Nairobi — Undoubtedly, Information Communication Technology (ICT) is a medium that has revolutionised banking and everyday operations in financial institutions at the click of a button.

Without a common link that is accessible to all, it is difficult for the financial institutions to operate effectively and grow.

At the click of a button, customers can speedily access personal information from their banks without fear of information getting into the wrong hands.

Therefore, the emergence of ICT in financial institutions has enabled banks achieve what may have seemed impossible. By use of technology, banks are able to reach more customers in the urban and rural areas without compromising the quality of service and products in either region. Thus, for Equity Bank, the technology phenomenon has enabled it to achieve one of its key goals: to bank the unbankable.

According to the bank's General Manager of ICT, Mr Peter Gachau, there are people who have not accessed the benefits of a bank because one is not physically available in their region.

"Embracing technology is an important first step in reaching out to customers who have not yet enjoyed benefits from the banking sector. Our drive is to bank the unbankable- to provide products and services to customers who are not aware or have the wrong perception of what engaging in financial institutions means to them as clients," says Gachau.

He says that technology has for the last 15 years revolutionised the banking sector. At the click of a button, customers can speedily access personal information from their banks without fear of information getting into the wrong hands.

Gachau explains that part of reaching out to customers who are not aware or used banking services or products, even through friends and relatives, now have a chance to do so through use of ICT.

He says that for a long time, customer in all rural areas had challenges of enjoying banking facilities before major banks expanded their branches and included automation as part of easy dissemination of data from the parent bank.

In the analysis by Steadman Group of banking habits by ordinary wananchi, 62 per cent of the national, all urban and all rural population have access to banking services. In addition, only 27 per cent have financial access through banks or savings and credit cooperative societies (Saccos).

However, only 19 per cent includes those who have operated in regulated banks, building societies and postbanks. In addition, only eight per cent of these are formal institutions comprise microfinance institutions and Saccos.

Similarly, only 35 per cent of those accessing financial services include the informal accumulating Savings and Credit Associations. As a result of the limits to banking services in rural and some urban areas, 38 per cent of the population cannot access any form of banking service or product.

"This means that many people in this bracket do not use or have access to any formal or informal financial products either in the rural or urban areas. For this group, lack of engaging banks is because they do not believe in approaching financial institutions for services such as: Save money, borrow a loan or acquire money on credit.

However, today, technology has taken over age-old beliefs that banking is a preservation of the wealthy. As banks and other financial institutions acknowledge that ICT is a key ingredient in the banking sector, people now accept money as a resource that can be used to empower one to afford mortgage and tuition despite one's financial ability.

Gachau says that banks are primarily mediums of positive change to the customer by enabling one to make ends meet through an agreement with your bank.

"Today, it is important to understand how financial institutions work to make everyday life manageable. As more people understand that financial institutions are no the stiff cash demanding institutions but have changed by adopting customer-oriented," he explains.

He says that the increasing high cost of living: Affording college or university tuition, a house or raising capital to start a business financial institutions can always be used to your advantage. However, the key is to understand the expectations of the financiers to work out modalities to best repay a loan without being overwhelmed.

However, as part of banking the unbankable, there are some key factors to be understood by the client.

Equity Bank experience

"We mobilise resources and offer credit to maximise value and economically empower the microfinance clients through quality, up-to-date financial service. As bank, the key to success is to balance some key factors to achieve our goal as a financial institution and those of the client," he says.

He adds: "It is important to provide an accessible, friendly environment for your clients. Often, customers do not regard the bank as a stiff institution whose core function is to collect money from customers.

"It is, therefore, important to give your customers easy, viable options. For such customers, it is important to facilitate a medium where they can hold transactions such as deposit or withdraw money and access their accounts without physically going to the bank," he explains.

Gachau maintains that this is especially important for customers in the rural areas where use of technology through automation will enable them to access money and other financial transactions without being frustrated.

However, he cautions: "Though ICT is a relevant medium to drive business and enable customers to easily access and operate their accounts, as a bank, it is important to ensure the customers can access technology in the first place."

He says that the key role of IT is to easily bank the unbanked world - by drawing people to access the benefits of a financial institution by using ICT.

Winning in a digital technology world

Gachau says that, "today the fastest method for stakeholders in the business sector, to introduced and sustain elements of banking such as use of Automated Teller Machines where one can withdraw or deposit money in is best achieved by using technology that ordinary people access and use comfortably,"

Understanding the use of saving products

So far, only 52 per cent of the total populations in urban and rural areas are currently using a savings product especially in the banks.

