Rethinking Financial Services Taking Stock of our achievements

Rethinking Financial Services Taking Stock of our achievements and forging the way forward BANKING SERVICES

Opportunities for Banks Where are the low hanging fruits? ACCESS FRONTIER Given Current Products

Demand vs. Supply Uptake of Formal Financial Services 60% 50% Mobile money services 17% 14% Commercial bank services 15% 13% Insurance services 4% 3% Pension services 7% 2% MFI/microlender services 2% 3% SACCOS Capital markets 0% 0% 2017 2013 Number of financial Products in the market Base: All products; n=1, 534 Banks 64% Saccos 12% Insurance 11% MFI'S 7% Pension 3% Development banks 1% MNO'S 1% Aggregators 1% Money transfer 0%

How many adult Tanzanians are Banked? 17% (4. 7 million) of adults 16 years or older are banked

Identifying opportunity In order to identify opportunities for the banking industry – the unbanked is segmented to identify individuals amongst the banked who “LOOKS LIKE” the banked MAIN DRIVERS OF THIS SEGMENTATION were found to be: - connectivity - education levels achieved - numeracy levels - wealth - asset base & PPI With this approach the unbanked is segmented into 3 segments : - Bankable segment – with current products on offer these individual should be bankable - Development segment – adults in this segment lacks some of the characteristics that would make them bankable – some changes are needed (either on the supply or the demand side) - Unbankable segment – adults in this segment are so significantly different from the current bank adults that they will most likely not be banked in the short term and no changes in the market

Is there opportunity in the unbanked? Bankable 6. 6 m adults Unbanked 23. 2 m adults Development 9 m adults Unbankable 7. 6 m adults

Age: The Bankable are skewed towards 16 to 24 years 37% 31% 28% 27% 23% 21% 19% 18%20%17% 16 to 24 yrs 25 to 34 yrs Unbankable 35 to 44 yrs Development 16% 13% 12%13% 11% 6% 4% 8% 45 to 54 yrs Bankable 18% 4% 4% 4% 55 to 64 yrs Older than 64 yrs Currently banked

Education: The Bankable are skewed towards those with higher levels of education 13% 2% 14% 30% 48% 41% 87% 66% 52% 44% No formal education 2% Currently banked Primary school levels Secondary school levels Tertiary Unbankable 0% Development 2% Bankable

Financial Inclusion: The Bankable are more likely to use mobile money services 95% 76% 56% 45% 32% 30% 29% 21% Use Informal services Unbankable Development Mobile money services Bankable Currently banked

Access: The Bankable are close to Bank Service Points and Mobile Money Agents 86% 76% 88% 77% 18% 4% 10% 3% Bank Unbankable Mobile money agents Development Bankable Currently banked

Confidence: The Bankable are comfortable dealing with Banks but less comfortable going into Banks 92% 81% 77% 59% 55% 43% 29% Unbankable Development Bankable Currently banked Confident in dealing with banks regarding saving & borrowing Comfortable to go into banks

Cluster Distribution: The Bankable are significantly urban skewed 85% 83% 36% 39% 35% 33% 24% 26% 11% 14% 2% 1% 2% 2% Dar es Salaam Unbankable Other urban Development Rural Bankable 5% 2% Zanzibar Currently banked

The Bankable are likely to save and send money to someone in the past 12 months 78% 72% 69% 61% 60% 40% 53% 49% 44% 40% 36% 33% 28% 25% 11% Save Borrow Unbankable Development Sent money Bankable Received money Currently banked