Financial inclusion is said to be a panacea for lowering poverty and income
inequality. In most developing countries, commercial banks are considered to
be the traditional channel of including the unbanked into the formal financial
system. This study aims to investigate the role of commercial banks in financial
inclusion in Malawi. The study used both primary and secondary data in
which a qualitative questionnaire was administered to all banks. Using a
combination of stratified and judgement sampling methods, data were collected
from 16 bank branches. The results of the study reveal that over the
past years there has been dismal performance in terms of expansion of commercial
banks’ branch network, though the number of ATMs has significantly
increased. The study also reveals that agent banking has significantly expanded
even in the rural areas suggesting that banks have significantly contributed
to reaching the unserved population. The study further finds that
most banks provide financial literature to their customers, set very low minimum
or zero balance requirements for certain categories of accounts, have
consumer protection mechanisms and are also engaged in various initiatives
aimed at enhancing financial inclusion. Nonetheless, the study finds that customer
fees and charges, distance to bank outlets, Know Your Customer (KYC)
requirements and low literacy levels, in that order are perceived by most banks
as major barriers to financial inclusion.
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