The world needs to move away from the concept of computer-linked bank accounts to using smart cards if Africa`s unbanked are to be served, says Aplitec CEO Serge Belamant.
Belamant said at the BMI-T/IDC African Banking Forum in Midrand on Friday that the majority of people on the continent were unbanked because they could not afford bank charges, banking failed to add value to their lives, and there was no infrastructure where they lived.
In most African countries there are vast areas with no infrastructure, no Internet and no cellphones. "It is too expensive to banks to touch the unbanked," he said. "We have to move away from computer system-linked bank accounts."
Peoples Bank director John Maxwell says in traditional banking, the branch, electronic banking halls and ATMs have been successful. Telephone and Internet banking reaches a thin layer of customers and here banks compete for the top end of the market.
However, an online environment dealing with sophisticated clients calls for investment in infrastructure and security, which increases costs. This brings consolidation, since branches are closed to cut costs.
This, however, means banks are less able to deliver to the unbanked. There is a need for fresh and innovative thinking, since the nature, method and structure of banking are inhibitors in delivering banking to the unbanked market, he says.
Belamant says the solution lies in decentralised banking, where people carry their accounts with them in the form of smart cards, giving them the ability to transact offline.
"In order to reach the unbanked, a system is needed that is totally offline to cut banking costs. Inexpensive terminals are also needed to make the system viable for the underbanked," he says.
Using smart cards, Belamant says users can transfer funds to each other or to a vendor without having to have the bank involved in the transaction.
Because all transactions are offline, they are tracked through a multi-audit trail whereby each smart card updates the other smart card`s history of transactions. Through this interaction, the banks will be able to track what transactions are taking place, Belamant says.
"The smart cards are fingerprint activated, have an auto recovery function if a transaction is not successful and can be shut down at any time, making them very secure."
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