According to the World Bank there are over 12 million South Africans without a bank account. More importantly, South Africa has an unemployment rate of 32,9% (Q1 2023). These alarming statistics may paint a bleak picture of a struggling economy, but there is a beacon of hope on the horizon. The transformative power of innovative technologies and platforms promise to reshape these numbers and pave the way for a more inclusive future.

The digital challenge

Only 49% of South Africans are considered financially literate, additionally only 5% will be able to retire comfortably. According to the FSCA, when surveying over 3000 consumers, only 16% understood the concept of inflation, and only 46% could answer a basic interest question. To combat financial exclusion; banks, fintech companies, and edutech platforms can play a significant role through collaboration and targeted initiatives that encourage financial education.

By fostering digital proficiency, the country can empower its young population to bridge the unemployment gap. So, what is restricting financial inclusion in the country? Lack of access to financial products, coupled with overcomplicated digital solutions both pose challenges. Additionally inadequate internet infrastructure and expensive mobile data exacerbate the access gap, preventing individuals from utilising digital financial services effectively. According to GHS survey, in 2021 only 8,3% of South African households have access to fixed internet in their homes. In contrast we have 47.8 million mobile internet users, however airtime and data in the country remain expensive.

Leveraging technologies & platforms

Innovative technologies have emerged as powerful tools for overcoming the barriers of financial exclusion in South Africa, and sometimes it’s the alternative players that are making the biggest waves. Education platforms like Fincheck Academy and Worth Education offer accessible and comprehensive financial education resources to individuals, equipping them with the necessary knowledge and skills to make informed financial decisions. These platforms provide educational content tailored to real-life challenges faced by consumers, making it easier for users to understand and apply financial concepts.

According to Ean Barnard from Fincheck Academy “There is only so much the Open Banking sector can achieve with technology until it becomes a consumer-orientated only issue e.g. Financial Literacy and inherited money culture. Financial education will drive technology adoption, empowering consumers with the knowledge to access and comprehend digital products, securing their financial well-being and fostering a prosperous nation”.

South Africans are fully aware of the financial access gap in the country, with more than 50% of consumers wishing they had better financial literacy so that they could make better informed financial decisions and get access to the financial products they need. “In our country, there is a much-needed focus on educating our youth to get an education for job prospects. However, the lack of emphasis on financial management is dire: over 70% of South Africans spend their monthly salaries on debt. Platforms like Worth, are focused on transforming the lives of hard-working South Africans through financial education, allowing them to improve their money skills and confidence” says Hayley Parry, co-founder and Head of Education at Worth.

Another aspect of inclusion comes the need to improve South Africa’s current employment woes. According to Youth Capital’s 2022 Beyond the Cost survey, job seekers spend between R500-R1500 per month on transport, data and printing relating to job seeking. To improve employment prospects, it is crucial to tackle obstacles such as complex manual applications and limited digital literacy. The high costs associated with transportation, printing CVs, and the expense of mobile data only serve to compound these challenges. However, recruitment technologies like JOBJACK are playing a vital role in bridging the unemployment gap by harnessing digital solutions.

Through user-friendly online platform, JOBJACK offers a convenient way for job seekers to search for positions, submit applications, and connect with potential employers. This not only facilitates access to employment opportunities but also has a particular impact on the youth, providing them with a vital link to employers and a pathway to a brighter future.

“Having a job is one of the biggest factors contributing to someone’s quality of life. Everyone should be able to afford to apply for a job, but it is not the norm. JOBJACK has started to change that.” – Heine Bellingan, co-founder of JOBJACK

Future developments

In addition to recruitment technologies and educational platforms, we’ll also see the emergence of embedded finance and superapps, which will make it more accessible for consumers to access a wide range of financial tools and services under one roof. These platforms will integrate banking, payments, investments, insurance, and other financial services. “Embedded finance, within the superapp ecosystem, will empower individuals with seamless access to personalised offerings and tools. This in turn will create a great user experience and assist the client with the purchase of their product, insurance, investment, payment, etc. It will concatenate offerings and processes into one slick flow and transfer.” Michael Bowren, co-founder of Finch Technologies.

Data analytics and AI tools will also play a crucial role in enabling alternative credit scoring methods. By analysing vast amounts of data, including transaction history, social media activity, and digital footprints, AI algorithms can assess creditworthiness more accurately. Additionally, biometric technologies, will offer a reliable and secure means of verifying a person’s identity. This is particularly important in areas where formal identification documents are scarce, and it can often be difficult for consumers to open bank accounts and access loans.

Accessibility to physical stores, expensive mobile data, and inadequate internet infrastructure are still prevalent obstacles. The platforms that will truly succeed in driving financial inclusion will be those that understand and address these challenges, tailoring their products and services to ensure affordability, ease of access, and compatibility with the existing limitations. By doing so, they can truly empower individuals and bridge the digital divide.