However, this does not include those who only save by giving money to a family member or friend for safekeeping at home or an identified place.

"While a considerable number of the population are aware of the benefit of saving money, they do not consider it safe or beneficial to save directly in a savings account because of the standing charges from the bank involved. Others avoid the formalities involved preferring to approach a friend they can borrow money from any time, anywhere without costs attached to it," says Gachau.

He adds that for some, they do not have accessibility to banks where they can open accounts and therefore prefer to save using other easily accessible mediums. By giving a friend or relative, may seem a flexible way of ensuring your money is safe yet avoid the procedures of opening a savings account.

But, he adds that the other challenges are the banking charges a customer is required to pay. "A considerable number of those who fall in this bracket explain that they avoided opening a savings account because they did not want to pay additional banking charges. Others complained they could not afford or would strain to afford the opening and operational fees charged to sustain the account.

Another 40 per cent are shown to have used other methods of saving, either through a Sacco but have never used a savings account product to save their money formally.

The top five reasons listed for savings in order of priority are: Household needs takes up at least 57 per cent. For education, either for your children, siblings or self takes up 18 per cent of the savings, 16 per cent is used to cover losses such as medical bills or funerals expenses while only 12 percent of the savings go to cover personal items such as clothes, shoes and travelling.

He says that for each of these categories, the key is to make banking services accessible in the mode each is comfortable with. "Banks often tailor the money or service lending services to customers depending on their needs. Today, banks are not rigid but have always appreciated that every customer has unique requirements in view of their financial needs. Part of reaching out to those who are weary of the banks is reassuring them safe keeping of their resources and guarantees that they will benefit from linking with financial institutions," he says.

Source of credit

Seventy-five per cent of urban and rural folk seek loans from shops or business products suppliers, 13 per cent borrow from Saccos and only six per cent borrow credit from personal or business loans.

The analysis shows that 31 per cent are currently using credit products, although it excludes those who borrow from family and friends. Only eight per cent have never used a credit product while majority, 61 per cent, have never used a credit product from a financial institution.

What are some of the problems that people give for not using credit products.

Fear of not being able to repay the loan at the specified date, discouraged by the interest rates stipulated when repaying the loan. For others, fear of not meeting the requirements stipulated by the financial institution, such as security while others do not have any security to borrow the loan against.

Adoption of new technologies

In order to keep up with technology, it is important for financial institutions to adopt ICT facilities that will enable financial institutions to offer services.

Other challenges experienced include: Handling intense competition, increased customer expectations and reduce loss margins, establish and strengthen its relationship with its customers locally and internationally.

In addition, flexibility to innovate products in response to the changing market needs is a key factor in retaining customer loyalty.

"To reach the unbanked, Micro Finance Institutions need to lower the total unit cost per transaction to be affordable and appropriate to be sustainable," he says.

He added that adopting the mode of Mass banking ensures quality of service is not degraded and is recognized internationally as a key factor to reduce transaction costs.

"Technology is the enabler in achieving mass banking at optimum service level and lowered costs with optimum efficiency levels," he advises.

Leveraging on ICT to achieve outreach with an impact

Some of the essential factors to consider are for the bank to diversify delivery channels between the bank and the customer. Better risk management, effective reporting systems in case of a problem are required to manage the profitability of the bank.

In addition, a high level of operational efficiency is required in managing seamless transaction delivery for the complete range of banking products to the customer.

Gachau notes: "Banks, through technology, should always have high product adaptability to the market, seamless delivery of all banking products to customers and flexible efficient operations."

He explains: "Today, mobile banking is the fastest growing form of transacting business between the bank and clients. Therefore, it is a matter of bringing the service to the people. Part of banking the unbankable is taking the service to the people who have challenges accessing financial institutions." An effective way of achieving that is through mobile banking through communication links to a data centre from the parent bank. "If clients are able to access financial services easily, it builds their confidence and enables the bank to deal with any emerging problems quickly," he says.

Business benefits

They include: Market-led and customer focused product development with shorter time to market time lines. This will enable the bank to increase efficiency, better customer service and risk management and faster decision making for improved communication, profitability and growth of the Bank.

In addition, by use of an technology based centralised system such as: Real-time reports, less working hours for employee, enhanced centralised security, therefore, better audit ratings and ultimately the expansion of the banks branches.

Ultimately, Gachau says that technology always works for the best.