customers take incremental steps on their digitisation journeys.

Leading fintechs will know that if you want to go fast, go alone, but if you want to go far, go together.

This is why, as a business, we are actively pursuing strategic partnerships to bolster our brand association and position ourselves as a leading player in the industry.

Innovation is at the centre of everything, and we are close to signing transformative deals that will have a marked impact not only on Mukuru but on the broader industry in Africa.

The fintechs that go the furthest in terms of unlocking Africa’s immense potential will be the ones that remain deeply committed to driving digital innovation and fostering financial inclusion while capitalising on the vast opportunities presented by this diverse, vibrant continent.

We believe that by embracing true interoperability, digital transformation at its most granular level, and by investing in strategic partnerships, next-generation financial services platforms will continue to be trailblazers in the evolving financial landscape in Africa. The potential that will be unlocked will be nothing short of awe-inspiring.

The fintech, which operates in more than 50 countries with over 450 remittance corridors and more than 14-million+ users, says the product was developed as a result of strong demand from the massive Southern African diaspora in the UK.

The new instant transfer product will appeal to the existing customer base, as well as upwardly mobile and banked consumers who are globally connected but are seeking a simpler and quicker way to transfer money internationally.

Andy Jury, Mukuru CEO, says the business set out to build a truly instantaneous solution.

“The key point of differentiation is that it genuinely is almost immediate. There’s no money lingering in the complicated payment ecosystem for 48 or 72 hours. Excluding the competitive fees, you could send money to a UK bank account and then back to South Africa in less than a minute,” he says.

Jury explains that the solution is designed for transferring “discretionary allowance”, such as sending money quickly to a family member. “It was important to the team to come up with a solution that is simple to use,” he explains.

“Our existing customers already use WhatsApp and so being able to transfer money internationally using WhatsApp is an important characteristic of the solution. In addition to this, using the Mukuru App for these transfers offers mobile and on-the-move users a host of benefits, such as ease of use, as well as virtual verifications within the App.

“If you compare it to the fees of major banks or fintechs it is well-priced, but the real differentiator is that it happens in real time, is frictionless and the user knows where the money is. There is no needless waiting.”

Naturally, the complexity of the system and technology that enables instant transfers into a UK bank account if transferring from South Africa, and into a Mukuru wallet or local bank account in South Africa if transferring from the UK, is “next level”, according to Jury.

Being bi-directional and frictionless, the solution has been described as transformative and an important evolution in the money transfer industry.

Moreover, given that South Africa’s unemployment rate is sitting at 32.9%, the highest in the world, the country’s informal economy will continue to grow exponentially.

And yet, it remains largely disconnected from formal financial systems. As South Africa looks toward embracing the Fourth Industrial Revolution, now is the time to build a digital bridge to financial inclusion, designed with trust at its core.

The FinMark Trust Annual Report 2022 brought to light several pressing issues South Africans face, including the ongoing energy crisis, subdued job creation, and an economy under strain.

It emphasised the need to prioritise projects that address these challenges while advancing financial inclusion, particularly for the economically vulnerable.

The invisible majority

With the informal sector constituting such a significant percentage of the country’s economy, its exclusion from the formal financial ecosystem is detrimental on a number of levels. For one, by depriving the more than 50% of South Africa’s urban population who live in townships and informal communities from financial access, the economy is losing the potential to harness the power of the sector to drive growth and financial stability.

Barriers to banking, as identified by the FinMark Trust, include the cost of acquiring Point of Sale (POS) devices, bank fees for digital transactions, and the necessity for businesses to close while merchants visit banks. Furthermore, unregistered businesses struggle to get a bank account.

Addressing the gap

The digital revolution presents fintech players with an unprecedented opportunity to address this gap. By leveraging digital technologies, companies like Mukuru are designing financial services that cater to the unique needs and contexts of the informal sector. However, in this journey of digital financial inclusion, one factor stands out as a cornerstone: Trust.

Trust is the lifeblood of any financial relationship, and even more so in the informal sector. Relationships hinge on in-person engagements and handshakes.

This makes establishing trust through digital platforms a difficult undertaking. It requires savvy fintechs to focus on elements such as convenience, transparency, reliability, and safety. It also relies heavily on social influencers, such as the head of one’s church, and people with a shared language.

In a sector characterised by people who have limited time to travel far distances to branches, services that offer easy access through both analogue and digital channels are critical. From USSD and WhatsApp to customer apps, providing multiple entry points caters to the diversity of the informal sector, showing an understanding of their unique needs and circumstances.

Adding to the value chain

Hidden fees and costs erode trust and discourage engagement with formal financial services. Digital platforms that make all costs visible and easily understandable foster trust by ensuring customers know exactly what they are paying for.

The ability to deliver on promises consistently is pivotal in establishing confidence. Whether it is order delivery, cash collection or digital distribution, the assurance that services will function as promised and when needed is crucial in maintaining trust.

Safety is the bedrock of trust. At a time when cybercrime is pervasive, providing secure platforms is non-negotiable. Tried and tested processes and tools that protect customers’ funds and personal information go a long way in assuring customers that their money is safe.

