Two decades ago, no one would have imagined that it was possible to have money on their mobile phone, pay their water or electricity bills, or even pay a purchase bill. with his cellphone. This constituted a real myth for the population and some imagined it almost impossible.

Today, digital technologies have made this possible, which has allowed all of humanity to immerse themselves in a digital age. All of our interactions now go through virtual channels, which significantly changes our business.

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Quite a few areas have been affected by new technologies, which means that the financial sector is not left behind. In the very recent past, we have all seen the birth of a new activity in the financial atmosphere: it is digital financial services.

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For its operation, this new trend in this traditional sector (banking and financial sector) is based on technological supports as well as on electronic money. Thus, in a report by the Consultative Group to Assist the Poor (GCAP) on the regulation of digital financial services drafted between February and July 2016, it was mentioned that the notion of digital financial services does not have a common and widely accepted definition. recognized.

But, in many cases, the concept is used to designate the provision of financial services by means of digital communication (usually by mobile telephony, cards or the Internet), with limited use of the traditional banking infrastructure.

Therefore, we can understand that these services consist in offering, through the use of digital media, opportunities for banking transactions to people who generally do not have access to the operations of banks and financial institutions, which undoubtedly constitutes a huge challenge for humanity.

West Africa grasped so early the importance of such innovation in the context of financial inclusion. This is how the players in this ecosystem have taken this activity very seriously from the start, even if significant challenges remain.

Africa: the cradle of digital financial services…

In a context strongly marked by digital technologies, a multi-sector change is taking place all over the world. Digital transformation is thus the new trend in business areas, including finance.

Given the current realities and a strong social demand from customers, traditional players in the banking and financial sector are beginning to improve their activities by offering new offers and services adapted to the needs of the population. In this sense, new mechanisms for the digitization of financial services are emerging. This is the example of Mobile Money, an innovation born in our country.

Faced with a low-income, underbanked or underserved population, a new opportunity has arisen in Africa: Mobile Money. This is a partnership between banks and mobile phone operators where the customer does not have a bank account but rather an electronic money account.

As a reminder, this innovation was launched for the first time in 2007 in Kenya. It was the work of the operator Safaricom, a subsidiary of the British telecommunications group Vodafone. This partnership has generated M-Pesa, the first digital financial service in Africa.

Originally, this service was intended to facilitate the repayment of microloans from Faulu Kenya, a microfinance institution. Beneficiaries should rely on the services of the operator Safaricom to fulfill their commitment to the institution.

Thus, given the great success of this partnership, customers quickly seized the opportunities of this innovation by carrying out operations that were not initially planned, such as payment for goods and services or even sending and the withdrawal of money. This spectacular success of Kenya quickly inspired other African states, which meant that the model was quickly reproduced all over the continent, particularly in West Africa.

Digital financial services: a fundamental pillar in the fight against financial exclusion…

For a very long time, the banking circuit was reserved only for a well-defined social stratum of the population. Access to banking operations was inaccessible, even impossible for some populations. This situation ended up creating a digital and financial divide between the unbanked and those who had full access to financial services.

For some, the bank was a luxury specially dedicated to people with high incomes, which meant that they were in a situation of financial exclusion. For example, the rural world has long been excluded from banking infrastructures, thus causing the marginalization of its population. The same was true for poor people, underserved people or even women who had enormous difficulties in accessing financial services.

Today, with the exponential development of digital technologies backed by a significant penetration rate of mobile telephony, this trend has quickly reversed, thus constituting an old memory for the population. Thus, technology has played a crucial role in this process of financial inclusion.

With the massive importation of electronic media (telephones, TPE, applications), Africa has become a real digital hub. According to André Grissonnanche, expert in Information Systems Security, secure electronic transactions and electronic payment systems, “Africa has experienced incredible development of mobile telephones in recent years. Today there are 850 million mobile phones in Africa, representing a penetration rate of 50% of the population. The number of mobile phones can sometimes even exceed that of the population. For example, in Senegal there are 1.2 mobile phones per inhabitant” .

However, if West Africa has succeeded in digitizing financial services, it owes it in large part to mobile telephony. This medium, which was only limited to a very limited use (making and receiving calls), quickly became a multifunctional tool, especially in financial activities.

