Leading the way for digital financial services in Africa

A digital transformation is allowing the Tunisian Post to bring financial services to more of Tunisia’s underserved as it works to strengthen its business in this time of rapid change and intense competition, said Sami Mekki, CEO of the Tunisian Post.

“The primary objective of the Tunisian Post is to ensure progressive transformation based on digital opportunities to converge the physical and digital networks and redefine its business model and core business,” he said, ”and digitalize its financial services with a view to financial and economic inclusion, which are central to the Tunisian Post’s strategic vision and its first strategic area.”

The Post is positioned to offer inclusive financial services through its broad network, affordability, and diversified services through which 2.5 million Tunisians are served via digital payment methods, Mekki said.

Services such as prepaid cards and wallets meet the needs of microfinance institutions (MFIs), the low-income population, and micro, small and medium enterprises (MSMEs).

“Mobile payments and digital financial services represent a unique opportunity to rapidly increase access to financial services in Tunisia,” Mekki said.

One such service is the Post’s D17 mobile payment application, which recently took first prize at the World Summit on the Information Society Forum 2022 in the e-business category.

D17 allows Tunisian citizens to make money transfers, micro credit payments, and merchant payments. Following the app’s success, the Post developed a mobile payment solution for Mauritanian Postal Corporation and is now in talks with other African posts to develop similar projects.

Additionally, the Tunisian Post participated in the UPU’s Financial Inclusion Technical Assistance Facility (FITAF) to develop a new online banking solution, MyPoste.

This allowed the Post to improve quality and accessibility by adopting the latest digital solutions, broadening its financial offerings, and transforming its financial activities into a 100 percent online bank for individuals. The next phase will broaden services for business customers. The Post will also merge all available apps, including D17, into one seamless web experience under MyPoste.

“The technical assistance put into place by the UPU provides designated operators with a first-rate tool for implementing their financial inclusion projects,” Mekki said. “It reinforces the promotion of socioeconomic development and thus contributes to the achievement of the country’s sustainable development objectives.”

Transformation, however, comes not only through the independent development of an app or a portal. As pressure mounts from rapid development of technology and the emergence of new players into the market, the Post’s objectives may also be reached through partnerships.

“In order to play its role more effectively in the country’s economic development, particularly in the areas of financial inclusion, e-commerce and de-cashing, the Tunisian Post has stepped up the digital transformation of its financial services to achieve (several) objectives,” Mekki said.

To increase financial services for the unbanked and underbanked, the Post must build awareness of the needs of this population to better improve inclusive services and maintain a competitive edge over new market entrants.

To do this, Mekki said, the Post can build on existing partnerships with financial inclusion stakeholders, such as the Institution of Microfinance, and ministries, such as the Ministry of Social Affairs, to better define the targets of financial inclusion and their needs.

Another objective, he said, is to ensure interoperability of the Post’s digital payment solutions with those of financial institutions to increase use of digital services and reduce costs.

“New technology has generated unprecedented shockwaves in the financial services ecosystem,” Mekki said. “With the emergence of new players and new consumer habits and lifestyles, the Tunisian Post’s regulatory framework faces change, and digital transformation is necessary for the Post to remaincompetitive.”

The new regulatory framework in place since 2016 has allowed for the emergence of new payment institutions, which have begun to develop new digital payment solutions, and now compete for the same target audience as the Post.

“The significant requirements associated with this framework do not allow for the promotion of an ecosystem conducive to developing digital payment services, reducing cash-based services and fostering financial inclusion,” Mekki said. “The Post has been excluded from certain services as a result (opening of ring-fenced accounts for payment institutions).”

The arrival of numerous FinTechs, which are more agile and propose financial products and solutions based on new technologies, such as cryptocurrencies and blockchain, is a challenge to posts.

However, partnerships with those new players could provide opportunities for innovation that aligns with another objective of the Post, Mekki said, which is to develop an open innovation platform to develop inclusive financial products based on new technologies, such as cryptocurrencies, which could improve the country’s financial inclusion and economic growth rates.

It’s important to note that despite the potential for inclusivity in digital financial services, Mekki said, there continues to be a disparity as well as a lack of trust in these offerings.

“Digitalization represents a key lever in speeding up financial inclusion,” Mekki said. “Access to digital financial services, however, also entails the barriers and risks faced by the population excluded from the financial sector.”

Customers may worry that their data is at risk with these payment services. Or they may find it difficult to assess the quality, risk, cost, and benefit of financial products, or the reliability of financial institutions.

To counter this barrier, Mekki said, the Tunisian Post, together with other financial inclusion players in Tunisia, plan to develop educational programmes for customers.

In addition to digital transformation of financial services, the Tunsian Post hopes to reach underserved populations by establishing a postal bank. It has applied for authorization, which would allow it to offer a wider variety of financial services.

“Poor and low-income people excluded from the financial sector have varying financial needs to allow them to manage their personal and professional lives,” Mekki said, adding that they are often limited to current accounts. “However, this alone does not suffice. To seize the opportunities that will shape its future and increase its resilience, this population must have access to credit, savings, and insurance services in line with its needs.”

Learn more about how new technologies, such as blockchain, can help increase financial inclusion through the Post in the UPU’s report “Blockchains for a Sustainable Postal Future”.

This article first appeared in Union Postale No.2 2022.