Financial technology as a driver for financial inclusion: an assessment and case study of WhatsApp banking in South Africa

Abstract

The development of innovative technology can bring new ways of providing access to financial services, particularly to those who have either not had or have had very little access to the formal financial system, more commonly known as the underbanked or unbanked. The ubiquity of mobile phone technology, due to the increased coverage and quality of mobile network operators, makes this technology an attractive platform for the delivery of financial services, known as fintech. One example of such technology is a mobile based-financial service, WhatsApp banking, a service developed by one of South Africa’s (“SA”) major retail banks (the “Bank”). The first major contribution of the study is the positive assessment of WhatsApp banking, as a socially sustainable fintech tool in SA, measured against the LASIC (low margin, asset light, scalable, innovative and compliance easy) framework. Several other frameworks were considered, however none were selected, as they each lacked specificity in respect of measuring the potential success of a fintech. This is evidenced and supported by a growing user base in excess of 59 000 clients of WhatsApp banking, which exceeded the combined several thousand customers on previous social media banking services offered by the Bank. Secondly, while the WhatsApp banking service is a global first and a pioneering technology in the financial services industry, it does not address financial inclusion in its current state. The WhatsApp banking service is only available to the Bank’s existing clients and does not cater for new-to-bank clients. This is despite the resultant effects of reduced traveling time and costs of banking at a physical branch or automated teller machine and a greater diffusion of technological capability. However, the strategic thinking behind the development of this service is to leverage newfound technological capabilities, in order to deliver further fintech services or products. The study uses a case study methodology, combined with a desktop analysis of publicly available Bank documents and information on WhatsApp banking. This is supported by semi-structured interviews with key personnel at the Bank responsible for the development, implementation and management of the service