Enabling financial inclusion with SkillsPassport

Financial inclusion is increasingly being viewed as critically important to reducing poverty and achiev­ing inclusive economic growth. While it is by no means a panacea to ending poverty, it does represent a tangible way of reducing it. 

A growing body of evidence suggests that financial inclusion has substantial benefits for individuals. Various studies have demonstrated that when people participate in the financial system, they are better positioned to start and expand their own businesses, invest in education, manage risk, and absorb financial shocks. By giving the financially excluded, unbanked and under-banked access to bank accounts and payment mechanisms, savings increase, women are empowered and productive investment and consumption are boosted. 

Providing access to credit has positive effects on consumption, employability and income, thereby positively affecting some aspects of an individual’s mental health and general wellbeing. Financial inclusion and the associated access to financial services not only benefit individuals, but businesses as well. Greater access to financial services for individuals and businesses can help reduce income inequality and accelerate economic growth. 

Financial inclusion at its most basic level starts with having a bank account, but it doesn’t stop there. Only with regular use do people fully benefit from having an account. Both these outcomes can be difficult to achieve. Digitising payments can play an important part. Moving payments such as wages from cash into accounts can increase the number of adults with an account. Enabling electronic payments of bills such as school fees and utility bills affords people who already have a bank account to receive greater benefit from financial inclusion by allowing them to make the payments in a way that is easier, more affordable, and secure.

Benefits of digital payments

  • Moving from paying wages in cash to digital payments is beneficial to both senders and receivers:
  • It can improve the efficiency of making payments by increasing the speed thereof and lowering the cost of disbursing and receiving them. 
  • It can enhance the security of payments by reducing incidence of crime.
  • It can increase the transparency of payments and thus reduce the likelihood of leak­age between the sender and receiver.
  • It can provide an important first entry point into the formal financial system, which can lead to significant increases in savings by moving from informal to formal saving.

Policymakers and regulators, informed by a fast-growing body of knowledge, are beginning to make expanding financial inclusion a priority in financial sector devel­opment. An increasing number of national governments are introducing comprehensive measures to improve access to and use of financial services.

According to the Banking Association of South Africa (BASA), financial inclusion is defined as: 

“Access and usage of a broad range of affordable, quality services and products, in a manner convenient to the financially excluded, unbanked and under-banked; in an appropriate but simple and dignified manner with the requisite consideration to client protection. Accessibility should be accompanied by usage, which should be supported through the financial education of clients.”

BASA goes on to say that the definition of financial inclusion should embrace certain key principles for delivering a broad range of quality financial services to the most vulnerable in society. 

These key principles are summarised as follows: 

  • Access — availability of affordable financial products; 
  • Affordability — affordable products and services; 
  • Appropriateness — products and services that address client needs;
  • Usage — promoting usage of a bank account;
  • Quality — refers to product design and delivery characteristics that enhance the value of services to the clients;
  • Consumer education — clients must be educated on the use of financial services; and
  • Simplicity — products and services must be easy to use.

SkillsPassport embraces the BASA’s key principles:

  • Access: Each member is provided with a bank account and a SkillsPassport card that doubles as a debit card.
  • Affordability & appropriateness: The financial services offered by the SkillsPassport platform via the SkillsPassport banking partner was designed with the financially excluded, unbanked and under-banked in mind, and as such are both appropriate and affordable.
  • Usage: Employers can digitally pay wages directly into the SkillsPassport member’s mobile wallet or other banking instrument from where the member can pay bills, purchase airtime and electricity, etc., thereby encouraging usage.
  • Consumer financial education: Members are signed up and regularly ‘visited’ by SkillsPassport agents who also double as banking partner agents. The agents are trained on the use of the financial products and services and are able to advise members on the financial services and products offered.
  • Simplicity: Considerable time and expense have been expended by SkillsPassport’s banking partner in developing its digital banking platform specifically targeted for use by the financially excluded, unbanked and under-banked and as such has placed specific emphasis on simplicity of use.

The SkillsPassport business model has the primary focus of providing ‘digitally invisible’ people with a digital profile by registering them as members on the SkillsPassport platform. These same digitally invisible persons are also largely financially excluded, unbanked or under-banked. The SkillsPassport business model also provides for opening a bank account for each digital profile created, effectively starting members on the road to financial inclusion by giving them access to financial services. Once digitally visible, members can be ‘found’ for employment or training opportunities or even for unpaid benefits like pensions, all of which increase the chances of money flowing into members’ bank accounts from where they can transact. 

SkillsPassport™ will strive to alleviate the abject poverty experienced by the vast marginalised population in South Africa through digital visibility and financial inclusion. 

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