How technology is supercharging financial inclusion and investment.
While traditional banking services may be out of reach for many Africans because of the low density of bank branches or ATMs, mobile phones are providing hundreds of millions of Africans access to financial services.
And we are making advances in making traditional financial services available to the excluded – young people and low-income earners, two demographics that more often than most, intersect.
Fintech presents a new way to approach banking, investing, and all things finance. In an industry dominated by red tape, bank-client relationships and conversations behind closed doors, millennials – and everyone really – are looking for a more open alternative that, above all, is efficient. This generation of consumers is holding off big purchases (homes, cars, marriage) in favor of savings. Innovation in financial technology is providing consumers with cheaper alternatives to wealth management
But, setting aside money for investment has traditionally been seen as a luxury. But recently, investment, previously seen as inaccessible and not affordable has gradually started to open up to everyone.
Previously, investing in Treasury bills and government bonds proved difficult for young people and people with lower earning potential because the minimum allowed investment thresholds were simply too high (some were as high as N100,000), and they are accompanied with stratified interest rates that almost always made sure that if you invested only the minimum, the interest rate you received barely touched the current inflation rate. Even alternative investments were not exempt. With minimums like N65,000 and N85,000, they just are not as accessible or affordable.
According to Stutern, the average entry level salary is N50,000 to N70,000. People were being asked to invest with their entire salary
But today, with the advent of platforms like Piggyvest and several other FinTech apps, giant steps have been made toward bringing investments into the grasp of every man. Fintech development has made it possible to offer the benefit of various classes of investments while ensuring above average and uniform interest rates, as well as access to cash whenever people need it., gGiving a ray of hope around the future of financial behavior and investment habits in the country.
With leading tech players developing financial services that offer mutual fund investments for as low as N100, agriculture investments for as low as N5,000 and even fixed deposit investments for as low as N50,000, barriers of entry have started to diminish.
In addition, some of these significantly more affordable investment products also offer immediate withdrawal of funds, where users can invest their money on these platforms in a and still disburse it instantly. In other words, as soon as someone has invested in that product, they can decide to withdraw it the next moment and get their money back, a lot of times by trading their incredibly liquid units of investment with other members of the platforms.
It is fortunate that some leading fintech players are bold enough to break the norms and have a growth mindset. It is hoped that affordable investment products will change how Nigerians perceive investment and allow them to give it a try, by providing attractive value while letting them maintain control of their cash flow. Investment no longer has to be a luxury they can’t afford.
FinTech products benefit us in a way that previous incarnations of insurance and banking ever did. We don’t have to be burdened with financial products that tie us down and restrict our actions.
Technology has allowed us to creatively start to dissolve the barriers of entry faced by many Nigerians when it comes to accessing financial services, driving higher financial inclusion and creating a more inclusive economy and society.
More broadly, better financial stability – afforded us by mobile financial services, – will enhance productivity, facilitate local investment and mitigate against other societal risks, helping lift populations out of poverty.
Odunayo Eweniyi is the co-founder & Chief Operations Officer, PiggyVest. She has 5 years’ experience in Business Analysis and Operations and is a First-Class graduate of Computer Engineering, Covenant University, Nigeria. She was named one of Forbes Africa 30 under 30 Technology in 2019 and one of 30 Quartz Africa Innovators 2019. She sits on the advisory board of TrainFuture, an Education Technology company based in Switzerland. She was also one of the featured speakers at the World Bank-IMF Annual Meeting in 2019.