Access to alternative financial services have skyrocketed over the past few years. This is no surprise. Consider this: there are over 1.7 billion people in the world who don’t have access to the most basic form of financial service: a bank account. Technology is, however, disrupting the banking industry. This ushers in a new era for financial inclusion, finally serving the needs of lower-income populations.
What are alternative financial services?
Alternative financial services are financial services that have been developed outside of the traditional, regulated banking sphere. Alternative financial services are often utilised by people who are underserved by the traditional financial system. This includes: unbanked people, low-income earners, immigrants, and people with unfavourable or no credit records.
Some examples of alternative finance services include:
- Peer-to-peer money transfers
- Cross-border remittances
- Salary advances or payday loans
- Interest earning investments
- Buy Now Pay Later (BNPL) services
Why are alternative financial services attractive to the poor?
Alternative financial services provide safe, reliable, secure and cost-effective access to much needed financial services. The majority of the unbanked population are low-income individuals who either can’t afford a traditional bank account or live in an area that is underserved by traditional finance institutions. In these areas where traditional banks have failed to reach, there are millions of people who are forced to use costly, risky and alternatives for transferring money on a daily basis. Informal methods of transferring money across borders, or within a single country, are often costly and unsecure.
Alternative financial services enable the unbanked to: transfer, invest, gain access to loans and other services through a mobile phone. This has the potential to increase earning potential, and encourages savings and investments. This can play a massive role in reducing poverty.
“Africa has an incredibly large unbanked population that needs access to financial services. Through Be Mobile Africa’s innovative, all-in-one money app, users can send and receive secure, instant and affordable cross-border payments in multiple currencies – all without a traditional bank account,” said Dr Cédric Jeannot, CEO and co-founder of Be Mobile Africa.
The benefits of using alternative financial services
It’s no surprise there has been massive growth within the industry over the past few years. Some of the benefits of alternative financial services include:
Traditional banking services tend to be costly. This is one of the many reasons why low-income earning individuals do not have bank accounts. Fees associated with bank accounts, credit cards and cross-border payments are often exorbitant. Most of the unbanked population simply can’t afford these high fees. This is where alternative financial services come in. Alternative financial services are often designed with this factor in mind and tend to be much more affordable than traditional banking services.
Improves quality of life
Alternative financial services can drastically improve the quality of life by providing access to financial services. Think about how life would be if you never had access to a bank account, investments, loan facilities. Where would you store your cash? How would you buy your car? How would apply for a business loan? Financial services improve a person’s quality of life and encourage things like savings and investments. .
Financial inclusion for all
Enabling further financial inclusion unlocks new value opportunities for individuals and institutions. Simultaneously, giving unbanked people the power to begin saving, investing, and securely transacting, can elevate them out of poverty.
At Be Mobile Africa, our mission is to bring 100 million people out of poverty through financial inclusion. We are working towards banking the unbanked population of Africa and the rest of the world by providing safe, reliable, secure and cost-effective access to financial services.
Through our all-in-one money app, you can bank across borders and send or receive secure, instant and affordable cross-border payments in 22 currencies.