Mobile phone and agency banking have brought dynamic change to Tanzania. These digital solutions—and newer ones on the horizon—have the potential to reach millions more unbanked citizens across sub-Saharan Africa. That’s why, on February 16th, FINCA and Mastercard Foundation convened a Financial Inclusion Conference in Dar es Salaam. The event shared key insights and lessons learned through our joint efforts to extend financial services to unbanked communities in Tanzania, Zambia and Malawi using digital technologies.

The event attracted more than 100 attendees, including financial sector providers, donors, researchers and regulators. Tanzania’s Deputy Minister for Finance and Planning, Dr. Ashatu Kijaji, was the guest of honor. She affirmed the government’s commitment to financial inclusion for the poorest Tanzanians, and for regulations that ensure consumer protection in a rapidly evolving banking environment.

Financial Inclusion in Tanzania

“Today is all about how we can revolutionize alternative financial services delivery channels through mobile technology,” said Issa Ngwewe, CEO of FINCA Microfinance Bank Tanzania in his opening remarks. “Among African countries, Tanzania has the highest percentage of people using mobile money solutions.”

Only 8% have a formal bank account, while 61% of the population uses mobile devices to access their money.

Many of those individuals access their FINCA accounts through a network of more than 130 agency outlets in Tanzania. As a result, said Issa, “We have been able to reach, serve and improve living standards for over 150,000 individuals in different regions of the country. FINCA Microfinance Bank’s great strength,” he continued, “is its ability to embrace technology, which allows us to deliver financial solutions to the doorsteps of our clients.”

Digital platforms, such as mobile and agency banking, have significantly reduced the cost of reaching the millions of Tanzanians—particularly those in remote areas—who otherwise couldn’t access banks or financial services.

Until relatively recently, though, banking in Tanzania was different, as I noted in my own remarks to attendees. Only a few years ago, FINCA was a credit-only organization. We worked with cash and loads of paper through a network of brick-and-mortar branches. But we knew that, to be successful, we needed to change. We needed to be even closer to our clients: to their businesses, to their homes—even in the palms of their hands.

Embracing Digital Technologies to Reach and Serve More Clients

Today, thanks to agency and mobile banking, FINCA Microfinance Bank Tanzania has expanded its outreach and its services exponentially. Agency banking comprises a network of local merchants and shopkeepers, in areas where FINCA doesn’t have a physical presence, who provide basic banking services. Agents are equipped with point-of-sale (POS) machines: portable devices that securely connect to FINCA bank accounts through biometric fingerprints. Called “FINCA Express,” these agency locations offer deposits, withdrawals, transfers, loan disbursements and payments, as well as account information.

FINCA Microfinance Bank Tanzania has also partnered with three mobile network operators to provide banking services to clients located far from a branch or FINCA Express agent. Using just their phones, customers can access their accounts, pay bills, and perform transactions 24 hours a day, without the trouble and risk of carrying cash. Because of such changes, FINCA and its clients have entered a whole new world of banking.

At the conference, Nathan Were, FINCA Canada’s Program Manager for Financial Inclusion in Africa, described in detail how FINCA transformed from a brick-and-mortar institution to a digital one. In the case study that he co-authored, The Long Road to Branchless Banking: FINCA’s Experience Deploying Agency Banking in Africa, Nathan describes FINCA’s transformation, the pitfalls encountered, and lessons learned. He advised attendees on the need to select agents and vendors carefully; to build strong relationships with them; to adopt strategies to earn customers’ trust in new technologies; to expect business disruptions; and to be patient, since the full benefits of transformation might not appear right away.

Managing Risks and Building Customer Trust in Alternative Delivery Channels

Three panel discussions added depth to the topic of financial inclusion. I moderated a discussion on managing risks in digital channels—both for institutions and customers. Institutions need to be mindful of the risks associated with giving away part of the control over to partners: fraud, efficiency, quality of service, etc. And from the customers’ perspective, they need products that are accessible, affordable and user-friendly. They must also be protected against fraud and over-indebtedness.

Another panel discussed the business case for alternative delivery channels. The top priorities mentioned include customer experience and partnerships. Developing a proprietary agent network, like FINCA has done in the Democratic Republic of Congo, requires a lot of resources; when possible, partner with existing networks! And ultimately, customer uptake will drive profitability: focus on listening to customer needs, develop a clear value proposition and deliver a positive experience.

Finally, a third panel explored how to build trust and confidence among customers to drive greater use of digital banking technologies. Panelists highlighted the importance of customer education and agent training. They also discussed performing onsite and off-site monitoring to protect customers from fraud, resolve issues with system failures and sustain customer trust and satisfaction.

The Financial Inclusion Conference allowed FINCA to share lessons from its journey into the digital realm. We hope that the conference inspires further collaboration among financial and digital service providers, donors and governments to create a banking environment that enables individuals from all regions and economic backgrounds to participate—and to build better lives for themselves and their families.

Mastercard Foundation has been a key partner in our journey, embracing our mission of financial inclusion to bring more women, more youth and more rural populations into the formal banking sector.