Global financial intermediary organisation, MasterCard has unveiled the “Road to Inclusion” report at the Card, ATM and Mobile Expo in Lagos, Nigeria.
The new report profiles the financially excluded and underserved in Nigeria and five other emerging markets (Egypt, India, Indonesia, Vietnam, and Philippines), providing insights into how to bring them into the economic mainstream.
“Road to Inclusion” was commissioned by MasterCard to better understand what financial exclusion or underservice means to the millions of people within this group, and what has triggered their choices.
This is to better provide services that engage this marginalized audience and help them to reap the benefits of financial inclusion.
“Understanding the needs and attitudes of consumers provides us with important insights that will help us serve them better.
For instance, communicating bank safety and interest rates could potentially encourage the financially excluded and the financially underserved to use electronic payments more often than cash.
With the right approach there is huge potential to bring many people into the financial fold,” said Omokehinde Ojomuyide, Vice President and Area Business Head, West Africa, MasterCard.
In Nigeria, the average age of the financially underserved and excluded is 28 years old while ninety one percent have achieved secondary education or above, and 64 percent hold a job.
The average family household income of Nigerian respondents is just US$200 a month, resulting in lower disposable income, leading 41 percent of this group to cite “not having enough money” as the main reason for not having a formal bank account. Other reasons were that they “don’t want or need” a bank account (17 percent) or they feel that they need cash on a daily basis (4 percent).
Both the financially excluded and financially underserved still live within a cash economy. Instead of benefitting from bank account features like direct debits, internet banking or buying discounted goods online, the bulk of excluded and underserved Nigerians use cash to pay for everyday items such as telecommunication (93 percent), clothing (92 percent), transportation (91 percent) and food (73 percent).
Though cash as a payment method remains prevalent, there are strong concerns about the safety and security in carrying cash.
Fifty six percent said that the main benefit of a bank account is that it is safer than keeping cash at home. Another benefit of banks is the interest that they offer.
In testing whether prepaid cards would appeal to the unbanked and under-banked, the research showed that 66 percent thought that prepaid cards were “unique and different”, 60 percent said that prepaid cards were “relevant”, and 58 percent said they are likely to apply for a prepaid card.
While 65 percent of the respondents have heard of prepaid cards, none have used them. Interestingly, once educated about the concept, 53 percent of all respondents recognized that they would benefit from prepaid cards by not having to carry cash, while 26 percent acknowledged that prepaid cards would help them keep control of their spending.
While the majority of the respondents have access to some form of technology, this is largely restricted to a standard mobile phone only (85 percent). However, as smartphone uptake increases, the potential of using technology in relation to their finances grows.
“We believe that a prepaid card linked to the mobile phone account can provide a simple entry point into the financial system and bridge the gap between the formal financial services sector and the millions of underserved or unbanked individuals, especially when combined with services such as bill payment and Person-to-Person capabilities. The key is providing relevant services with high convenience and low cost that empowers them to change their lives for the better,” she says.