in the 21st Century

130 Kenya’s Financial Transformation in the 21st Century
constraints may help increase their demand for formal banking products.
Finally, if formal financial inclusion is to be increased, especially among
households with different backgrounds, then strategies like those of Equity
Bank – targeting underprivileged and underserved households (Allen et al.,
2012) and hiring speakers of minority languages – need to be supported so
that they can be scaled up at a more rapid pace. 16
Occupation
A person’s main occupation affects their demand for formal banking products.
One way the formality of one’s occupation affects the likelihood of being
formally banked is by affecting how wages and income are received. Formal
jobs often involve receiving a monthly salary through a formal bank account,
which increases the need for a formal bank product. Those in less formal jobs,
such as day labourers, may receive their wages through cash in hand. Recent
research in transition countries found that the use of banking products is
more common among those in formal employment, while those dependent on
income transfers are less likely to use these products (Beck and Brown, 2011).
Another reason why the formality of one’s occupation is important is supplyside
requirements. Most banks require a number of documents to verify
identity, place of residence, occupation, income, and for forth in order to open
a new account. The more formal an occupation is, the more likely there is to
be associated documentation that can verify that the person has the job and
what their income level is. People in the informal sector, such as agricultural
workers, may be unable to provide such documents and even if they were able
to, the documents may not be accepted as they are not from a known business
entity. Over 61% of the entire population of sub-Saharan Africa are often
unable to provide proof of where they live (World Bank, 2008).
Beck et al. (2009) found that one of the main barriers to having a formal bank
account is having to provide the necessary documents to open the account.
King (2012a) found that in Nigeria, the four-fifths of the population that
are unbanked have fewer formal documents in their name compared to the
remainder of the population. He also found that for individuals with four
documents, an additional document increases the probability of being formally
banked by 17%.
16 This point about its strategy for speakers of different languages is taken from: http://knowledge.wharton.upenn.
edu/article/research-roundup-the-financial-impact-of-social-impact/.