• Anna Whitford

An Online Banking Birth in Asia and Africa

Without access or trust in brick and mortar banks, countries across Asia and Africa have seen a financial technology explosion.

China did it first — now banking is becoming increasingly digitalized across the developing world (AP).

If you wanted to open a savings account 30 years ago, you would have to go to your bank, wait in line, and sit in an uncomfortable chair while a worker at the bank opened one for you. Today, you can open a savings account entirely online in fewer than 20 minutes. Other financial transactions such as credit card payments, bill payments, and money transfers were equally time-consuming. Online banking, which refers to all financial transactions conducted over the internet, is changing all of this.

Online Banking and Beyond

Online banking includes financial services such as checking account balances, opening accounts, depositing checks, and more. Charles Schwab, a financial services corporation that operates with no physical branches, is one of the better known examples of an online banking company.

Related to online banking is Fintech, which includes new technology which seeks to improve and automate the delivery and use of financial services. Fintech is not synonymous with online banking, however. Most online banks stick to general services like checking accounts, savings accounts, and sending or receiving funds via check and wire transfer. By contrast, Fintech includes apps like Venmo or Paypal (for sending and receiving money), Robinhood (for purchasing stock), and WeChat (for many things, including sending and receiving money).

Although the benefit of Fintech and online banking for convenience in developed countries is clear, its utility in developing countries remains an open question. Unlike traditional banking, Fintech does not operate in specific time zones or specific geographic locations. Fintech has the potential to open up financial services and banking to a whole new host of citizens around the world, although it has yet to be fully implemented for that purpose.

Below are several examples of how companies can use fintech to help consumers in developing countries.

A vendor wires money to his bKash account in the Bangladeshi capital of Dhaka (VCG).

bKash is a bank-led Mobile Financial Service Provider from Bangladesh. bKash provides a multitude of financial services for its users, including money transfers, utility payments, and mobile recharges.

bKash is socially important in Bangladesh because of the sheer number of Bangladeshis that do not have accounts in brick and mortar banks. While there are no definitive numbers, some estimates suggest up to 40% of citizens do not participate in the current financial system. In addition, about 70% of the Bangladeshi population lives in rural areas where financial services are more difficult to access. bKash argues that less than 17% of Bangladesh citizens are connected to a formal banking system, even though over 68% have mobile phones. These numbers suggest an opportunity to bring banking to the people by bringing the bank to their phone. bKash’s financial services allow users to be from anywhere in the country, making transactions like sending money between family members simple and accessible.

Chipper Cash

In Africa, Chipper Cash aims to make payment easier as well. Chipper Cash was founded in 2018 with a focus on zero-fee peer-to-peer payments across borders. It is available in eight countries — Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, Kenya, and the United Kingdom. Chipper Cash provides services such as cash transfer, virtual Visa cards, bill payments, cryptocurrency trading, stock trading, and more.

For Chipper Cash, cryptocurrency trading is a hugely important activity. Cryptocurrency is widely used in Africa by individuals and small business owners because of Africa's growing number of adaptable young professionals, its unstable local currencies, and hyperinflation.

Once lagging in digital transactions, cryptocurrency usage has jumped 55% in the past year in Africa (Reuters).

Chipper Cash allows individuals to freely move funds between individuals in different countries; they can move their money in local currency, easily convert cash into different currencies, or put it in cryptocurrency.

Online banking in developing countries is not fundamentally different from online banking in more developed countries. Fintech companies like Chipper Cash closely resemble popular services in developed countries like Venmo and PayPal. Regardless of where someone lives, they will always need to transfer money or pay individuals over large distances. When building Fintech banking systems for lesser developed countries, different features may be useful in different regions of the world. For example, few U.S. citizens believe so little in their own currency that they put all of their life savings in cryptocurrency. However, this does not mean that specific features are used only in developing countries.

As the world becomes more digital, Fintech and online banking will only grow. As this growth occurs, we will start to truly see just what Fintech can do to revolutionize our financial systems.

Anna Whitford is a sophomore at Georgia Tech studying finance and technology originally from Athens, Georgia. She writes about surveillance, policing, and innovation.

This piece was edited by Will Cover, a sophomore at Rice University studying public policy originally from Columbia, Missouri.

Cover: AP

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