Banks Should Incorporate Products Like M-Shwari to Encourage a Savings Culture

Financial service providers in Kenya need to give customers an option to set aside a small amount of their income for their digital savings accounts, in efforts to encourage a savings culture.

A savings culture in the national financial inclusion initiatives will facilitate the integration of digital savings to consumers far from propagating for affordable, flexible and accessible offerings on digital savings accounts.

The World Bank, in its late April 2019 report suggested the same and called for equilibrium in innovations and risks claiming it will cater for parts of the population looking to save and gain access to digitally enabled and market-based wealth-building products.

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Kenya has made tremendous efforts in pushing for access to digital transactions and payment services and while the result is conspicuous, access to credit, insurance, and investments – the second-generation modes of digital financial inclusion – is still unlimited.

Digital financial inclusion, in a nutshell, involves the disposition of digital methods to reach financially excluded populations with formal financial services custom made to suit their needs.

It is, therefore, highly crucial that consumers have the ability to save part of their earnings, not only to adopt a sound financial culture but to lift them gradually out of poverty.

Few products aimed at financial inclusion have implemented digital savings accounts. They include M-Shwari in Kenya, M-Pawa in Tanzania, and MoKash in Uganda.

However, most of the digital savings accounts in sub-Saharan African countries constitute channels to legacy savings accounts at banking institutions and other lenders.

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Saving at financial institutions in sub-Saharan Africa is still low, a fact attributed to limited access to savings products among low-income, and rural populations.

According to the World Bank, low formal saving is also from the perception among low-income individuals that their savings are not large enough to warrant an account at a financial institution.

Maintenance fees, minimum balance requirements, and high indirect access costs such as transportation and time to conduct such business limits a saving culture among people.

Kenya and the African continent, in general, has adopted a mobile-centric digital financial service approach, this is the reason why Mobile Network Operators (MNOs) partnerships account for a greater share of the digital savings account deployments.

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As such, services that incorporate digital savings accounts for everyone come highly commended if further financial inclusion and sustainable income for the population is to be fostered.