Towards a Cashless Economy: Microfinance’s Strategic Leap into Digital Financial Solutions
Money has always been in humans’ lives since the earliest days but under different forms of course. Long ago, farmers’ exchanges were made in terms of animals’ numbers against the products or services they were looking for or they were willing to pay for and it was known as “bartering”. Troubles arose because sometimes it was difficult for both parties to agree on the values of goods or services being traded, and at that time, it was “solved” by the development of the “commodity money” and products such as sugar, salt tea, or seeds were used. Then their transport, their perishability, or the problem of their storage proved that it was not a sustainable solution.
Later, people started to use coins from precious metals considered by historians as “representative money”. Then paper money was introduced, in China, to replace heavy and devalued coins not as easy to carry but also as an offshoot of the invention of block printing. With time, representative money (paper money and Coins) become more common and essential, almost irreplaceable in our lives and they are being used to buy (or use) all kinds of goods and services. Nowadays, each country can make its own system of coins and paper money.
In brief, money was defined by economists as anything commonly accepted by people in exchange for goods and/or services, it is the medium of exchange. Therefore, money can be anything that can replace or represent wealth and facilitate exchanges between two parties for goods or services. The evolution of technologies allowed the conception of sophisticated and complex paper money for security purposes. But now with the incredible development of mobile and communication technologies, virtual money or “e-wallet” is the way to go.
Now, technology allows connection between bank accounts and mobile handsets in a secure and reliable manner. We, ADFinance, developed and now provide these solutions to microfinance institutions to enhance financial inclusion in Africa where small businesses and low-income individuals still lack access to financial services or have time-consuming procedures to get them.
Previously mobile banking assisted financial institutions’ customers in interacting with the core banking system through their mobile handsets to get transaction alerts, balance inquiries, and mini-statements of their bank accounts as well as make transfers between bank accounts. And now with the latest developments, anyone with a mobile handset can have access to all the basic financial services such as deposing or withdrawing on top of the already existing services at any time and from anywhere just with a telecom network.
They can make transfers between accounts of the same or different financial institutions and get credit installment reminders. Though, the most interesting feature is the interaction between the core banking system of the financial institution and the e-wallet of the client. It is the option for the customer to transfer money from his mobile money virtual account to his bank account in the MFI (Micro-Finance Institution) for instance and vice-versa as an alternative to traveling to the nearest branch to make the transaction. In addition, this service reduces significantly the operational costs of running branches while expanding their outreach. It is a win-win situation for MFI and its customers.
It was designed with attention to detail for instance security and reliability with the collaboration of Telecom operators to ensure that customer and their MFI will use it without worries about the security of their monetary transactions. A highly qualified team of software engineers ensures 24/7 security and maintenance of the service. In line with the current movement to the cashless economy, an upscaling deployment of branchless solutions will be a game changer as more and more people have access to mobile handsets and almost all services are going to be digital. Therefore, borders and distance are no longer going to be barriers to transactions and connection among humans. Even if the current trend of cryptocurrency and blockchain exists, our solutions for a cashless society are still adapted to the latest technologies in security and efficiency for Africa. We developed solutions to support even the excluded portion of the rural population by making accessible the latest developments in the domain of the microfinance industry at a reasonable investment. Therefore, our company will continue to develop innovative solutions for the industry as stated by our long-term mission of “Enhancing financial inclusion in Africa by developing and implementing user-friendly digital financial solutions.”
