At the 2020 Huawei Developer Conference held earlier this week, fintech influencer, best-selling author, and entrepreneur Brett King joined the finance tech.session to talk about the role of technology to improve financial inclusion and shared his views on how banking will look like in the years to come.
In light of this, AppGallery has been growing rapidly as it pushes to onboard more financial partners and attract banking apps from different regions. In particular, the app marketplace is seeing strong demand coming from users looking for apps that allow users to manage their finances with their local banks and financial institutions. The goal, it said, is to establish a wide catalogue of apps that caters to the varied needs of its global audience.
In the past three months alone, AppGallery has seen a growth rate of financial apps of around 160%.
Huawei is allocating resources to help accelerate this growth, including the US$10 million Finance Partnership Growth & Innovation Fund that will go towards partnerships with financial apps developers and innovation projects, and its US$1 billion developer incentive program Shining-Star.
Speaking with Siri Borsum, global vice president of the finance vertical for Huawei Mobile Services, at Huawei Consumer Business Group, King said that mobile phones have dramatically helped improve financial inclusion over the past decade, allowing for innovative services like M-Pesa to emerge.
“Prior to the introduction of mobile phones in Africa, only about 24% of the African adult population had a bank account,” King said. “Within a span of 6 years [after the introduction of M-Pesa], about 98% of the adult population [had] a basic bank account through their phone.
“We’ve essentially seen the fastest ever shift in financial inclusion that we’ve ever seen in history … The mobile phone has done more for financial inclusion than … the banks have done in more than a hundred years.”
Launched in 2007 by Vodafone Group and Safaricom, M-Pesa is a mobile phone-based banking service that allows users to deposit, withdraw, transfer money, pay for goods and services, access credit and savings, all with a mobile device.
The service lets users to deposit money into an account stored on their cell phones, to send balances using PIN-secured SMS text messages to other users, including sellers of goods and services, and to redeem deposits for regular money.
Since its debut in Kenya, M-Pesa has expanded to Tanzania, Mozambique, the Democratic Republic of Congo, Lesotho, Ghana, Egypt, Afghanistan and South Africa, and now claims over 42 million active customers.
Services like M-Pesa have become so successful in serving the unbanked because they’ve managed to leverage technology to build innovative products. These solutions are accessible to the masses and address the challenges consumers typically face when dealing with traditional financial institutions.
“If we look at the traditional mechanisms for how we would get these [unbanked] people into a bank in the past, we have a number of problems,” King said. “First of all, they have to physically get to a bank branch, and secondly they need to come in with the identity requirements to open a bank account.
“If you take sub-Saharan Africa, for example, about 70% of those people would have to spend an entire month salary to get to the nearest bank branch. That’s just the cost of transportation. And when they get there, they wouldn’t qualify for a bank account because they wouldn’t have an ID document. This is really what technology has been tackling over the last decade or so.”
Financial inclusion isn’t a problem that’s limited to emerging markets, King said, noting that in the USA, about 25% of households still don’t have a bank account or a credit relationship with a bank.
To enable developers to build these apps that can serve emerging markets, Huawei has developed fully open Chip-Device-Cloud capabilities that help to accelerate app experience innovation, and includes functions directly related to financial services such as identity authorisation and secure payments, as well as state-of-the-art technology such as artificial intelligence and machine learning.
On the future of banking, King said the industry was heading towards what he refers to as the Bank 4.0 era, where banking becomes embedded, ubiquitous and frictionless.
“The biggest shift between Bank 3.0 [which revolves around mobile], and 4.0 is that we move from a world of product design that we put on multiple channels … to the 4.0 world, where it’s now about software-based experiences,” King said. “So we strip away the product features that are unnecessary and we just get into the core utility of the bank [which are]: the ability to safely store money, the ability to pay for things or safely move money, and the ability to access credit when you need it.”
Banking 4.0 is also about leveraging data to deliver the right service to the right customer at the right time, King said, noting that technological advances and hyper-connectivity will allow financial companies to better understand their customers and offer them the right product when that product is needed.
“In the past, we had all kinds of products, for example, in credit, there are credit cards, car loans, travel loans, mortgages,” King said. “In the future, it will be like ‘what do you need the credit for? What is the context of your request? What can you afford?’ and now I can give you access to credit in real-time.
“Lowering friction… is the number one goal developers should have. How do they take friction out of the customer experience. How do they make the end result for the customer easier, better and safer.”
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