Financial Education: A Bridge between Branchless Banking and Low-Income Clients

This paper examines the rapid evolution of branchless banking technologies and development of financial education as a tool to help low-income households manage their money.

While focusing on getting delivery systems right, promoters of branchless banking often lose sight of the consumer. Despite recent enthusiasm regarding these new banking services, uptake and usage has been limited, and often does not include many of the poor. Reasons for lower usage rates among low-income populations include:

• Lack of familiarity with banking services;
• Limited trust in new financial delivery systems;
• Lack of understanding and experience using the technologies.

However, low-income households are willing to cross the digital divide and conduct their financial transactions through branchless banking. Higher usage is possible, but will require financial education to facilitate this process. This can be delivered through a variety of channels, such as radio, print media and class room training.

Finally, the paper presents a case study from Malawi which demonstrates the viability of branchless banking when potential clients have proper knowledge of how to use it and stresses that well-conceived financial education programs will achieve this aim.