Papersoft - Leveraging Biometrics for Financial Inclusion in Africa

Leveraging Biometrics for Financial Inclusion in Africa

In emerging markets the lack of proof of identity is a barrier to Financial Inclusion. In some countries, around 40% of the population does not have any documentation.

Promoting biometric registration through agent networks across Africa will help propel financial inclusion forward.

IDENTITY: The building block for Financial Inclusion

The importance of legal identity is a well-known concern, mainly in emerging countries. The local governments and the international community have been trying to close the identification gap, an obstacle that excludes individuals to participate fully in political, economic and social life.

However, according to the World Bank there are still 1 Billion people living without proof of identity. This represents a challenge for banks and financial institutions that need ID documents to comply with customer due diligence and know your customer requirements.

 

Papersoft - Leveraging Biometrics for Financial Inclusion in Africa

Graph 1. The graph illustrates the high percentage of adults that declared not having a bank account due to lack of documentation.

 

How to unlock the potential of Financial Inclusion?

Africa currently has the lowest number of people with some form of formal identification, so building a field-proven identity system that can easily enroll the population is the starting point for financial inclusion.

Financial institutions have been using Alternative Delivery Channels (ADCs) such as agent networks to reach underserved and unbanked populations and help close the gap between the branch and the customer at a lower cost. As agents are often valuable and trusted members of the community, in which they work, they are able to educate and acquire new customers. This way, with the right biometric mobile solution, agents can onboard and identify customers without needing to fill paper forms, bring the unbanked into the formal financial system and at the same time help enroll and identify the population in a secure, compliant, anti-fraud and anti-money laundering environment. Therefore, agents play an important role in implementing and streamlining ID systems.

To build a solid ID Ecosystem and unlock the full potential of financial inclusion it is necessary more than the agents´ support. Governments, state agencies, regulators, banks, must work together to build a framework that safeguards consumers from digital risks, ensures product availability, affordability, convenience, and quality of the service suitable for meeting the population needs. This is only possible with the support of a secure ID platform that engages with citizens, covers the large proportion of the population and addresses all the KYC requirements for bank or mobile accounts overcoming legal & policy challenges.

Several African countries, like Zimbabwe or Nigeria have been embracing new technologies and evolving their identity systems with biometrics. The booming of mobile devices played a significant role in providing access to the financial system and biometrics has been pushing forward financial inclusion.

Biometrics is leading Financial Inclusion strategies

Biometric capture and authentication are a secure and reliable way to identify individuals with unique physical characteristics such as facial recognition, fingerprint or iris verification. Moreover, is one of the most powerful forms of authentication, gradually replacing ID cards, passwords, and paper-based ID processes.

With Identity at the center of Financial Inclusion, these mobile solutions are perfect for emerging markets, due to their small size, lightweight, rugged construction, and reliability under demanding environmental conditions, plus the ability to run for hours off the power provided by a smartphone. They also ensure fast, agile performance that gives agents a powerful tool to help solve Identity challenges in Africa and streamline access to financial services anywhere in the country.