Nine out of 10 mobile transactions in sub-Saharan Africa float through USSD (Unstructured Supplementary Provider Info). Yes, USSD is an outmoded expertise created over 20 years within the past, and is outdated in a total lot of ingredients of the arena. But it surely aloof has high worth in Africa.

USSD used to be introduced within the 1990s after engineers chanced on they can also use it as a supplement to the existing GSM because it used to be more targeted on person-to-person dialog between a mobile network operator’s computers and its subscribers’ handsets.

The African market in most cases makes use of USSD for a differ of activities bask in transferring money, balancing cheques, doing high-ups, and procuring recordsdata bundles. The clarification for the massive adoption of USSD is no longer far-fetched: it’s far accessible to every feature telephones and smartphones, which enables it to reach a broader target market, in contrast to mobile apps.

USSD is king in Africa

USSD has been essential to building phenomenal mobile mobile phone use and utilizing financial inclusion in sub-Saharan Africa where non-connected feature telephones aloof dominate the landscape. Some 6 out of 10 telephones are feature telephones. That is 56.8% of telephones in a landscape where 3G connectivity handiest overtook 2G in 2020, and has handiest 28% recordsdata superhighway penetration and 46% mobile penetration. This implies, handiest half the continent’s inhabitants makes use of cellphones, and a worthy lesser number are connected to the earn.

Even though the sub-Saharan mobile financial system is quick-rising, half the of us on the continent carry out no longer personal get entry to to cellphones: mobile services subscription is 46% and is anticipated to reach 50% in 2025; whereas smartphone adoption is 64% and expected to reach 75% by the identical 2025.

USSD has confirmed to be a essential revenue for banks, over the years. Between January and June 2020 on my own, the worth of USSD transfer funds increased, going from roughly ₦30 billion to ₦390 billion (roughly $1 billion). In 2019, GTBank raised ₦2.13 billion from convenience costs, and ₦18 billion from all its digital banking products: USSD banking, GTPay, and cost gateway Habari.

Opay, one in every of the most most valuable fintech choices in Nigeria launched a USSD code (*995#) in 2019, and it enables users to get entry to any of the services accessible on the mobile app. This intention has enabled them to reach thousands and thousands of Nigerians that stay unbanked.

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USSD is king in Africa

USSD is a well-organized transfer for any industry to grab more moderen and unexplored markets, however it wants more disruption.

A Caribou Info learn revealed that 94% of financial transactions on the continent are through USSD, whereas 6% of these transactions are made through mobile apps. What does this mean? Fintech firms staunch during the continent are battling to grab this meagre 6%. They exhaust thousands and thousands of bucks on advertising and marketing campaigns aimed at getting this miniature percentage of of us to make use of their products. It is rarely surprising all these fintech firms personal USSD codes for traditional transactions.

Undoubtedly, it won’t be straightforward to innovate spherical USSD on myth of it used to be before all the pieces developed for mobile network operators’ internal use. There are no longer ample builders with the flexibility build to create USSD-powered capabilities, and its builders did no longer envision the modern traction it’s far getting at the modern time.

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But what would democratising USSD see bask in? Agree with a world where African companies can replicate the iconic “*737#” of Warranty Belief Monetary institution (GTB), allowing them to reach customers in essentially the most far away areas. These companies won’t personal to interrupt the bank to finance a large social campaign to design users to their net page or app. But this comes with an grief: customers would personal to rely upon memory, and a few customers would receive it hard to set aside in solutions the code of your total companies that are essential to them. Luckily, there used to be some innovation on this condo, one in every of the few and most essential iterations of USSD in modern years. Already, there would possibly be an offline mobile app that fetches your total bank codes from a buyer’s a number of bank accounts collectively and permits them to use these USSD-enabled transactions offline, in-app, with the serene interface of a mobile app, very much bettering users’ experience. This would possibly increasingly be a starting level for innovation within the U.S. condo, and, at any second now, one can anticipate other innovators to create choices that can allow companies to personal USSD codes.

USSD is moreover a technique to again historically underserved demographics. As an illustration, girls people, who are less in all probability than men to have cellphones, are financially excluded from the many fiscal services on mobile apps, and as an different, rely upon USSD to vitality their activities.

While it’s far factual that USSD is outmoded expertise, it’ll be time for Africa to make use of Eastern sport developer Gunpei Yokoi’s product vogue philosophy of Lateral Pondering with Withered Skills, which advocates for reimagining recordsdata to give outmoded solutions novel use.

From the Cabal 

Are you an early-stage fintech founder trying to assemble partnerships with banks however no longer barely sure of where to originate? 

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Sultan Quadri, Personnel Creator, TechCabal.