Financial inclusion becomes big business as banks in Africa and Asia scale digital services

The authors show that distribution models relying on branches alone cannot succeed in emerging markets. Instead, winning institutions deploy layered, multi-channel systems that combine mobile platforms, agent networks, kiosks, and hybrid digital-physical services tailored to local conditions.

Financial inclusion has moved from a development goal to a commercial battleground, as banks across Africa, Asia, and the Pacific deploy digital tools, biometric systems, and community-rooted networks to reach the world’s 1.4 billion unbanked adults, according to a new study published in the Journal of Information Technology Teaching Cases.

The findings reveal how institutions once seen as serving high-risk, low-value customer bases have reshaped entire banking ecosystems while achieving strong profits and national-level dominance.

The research, “Digital Financial Inclusion: Profitable Models from Africa, Asia, and the Pacific,” analyzes 13 financial institutions that have turned inclusion into growth. Across emerging markets facing fragmented geography, weak documentation systems, political instability, and technology gaps, these institutions show that financial inclusion and commercial success reinforce one another when banks redesign products, verification processes, and distribution channels from the ground up.

The study identifies a clear architecture responsible for the sector’s shift: advanced digital identity verification, multi-channel distribution, ecosystem partnerships, simplified product design, and strong community engagement. Together, these elements allow banks to scale rapidly, cut operating costs, serve populations long ignored by traditional models, and achieve profitability through high-volume, low-margin operations.

How the new wave of banks breaks barriers that excluded entire populations

The research traces how the financial sector’s assumptions about the unbanked have shifted. For decades, low-income individuals lacking utility bills, formal addresses, or fixed employment were categorised as unprofitable due to the high cost of onboarding, compliance checks, and branch-based service delivery. The authors argue this belief has collapsed as new models from South Africa to Papua New Guinea show that eliminating documentation barriers unlocks mass-market scale.

Capitec Bank in South Africa is presented as one of the clearest examples of this shift. By integrating biometric verification directly with the national identity system, the bank removed the requirement for proof of address, enabling millions living in informal settlements to open accounts. That model, built on automated verification and a single, simplified account structure, now supports more than 20 million customers and billions of transactions each year. Its profitability and low cost-to-income ratio show how removing friction creates operational efficiency at national scale.

A similar pattern appears across other markets. In India, Bandhan Bank used Aadhaar-enabled digital verification to eliminate paperwork barriers while deploying thousands of field officers who conducted weekly banking meetings in rural villages. This hybrid model, digital onboarding combined with in-person trust building, allowed the bank to reach more than 33 million customers, most from rural and semi-urban regions. High repayment rates among low-income borrowers, even during economic shocks, demonstrate the power of human networks paired with digital infrastructure.

In Afghanistan, HesabPay offers a contrasting but equally revealing example. Operating in a conflict-affected economy with weak infrastructure, it developed a tiered digital identity framework that allows displaced or undocumented individuals to open low-risk accounts with minimal information, while higher transaction thresholds require more verification. The platform’s blockchain foundation improves auditability, stability, and compliance, enabling it to distribute humanitarian aid to more than 182,000 beneficiaries and process millions of transactions across all 34 provinces.

Across every country examined, the authors find that advanced digital identity tools, whether biometric systems, AI-powered facial recognition, or adaptive KYC frameworks, form the essential foundation that converts exclusion into access. When identity becomes digital, onboarding costs drop, fraud risks shrink, and mass-market scale becomes commercially viable.

Why multi-channel, mobile-first distribution is the new competitive flashpoint

The study explores how banks reach customers in regions with weak infrastructure, limited connectivity, or low digital literacy. The authors show that distribution models relying on branches alone cannot succeed in emerging markets. Instead, winning institutions deploy layered, multi-channel systems that combine mobile platforms, agent networks, kiosks, and hybrid digital-physical services tailored to local conditions.

Kenya’s KCB Bank exemplifies the power of partnership-driven distribution. Rather than compete with the mobile money giant M-Pesa, KCB integrated directly into the platform, enabling instant account opening and microloans through basic mobile phones. With more than 26,000 agents and nearly all transactions occurring outside branches, the bank transformed nationwide access while capturing a substantial share of the market. Mobile loans in the billions of dollars demonstrate how digital rails paired with agent networks produce both reach and revenue.

Bangladesh’s bKash uses a dual-platform model to overcome technology gaps. Its USSD system serves customers with basic phones, while its mobile app supports more advanced services. More than 200,000 agents deliver last-mile access, build trust, and educate first-time users, enabling the platform to serve over 80 million verified users. International investment from major global financial institutions strengthened its ecosystem, accelerating the expansion of digital payments across Bangladesh.

Sri Lanka’s Sampath Bank offers another variation: hybrid digital-physical reach. Its Mobile Cash system enables money transfers to non-account holders, redeemable through SMS at ATMs and branches. This approach responds directly to the country’s uneven financial and digital literacy landscape, allowing customers without smartphones or high-speed internet to participate in the financial system while more advanced services continue to grow.

Papua New Guinea presents one of the most challenging terrains in global banking. With its population spread across hundreds of islands and limited formal identification systems, conventional banking models have historically been impossible. Bank South Pacific overcame these barriers through biometric solutions and a vast rural agent network exceeding 5,000 representatives. This model serves millions, generates strong profits, and demonstrates that even remote island economies can be incorporated into national digital finance systems.

Together, these cases highlight why distribution innovation is now a defining competitive factor. Multi-channel approaches let banks align with local realities, expand reach without excessive infrastructure costs, and support user adoption regardless of geography or device ownership.

Ecosystem integration and community trust as drivers of sustainable profitability

The study further examines what enables long-term sustainability once customers enter the system. The authors argue that digital inclusion succeeds only when three conditions align: integration into daily economic activity, simplified product structures, and strong community trust.

Ecosystem integration plays a key role. In Indonesia, Bank Jago’s connection to the Gojek platform enables seamless movement from mobile wallets to full banking services. Its “Pockets” system allows users to manage multiple financial goals within a single account, mirroring real-life budgeting behaviours and increasing engagement. Similarly, Techcombank in Vietnam embeds banking functions into everyday activities through partnerships with real estate, securities, and insurance providers, supported by AI-powered personalization. These models turn banks into lifestyle platforms rather than standalone institutions, driving frequent interaction and customer stickiness.

Simplified product design emerges as a second driver. Capitec’s single account structure and ultra-low fees eliminate confusion, reduce operational costs, and support high-volume usage. Other institutions achieve simplicity through modular systems, alternative credit scoring, or automated onboarding. The goal is to provide services people can understand and use without complex documentation or technical knowledge.

Third, community trust consistently underpins long-term success. Bandhan Bank’s village-level meetings build social accountability and financial discipline. TISA Bank in Papua New Guinea taps into the social influence of teachers, who act as community ambassadors and service advocates in regions where formal banking is unfamiliar. HesabPay’s integration with humanitarian aid transforms the platform into a daily utility for vulnerable households. These approaches show that trust is not a soft complement to technology, it is the backbone that drives repayment, uptake, and sustained inclusion.