The World Bank has published a study highlighting the reasons hindering banking operations in developing countries, using Africa as an example. Let's discuss.

Economic volume

The small size of a country's economy prevents financial service providers from profiting and scaling.

Limited demand for services

In developing countries, users are not interested in savings, insurance, loans, or even simple payment operations. This means that a significant portion of the population is not commercially viable clients for the traditional banking model.

Rural population

The majority of the population lives outside cities and is dispersed throughout the country. Therefore, providing financial services outside of cities through branches is inefficient in terms of costs.

Lack of official documents

A significant portion of the population works informally and lacks the necessary documents. This increases costs and risks for financial institutions and excludes a large portion of the population from traditional formal financial services.

Volatility of the national currency

Currency exchange instability increases the costs for banking organizations and undermines risk management.

Innovative financial technologies potentially can reduce operational costs and risks, allowing the population to access necessary banking services, process small transactions, and be available anywhere in the country where there is internet access.

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