Is Stax the answer to financial inclusion?
Although Stax is a digital-first product, it has a crucial role to play in deepening financial inclusion in Africa.
Financial inclusion is one problem African governments and entrepreneurs are united in fighting. In 2017, compared to the global average of 69%, only 34.2% of African adults had a bank account according to the World Bank. The numbers are not pretty, and everyone knows it.
Financial inclusion is not just another statistic that looks bad on paper. It is a measure of individual and business access to affordable and sustainable financial services e.g. transactions, payments, savings, credit, and insurance. Its impact on the lives of everyday people on the continent is stark. Per the World Bank, financial inclusion is a key contributor to reducing prosperity. For Africa, which still struggles with poverty, solving the financial inclusion challenge is seen as a priority solution.
The introduction of mobile financial services has been key to the growth of financial inclusion in Africa. Compared to the 34% of African adults with bank accounts, 650 million (~53%) Africans have access to a mobile phone. Opening up financial access via mobile phones has been a huge hit on the continent. Kenya, for instance, has been able to increase its financial inclusion from 43% to 83% between 2006 and 2019, due to the proliferation of Safaricom’s M-Pesa. Through the provision of a bank in every African pocket, 100% financial inclusion appears to be a quite attainable goal today.
Outside of Kenya’s M-PESA, most mobile transactions in Africa and other developing economies rely on USSD. In fact, according to GSMA, 9 in 10 transactions in Subsaharan Africa still flow through USSD. Most USSD transactions happen via feature phones, however, smartphone users also favour it, as shown by Caribou Research.
That said, the native USSD interface has some serious user experience issues that may gatekeep certain users. For nearly 1.2 billion people who struggle with disabilities or illiteracy across the world, USSD poses serious accessibility issues.
The video below gives an example of just how inaccessible USSD can be for users with disabilities.
Where does Stax Come in?
As a mobile-first product, it can be difficult to see where Stax comes into play as a solution to financial inclusion. After all, the high cost of data is one of the reasons people are slow to adopt digital banking across Africa.
But Stax is not a digital banking product. On the contrary, it is only a user agent. Once connected to a user’s mobile money or bank account, Stax helps them complete transactions by dialing USSD codes in the background. The abstraction of the USSD flow behind the rich user interface is, first off, a win for inclusion. For the nearly 1.2 billion people across the world who need better accessibility, Stax provides a better, richer solution.
Stax’s reliance on USSD also means that once downloaded, users no longer have to rely on access to the internet to perform transactions. That’s an incredible advantage for people who live in high-cost internet areas or places with poor connectivity. Once downloaded, users never have to use the internet to access the app again, meaning that they can transact anywhere at any time.
Although Stax currently requires users to connect their bank accounts to the app to use it, in the future, it might even be able to help users open bank accounts— reaching to the very bottom of the financial inclusion pyramid: account creation. Why is this possible? At the very heart of it, Stax helps users to dial USSD codes. With some banks already allowing users to open accounts using USSD codes, nothing stops Stax from implementing that solution in the near future.
Finally, for people who are just coming into the formal financial ecosystem, Stax acts as the perfect bridge between the old (USSD) and the new (digital banking). Stax combines the best of both technologies—the reliability of USSD and the rich user experience of digital banking— to provide a fuller, better experience for its users. This experience, in the long run, allows users to participate more seamlessly in the financial ecosystem by carrying out more varied transactions and using more financial service products.
Parting thoughts
Financial inclusion is an intricate and diverse problem; it is not one that a single silver bullet can solve. Agent banking, mobile money, USSD banking, digital banking, and other solutions all have their roles to play in ensuring that people are financially included.
As a user agent, Stax can be a powerful tool for solving financial inclusion. Its utility extends beyond just transactions, and in the future, we will likely see it play a crucial role in helping people become connected to the financial ecosystem.