The vicious circle of financial exclusion in emerging markets (and how Channel VAS aims to resolve it)
For Africa and the emerging markets in general, access to technology and specifically to smartphones is a key issue with a lot of challenges. In today’s digital, connected world, the smartphone has become a necessary tool for people’s daily lives – a device of vital importance, which enables them to ride on the digital and access untapped opportunities. There is only one problem: The majority of people in emerging markets cannot afford to buy one.
The result is a paradoxical situation, which is very common in these counties. A “Catch 22” situation. People cannot afford a smartphone as they are not financially included and at the same time they are not financially included as they cannot afford a smartphone. So where do you start in order to interrupt this vicious circle?
Banking the unbanked is something that established, brick-and-mortar financial institutions have completely ignored, as there are no incentives. They are simply not interested to acquire a customer who earns a small amount of dollars per year. From their point of view, the risk to provide to him a small loan is too high.
But with over 1.7 billion people having no access to banking services globally, the task to find ways to offer financial inclusion to these people has now fallen on major global fintech companies like Channel VAS. Through mobile technology and the vast amount of data we can collect and analyze through our proprietary tools, we were able to significantly cut down costs and minimize risks for acquiring those customers. The huge number of this potential customer base of unbanked people represents a great opportunity and mobile technology gives us the chance to reach them wherever they are.
But what about the low penetration of smartphones in these areas? For Channel VAS this is a problem that can be turned into another big opportunity. That’s why we invest a lot of resources in this field and are developing smart custom solutions such as handset loans. By providing handset financing and be able to collateralize these handsets we open up a wide area of services, a new segment of lending which was ignored in the previous years.
And the footprint of such solutions speaks for itself. The growth of Channel VAS through the years is impressive. Through our innovative services we expanded our geographical footprint, especially in the African region, bringing financial inclusion to more unbanked and underserved people.
Channel VAS has an addressable base of several hundreds of million mobile subscribers that are using our services, while our operations account for a significant percentage of the market’s total value. And as we continue with our mission of banking the unbanked and offering financial inclusion for all, the future looks bright.
Channel VAS is a Fintech Sponsor at Mobile 360 – Africa taking place 16-18 July in Kigali, Rwanda.
The views and opinions in this piece reflect those of Channel VAS and not necessarily those of GSMA.