In total; 2.5 billion of the world’s adults don’t use formal banks or semi formal micro-finance institutions to save or borrow money (1) . Of that number nearly 2.2 billion of these unserved adults live in Africa, Asia, Latin America, and the Middle East.
This is problematic as it restricts these populations from having significant benefits and increases in financial assets for families and individuals that have the ability to gain account ownership.(2)
Micro Financing Institutions (MFIs) in frontier markets have unusually made lending decisions without access to the sort of customer data and documentation commercial banks take for granted: credit scores, identification documents such as passports or government ID cards, bank statements, lending history and collateral. These unbanked individuals do not have the necessary documentation needed for traditional lending methods from banks. This is why Oradian made an effort to physically visit these communities and find groups of people who want to lend money. Lending activities are then tracked on Oradian’s cloud-based core banking system Instafin via tablet interfaces and the lender can come back periodically to collect the returns from one of the unbanked individuals in each of these communities.
It is evident from this case that there is a growing need for a digital banking system that may assist and connect these unbanked populations to relevant banks and providing them with access to the financial services they need. While Oradian’s Instafin core banking solution is able to manage financial products and the record of accounts for this market, the FutureBank Platform can provide regional, demographic specific and targeted digital user journeys for the unbanked user in this market.
Oradian is a company founded in 2012 that provides MFIs in countries with underdeveloped banking infrastructure with a finance management platform for personal banking.
The Croatian fintech company was originally focused on Nigeria , where it grew its customer base to 24 MFIs with roughly 490,000 end users. Philippine Central Bank supported the project and since the young company has had a rollout in the Philippines, where it already works with 18 MFIs. Oradian today is also present in Ghana, Liberia, and Malawi.
What is our collective vision with this project
The long term vision of Oradian’s Instafin and the FutureBank Platform is to connect 100 million previously unbanked families to the financial system globally, especially in areas where technology is underdeveloped, through an end-to-end digital banking experience. Our combined software helps MFI’s grow their businesses and lower the cost of finance to end users. In order for this project to be implemented, our FutureBank Platform will be used in conjunction with Instafin to provide a seamless banking experience. Collectively, we can make an accessible user interface paired with connection to the relevant lending accounts for the unbanked target market. We can also provide services to the unbanked that will make their lives a whole lot easier, like being able to provide prepaid services directly from their mobile devices so that they can eliminate costly travel to urban areas in order to purchase electricity and other basic services. Instafin is the operational platform on which microfinance institutions, cooperatives and credit unions manage their day-to-day operations, and FutureBank Platform is the digital experience that the unbanked user interacts with.
The number of people who own smartphones is increasing in Nigeria, Ghana and the Philippines as the retail price drops. This means there is a growing opportunity to extend Oradian reach by making use of digital banking with the help of FutureBank.
To create the tools for financial inclusion and make them accessible to all financial institutions The FutureBank Platform is an ideal product to integrate with Instafin in order to reach this goal to give the system a useful and customizable front end banking interface. Each region and demographic group has its own nuances and requirements, and the FutuerBank Platform is specifically designed to accommodate rapid, agile customization to user journeys that can be quickly deployed and easily scaled. The technology also supports offline capabilities and zero rated services through integrations with regional Mobile Network Operators (MNOs) in Nigeria, Ghana and the Philippines.
Instafin can reduce high operational costs through automatic reporting that dramatically speeds up time-consuming month-end reporting processes, thus minimising inefficiencies that exist in across these rural banks servicing the unbanked population. Instafin has other features such as messaging, automatic updates, maximum data security and pricing engines. It also provides training and implementation services on the ground in the areas they service — including data migration from their previous CBS or from spreadsheets.
The FutureBank Platform provides the unbanked users with access to their basic financial information, such as their current balance, transactional history, loan account status and other repayment information. It can also provide direct access for the user to purchase pre-paid services available to them based on their area. These kinds of features add immediate value to the quality of life for the unbanked individual and puts them on a path to financial security and wealth for their families into the future.
At its core, the FutureBank Platform is a MicroServices API platform that integrates into the most popular Core Banking systems in the world. The Banking API exposes a common interface to digital channels and FinTech partners whilst abstracting the complexities of the underlying legacy Core Banking systems. The Banking API can provide a single end point into multiple disparate Core Banking systems which is useful in the case of the project with Instafin.
FutureBank uses unique asymmetrically encrypted HSM tokens to secure each transaction through the platform – adding an additional layer of security. The platform exposes an event driven SDK architecture for easy integration into 3rd Parties, Merchants and Individuals.
Source: McKinsey research conducted in partnership with the Financial Access Initiative (a consortium of researchers at New York University, Harvard, Yale, and Innovations for Poverty Action); we relied on financial usage data from Patrick Honohan, “Cross-country variation in household access to financial services,” Journal of Banking & Finance, 2008, Volume 32, Number 11, pp. 2493–500.
FITZPATRICK, K. (2014). Does “Banking the Unbanked” Help Families to Save? Evidence from the United Kingdom. Journal of Consumer Affairs, 49(1), pp.223-249. doi:10.1111/joca.12055