Using technology to drive financial inclusion

Ethiopia is the second most populated country in Africa, with 100 million people and the continent’s fastest growing economy. However, financial inclusion is a challenge, with approximately 65% of the population believed to be unbanked. In 2017, the Ethiopian government set up a National Council for Financial Inclusion, whose aim is to execute the National Financial Inclusion Strategy to tackle the underlying causes.

One of the key reasons for financial exclusion is access. Latest figures show that 36% of bank branches were based in the country’s capital Addis Ababa, leaving rural areas particularly underserved.

“Financial inclusion is a top priority and expanding reach and accessibility across the country is a clear part of our strategy,” said Sosina Mengesha, Chief Digital Banking Officer at Bank of Abyssinia. “So far we’ve expanded our branch network and complemented it with ATM networks to enable us to reach more rural communities.”

But expanding operations isn’t always simple. “The costs of opening multiple full-fledged branches are significant and it’s not always easy to find suitable and adequate branch space. Then there’s finding trained staff to run them – all of which hampers our ability to grow as aggressively as we want to,” said Mengesha.

So, Bank of Abyssinia developed a new branch model – the Virtual Banking Center (VBC). On a minimal footprint, the VBC is able to offer a full suite of banking services by using video teller technology. With the use of ITMs (Interactive Teller Machines) and remote tellers, the Bank of Abyssinia is able to provide customers a personalized experience and enable them to complete almost all the transactions as they would in a traditional branch.

“This model has enabled us to significantly increase accessibility and extend availability of banking services to 24 hours a day through centrally located tellers. This has proven hugely popular with our customers, offering them the ability to access manage their finances at their own convenience. We’re the only bank in the country able to provide this level of service.

“But face to face connection is very important in Ethiopian society, so our VBCs aren’t completely unmanned; we have dedicated hours where someone is available on site for when customers want that personal interaction,” said Mengesha.

Using video, tellers based in a call center are able to serve all Bank of Abyssinia’s VBCs from one central hub. This makes efficient use of the bank’s resources and enables them to easily scale their branch network. Plus, they can offer the same banking services as provided in branch – such as account opening, money transfers, cash deposits and withdrawals, foreign exchange, bill payments, card requests and advisory services – but  24/7, which has proved highly popular with customers.

“While mobile and digital banking adoption is growing in Ethiopia, we remain a cash heavy society and that means that we need to provide easy access to cash. So, by providing more accessibility to branches and VBCs in more locations, it will encourage more people to open bank accounts and leverage all the other services that financial institutions can offer and consequently increase financial inclusion across our country,” said Mengesha.

“Our VBCs offer a glimpse into the future of banking - digitally driven, modern technology that is able to offer that personalized service when required,” added Mengesha.

To date, Bank of Abyssinia has opened 15 VBCs across Ethiopia and has plans for a further five by July 2022.