Digital financial services have enabled previously unbanked people to access formal financial services through the use of digital channels. With great accessibility and ease of use, the new financial services platforms offer the public a wide choice of range of products and remote offers based on existing technologies, which is always beneficial for all social strata.

The advantage of this digital finance is that it offers the financially excluded population alternative solutions to banking operations at a lower cost. Thus, in his opening speech at the high-level forum on technological innovations for financial inclusion held in Dakar on November 27, 2018, Mr. Tiémoko Meyliet Koné argued that " the accelerated development of digital finance products favored by the digital revolution that has taken place in recent years, has generated significant benefits in developing countries while consolidating the dynamics of financial inclusion. Innovations, particularly the adoption of mobile phones and smartphones, have facilitated the expansion of access to financial services to businesses and populations that were hitherto hard to reach” . These words can be supported by several success stories of digital financial services in the context of financial inclusion, especially in West Africa because the benefits of its services are very vast, and sometimes even immeasurable.

Today, with digital financial services, users are able in record time to store or even transfer funds via mobile telephony, which allows them to improve their income potential and fight against poverty. and financial exclusion. They also make it possible to anticipate financial risks by facilitating the collection of money from friends, relatives or relatives, at a very low cost, which is a major advantage for financial inclusion.

Moreover, West Africa has achieved significant feats in the financial inclusion strategy because, relying on the words of Gisèle Ndoye during the second week dedicated to this activity in November 2019, the WAEMU zone exceeded the rate of 57%, which is reassuring given that the curve is rising.

However, challenges remain in the digital financial services sector…

The importance of digital financial services in consolidating financial inclusion is well established. Throughout the world, these services have enabled all social strata to regain an important place in the financial circuit long reserved for a specific category of person.

In West Africa, the involvement of digital technologies in the finance sector has considerably reduced poverty, especially in certain areas where access to banking infrastructure was difficult. However, notwithstanding the importance of this sector at present, major challenges remain.

Indeed, among all the players in the ecosystem of digital financial services, the consumer remains the most important because he represents the final recipient. Given his position, many risks can weigh on him and on his personal data. In this sense, the strengthening of legal and technical mechanisms for consumer protection becomes an emergency.

As a reminder, for most of the transactions it carries out, the customer is called upon to provide certain information which may at times be confidential. Even if this falls within a very specific framework (the fight against money laundering and the financing of terrorism), it is necessary to reinforce vigilance on the data collected, especially respect for the principle of purpose.

In activities as strategic as digital financial services, the concept of trust plays a crucial role because it helps to retain customers. In this activity, the confidentiality of personal data and the protection of consumers are always called into question. This situation is explained by the fact that most of the data is collected and processed passively and automatically, that is to say without the consumer realizing it.

Data can thus pass between service providers without the prior authorization of the person concerned. These actions are illegal and can undermine trust between financial service providers and consumers, especially when certain operations are suspicious or certain irregularities occur on the customer's account without the latter carrying out any transaction.

Thus, these obstacles can often be a source of failure or destruction, especially in a sector that is called upon to constantly evolve.

The other major challenge to be met in this sector remains, among other things, the interoperability of digital financial service platforms. Today, if the development of these services is experiencing a slowdown in certain areas, it is because it is difficult to make certain platforms interoperable. In most cases, we observe in these areas the presence of few services, which can be a source of blockage of activities.

Currently, it is clear that the financial exclusion of certain populations is caused by this lack of interoperability of digital financial services. By way of definition, interoperability can be understood as "the ability of the user of an account or portfolio managed by a service provider to receive or make transfers to the account or portfolio of a user managed by another provider. We can also describe interoperability at the agent level, when a client of one provider can transact with the agent of another provider”.

This mechanism thus makes it possible to support an inclusive payment ecosystem because the user will be able to carry out transactions with the service provider of their choice or between service providers. Thus, the problem of interoperability between payment systems, cards or even electronic purses constitutes a major constraint for financial inclusion.

Although important projects in this direction are underway in the community space, the atmosphere of digital financial services has not yet experienced the effectiveness of platform interoperability. However, considerable efforts are being made by Fintechs such as Paydunya and Touch.

In a participatory approach, these aggregators in the financial sector also had the idea of promoting interoperability, which moreover constitutes an important step in the promotion of financial inclusion in West Africa.