During a time in which the coronavirus led to trauma and dislocation, fintech—shorthand for financial technologies—provided a light in the darkness to many of the world’s poorest people. And while the communities in which FINCA works likely won’t see mass availability of vaccines until 2022 at the earliest, fintech at least is making their lives a little bit easier.
FINCA Utilizes Fintech to Improve Access during COVID-19
Examples of advances at FINCA include the recent establishment of 130 new remote paypoints in Guatemala and the launching of “virtual banking” in Haiti. These innovations make use of the fact that even in the world’s poorest communities, cell phones are now ubiquitous. They make it possible for people to conduct business with a bank remotely, which used to require visiting a branch.
And where social distancing is beneficial if not compulsory, our clients quickly recognized the multi-fold advantages of going digital. By using the branchless banking channels FINCA has created, the women and men we serve could avoid public transportation, waiting in lines and handling unhygienic cash.
As a result of those investments—many of which began well before the pandemic arrived—FINCA clients are making 60 percent of their transactions digitally. In Africa, that figure is 70 percent. And FINCA is showing the way to the rest of the industry as our figures are well above the norm. According to a recent industry survey, only one in seven microfinance banks has even 30 percent of their clients transacting digitally.
More Light in the Darkness
As mentioned above, the move to digital started before the pandemic. FINCA initiated its own investments in the last decade knowing that our clients would want to adopt new products and services that offer cheaper, faster and more convenient access. COVID simply accelerated the need and more rapidly justified the investment. To be honest, where FINCA before was trying to lead clients online, we’re now racing to keep pace with them as their lives become more and more digital.
And the news only gets better. As our colleague, Greta Bull wrote in The Banker, “Digitized financial services create a virtuous circle: a transactional account creates data trails that enable providers to layer on additional products, such as savings and credit. They enable poor people to send and receive money with wider social networks in times of crisis, extending a crucial social safety net across a larger geography and enabling poor people to deploy their time and labour in more productive ways.”
At FINCA Canada we are supporting the expansion of digital tools so that clients in Haiti and DR Congo can make transactions safely from their mobile phone or through a FINCA agent located in their community. This is not only convenient and safer for our clients but also removes the time and expense of having to travel to a FINCA branch. As a result, we have seen a surge in the use of agent and mobile banking since the pandemic began.
There is still plenty of work to do. But at FINCA we’re confident that a digital future will provide more opportunities for the poor. More light in the darkness.