Digital transformation in the banking sector and its effects on the financial inclusion of the unbanked population in Tzaneen, Limpopo

Abstract

The study explores the role of digital transformation in enhancing financial inclusion, focusing on mobile banking and digital financial services for unbanked individuals in Tzaneen, South Africa. Barriers include limited access, low digital literacy, security concerns, high transaction fees, and lack of trust. The study suggests that mobile banking can enhance financial services access, especially for unbanked individuals in underserved areas. However, challenges remain in technological access, trust, and affordability. Short-term strategies include digital literacy programs, affordable smartphones, simplified interfaces, security, and cost reduction. The research examines the barriers hindering the adoption of digital banking technologies, including limited access to smartphones, low digital literacy, security concerns, high transaction fees, and a lack of trust in digital platforms. The study employs a qualitative research methodology, using semi-structured interviews with unbanked individuals in Tzaneen to gain insights into their perceptions, experiences, and challenges regarding digital banking services. The unbanked population were from the region of Limpopo in Tzaneen. This group of individuals were between 21 - 65 years age, with a target number of 20 respondents. The findings highlight the potential of mobile banking to improve access to financial services, particularly for unbanked individuals in underserved areas. However, participants also emphasized persistent challenges related to documentation requirements, limited rural infrastructure, and the need for more user-friendly and culturally relevant digital solutions. The study recommends improving digital access, literacy, security, and affordability for the unbanked in the short term, while focusing on financial education, network expansion, local support, scalable platforms, and adaptable solutions in the long term.