Listening to the customer

Engaging in a consistent feedback loop with customers is also crucial to building trust. By actively seeking customer feedback and incorporating it into service design and delivery, digital financial services show that they value and respect their customers.

This feedback loop, combined with dedicated customer service, fosters trust by showing customers that their voices are heard, and their concerns addressed.

Above all else, the human touch remains a critical building block for creating trust in the digital world, especially in the informal sector.

This is why Mukuru has an extensive network of field employees to establish trust and drive retention. These employees bring a sense of comfort to people as they can establish rapport when signing up with a fintech service provider.

Moreover, overcoming the ‘cash conundrum’ is key. Integrating user-friendly digital payment systems that are widely accepted throughout informal communities while providing accessible cash withdrawal points will be essential.

Ultimately, establishing an environment of trust will be the key to creating a pan-African digital financial system that is inclusive, resilient, and robust.

Formal financial and economic inclusion remain pivotal in addressing the rampant inequality in many African economies today.

In 2022, as South Africa grappled with scheduled and unscheduled power outages, businesses were put under tremendous strain as revealed in the FinMark Trust 2022 report.

With an estimated 50% of financial transactions in Africa occurring in an informal, over-the-counter, cash-to-cash, unregulated setting, there is significant potential to adopt digital solutions designed to bring about financial inclusion.

But more than the technology, driving financial inclusion comes down to using a customer-centric approach to financial services.

For any business, this is a logical thing to do. For fintechs, it shows an understanding of the importance attached to promoting financial and economic inclusion in communities throughout the country. Such an approach is not just about the bottom line.

It is about creating a discernible impact on people’s lives. Listening to and understanding the needs of the communities in which a fintech operates, to tailor solutions that focus on driving financial inclusion, has become a business imperative to stay relevant.

The adoption of the Mukuru Card / digital wallet reflects the current need in the market for all South Africans to access financial services.

Its use and adoption has grown consistently since its launch over a decade ago and with nearly half of the active Mukuru customer base using digital wallets in some form, it is a clear sign that there are significant opportunities to unlock for service providers looking to access the underserved market.

Much of this comes down to designing solutions that reflect an understanding of the friction points when it comes to payments.

It is about reducing the disruption people experience by creating something that reflects how a business can help overcome the challenges they face daily.

In doing so, a service provider can unlock significant opportunities to bring in those people previously excluded from the traditional financial services ecosystem.

Not only is it the right thing to do, but it enables fintechs to build a sustainable business by offering solutions that customers need and want.

Ecosystem of support

For instance, interventions to address financial inequality should be interconnected and tailored to solve the practical challenges many communities face.

One example of this is how we at Mukuru are focused on reaching the unbanked and underbanked population by offering accessible, low-cost remittance services.

Simultaneously, the organisation provides a digital store of value, allowing customers, for many of whom this is a first-time experience, to safely keep and manage their money.

By facilitating easier sends with these digital stores of value, the opportunity cost for spending in other areas is lowered, thereby linking financial health to overall economic progress.

These solutions are integrated to provide a degree of formalised financial services to those overlooked by the traditional banking system.

However, there are still significant barriers to banking which many face in South Africa, as outlined in the FinMark Trust report: the cost of acquiring POS devices, bank fees for digital transactions, and the challenge for informal businesses to get a bank account.

Savvy fintechs address these barriers by providing services that require minimal initial outlay and offer affordability.

This includes leveraging technology to allow for seamless transactions without the need for costly devices, as well as offering services that can be accessed without a traditional bank account.

People first

Moreover, Mukuru understands that embracing technology must not overshadow the human element. As such, the business has developed digital solutions like mobile apps and Web platforms, which offer convenience and ease of access. But crucially, we maintain a vast network of physical locations where customers can engage in person, receive support and guidance – underlining the essential role of the human touch in driving financial inclusion. For instance, we have 1,500 field agents currently active across the country to provide in-person assistance to customers.

A significant aspect of this approach is recognising and addressing barriers to formalisation, as identified in the FinMark Trust report, such as the perceived administrative burdens and limitations on required documentation, particularly for immigrants.

Mukuru strives to create an environment that encourages formalisation, with supportive guidance to help customers and informal businesses navigate these challenges.

This multi-faceted approach aims to address different aspects of inequality, from access to banking services, digital literacy, and limited internet connectivity. It is therefore not just about bringing banking to the unbanked, it is about ensuring these new users can comfortably navigate this new world.

To this end, there cannot be a single point of failure. This is why it is critical to invest in building the necessary redundancy when it comes to payment solutions. For instance, having a mobile app, USSD, WhatsApp, a contact centre, and physical booths all available to customers to transact more reliably.

By staying customer-centric and strategically deploying technology, Mukuru provides an inspiring model for financial service providers seeking to drive financial and economic inclusion.

This human-focused approach may well be the key to harnessing the full potential of fintech in addressing inequality, and in paving the way for a more inclusive and equitable future for all.

In practice, every new customer that is added to this ecosystem not only increases the service’s value but also amplifies the impact on economic inclusion.

Invariably, this creates a positive cycle where everyone benefits from a more connected network. At a fundamental level, Mukuru’s approach underscores the power of connectivity in reshaping the financial landscape towards greater inclusivity.