Innovative banking solutions for the unbanked population

Billions of people in the developing world still don’t make use of/have access to formal banking tools. This is due mainly to the fact that banks and other formal banking institutions aim their services at the middle and high income class, who bring in more revenue. In countries such as Colombia, the low income population simply cannot afford banking services. Another huge issue is that they do not trust in banks and are afraid that they will take their money, for the simple reason that they are uneducated in the financial world and therefore do not understand it.

This has given rise to community savings and credit groups, in which groups of friends, families and other members of the community gather regularly to save small amounts of money together. At the end of one cycle, all the savings including interest and fines (rules made by the group) are paid out to each member. This is where e-kulki comes in. Savings are deposited in the form of cash and are kept in a wooden safe, which can easily be stolen, and while the group accounting system is extremely simplified, it is still too complex for those with low levels of financial literacy allowing mistakes to still happen.

E-kulki is therefore developing a mobile wallet banking app, which works on any simple phone and is free to set up, through which groups can open a collective bank account, drastically reducing the cost of banking. This eliminates the risks associated with cash and takes care of all the bookkeeping, storing each member’s data and transactions made in one database. The system is made transparent by sending members updates after each meeting.

While informal savings groups have been a great system for the unbanked population, e-kulki’s app makes the system even more efficient and safe in using technology to combine the benefits of the informal sector with formal banking institutions, educating the population about finance and ultimately working towards the world wide goal of financial inclusion.

Source: internship with e-kulki, also see


2 responses to “Innovative banking solutions for the unbanked population”

  1. marlouveloo says :

    I read your article and the attached news article and became enthusiastic about this innovative banking solution. E-kulki provides a great opportunity for low income groups to get access to basic savings and credit. Further, this solution can educate those groups financing and using mobile applications.

    While reading your blog, some (critical) questions popped up. First, the article describes the solution as follows: ”Each group member sets up a mobile wallet on their phone, enabling individuals to transfer money INTO the group savings, and also for the group to administer loans to its members”. Those group members have low income, and therefore i am wondering if E-kulki is able to collect enough group savings to provide loans to others? Is the collective contribution of savings sufficient to cover loans?

    Second, little was said about the level of security of the mobile application. The app can be opened with any type of SIMcard, but how easy is this? Can you get (simple) access by only filing in a personal code or are there more steps you need to take before entering your mobile bank account?

    Third, what are E-kulki’s ideas and solutions about the usability of the application for the elderly? This might be an interesting group for E-kulki to target (relatively more savings), but generally they have difficulties using those new devices.

    Thank you for sharing this innovative business application. Great way of using technology to support the financial possibilities for low income groups.

    • mariahelmrich says :

      Thanks for your enthusiasm on the topic! I’ll try to answer your questions to my best abilities.

      Concerning your first question, loans can only be made if there is, in fact, enough money deposited by group members. They are only made within the groups, so not actually to any external parties. In most cases, they are only made in case of emergencies, like having to pay medical bills, fixing the house, etc., but these are never really huge amounts. Basically, if there isn’t enough money, then loans simply can’t be made.

      Regarding your second question, the mobile wallet works similarly to other bank apps in that users have a unique pin code they have to enter when making any transaction.

      And regarding question three, generally speaking, their target group is the younger generation as they are already familiar with the use of mobile phones and in the case that they are not, are more ready to learn it, which makes implementation easier. The elderly generally don’t trust such new systems and are not as flexible in learning new ways, but E-Kulki in collaboration with others have set up workshops in which they teach (especially the elderly) how to use the new system. Mind you that the elderly don’t necessarily have more savings as they usually don’t work anymore, whereas the younger generations do, thus can bring in more savings.

      I hope this clears up your your questions, and thanks again for your interest.

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