Archive for: Customer adoption
by Claudia McKay : Friday, February 3, 2012
“Cash is easy.” “Cash is what I know most.” “There are no charges when I use cash.”
 Ghana Market Seller (Photo Taken by Adam Jones) I was sitting in a little room in the outskirts of Accra listening to a group of tomato sellers talk about the financial tools they use to manage their finances. As a part of CGAP’s work in Ghana, we have commissioned Bankable Frontiers Associates (working with Easy Errands, a Ghanaian market research firm) to conduct a market research study on the financial needs of low-income customers in Ghana. One of the first steps was to conduct focus groups throughout the country and listen to diverse groups of Ghanaians, including farmers, taxi drivers, traders and students, talk about their strategies for moving and storing money. They discussed bank transfers and drivers and the use of family and friends but more than anything, they talked about cash.
The trite expression ‘Cash is King’ is over-used in our line of work, but as I sat in that little room listening to these people whom mobile money services have spent millions of dollars trying to woo, I realized yet again that the biggest competition we face in scaling branchless banking is not a rival MNO or bank or even the expensive money transfer operators – it’s cash. (Read some recent posts on our blog about this topic here and here.)
Cash is far and away the preferred method for storing and sending money in Ghana, no matter how inconvenient. One tomato seller, Charity, wraps her cash in no less than six black plastic bags and hides it in the back of her refrigerator, underneath her tomatoes and meats, so that the rest of her family does not suspect it is there. A timber seller, Emmanuel, told us he keeps his cash under the carpet in his living room. When asked whether the cash does not form a noticeable bulk, he replied with a big grin, ‘That’s why I spread it all around so that people walk all over my cash but have no idea it is beneath their feet!’
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In this fourth post in our series on interoperability, we describe interoperability at the customer-level. Read the first three posts here.
 One agent. Five mobile money services (Photo taken by Ben Lyon of Kopo Kopo near Geomaps Centre in Nairobi) In our work on interoperability, we find that there are some questions that we are unable to adequately address at the platform and agent levels alone. For instance, the opening of USSD gateways by mobile operators may allow customers of one operator to access services of another operator without either platform interconnection or agent sharing.
We identify two interoperability scenarios related to the mobile handset:
1. Customers can access their account through any SIM on the same network. For instance, one service in East Africa allows its customers to access their service from any handset as long as it is on their network.
2. Customers can access multiple accounts on one SIM. For instance, SMART in the Philippines allows customers to access SMART Money on their SMART SIM, as well as access accounts with various banks through different enabled interfaces.
Allowing customers to access their account via other SIMs or other accounts via one SIM increases the potential size of the market and increases customer convenience. In the latter case, providers may fear that customers will readily switch to another provider. MNOs run the risk that another service accessible to their subscribers will cannibalize their own service. Providers with large market share, in particular, may be less inclined to allow customers of other services to access their accounts. In addition, number portability has made it easier for customers to switch telecom providers.
Mobile money and the link between the mobile phone number and mobile financial services are supposed to help retain customers. Even if providers permit access to other services, they may use pricing, marketing and other features to try to keep customers from churning (e.g., make it hard to find the other service on the menu).
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To commemorate the 2nd anniversary of the Haitian earthquake, we are running a few blogs on the mobile money industry that has developed in Haiti over the past two years. The consulting firm Dalberg has recently completed three pieces of research on the Haitian market as part of Haiti Mobile Money Initiative (HMMI). You can read their Haiti mobile money case study here and their research on the NGO experience of plugging into mobile money here.
Today they release the third piece of research on the payments market, specifically on the topic of market segmentation. Our guest authors are Vicky Hausman, Yana Watson, Matt Shakhovskoy and Lorenzo Bernasconi from Dalberg.
 With a year of operations under their belts, providers of mobile money services in Haiti are looking to move from a push for rapid expansion to a strategic pursuit of profitable markets. The industry’s kick-start came from a $10 million prize pool supplied by the Bill & Melinda Gates Foundation. Now as the prize mechanism nears its completion, the focus is shifting to sustainability based on supply and demand. For providers of mobile money services, we believe that a successful strategy will depend in large part on market segmentation.
The Haitian economy, though poor, is dynamic and resilient, and mobile money could fit into it in many different ways. Establishing possible uses through research and then offering a mix of services to suit distinct groups of customers will be key to the industry’s long-term viability. Studying and prioritizing these groups through segmentation will help companies to collect the highest return on their investment.
Segmentation is particularly important in nascent industries like mobile money, since identifying early adopters and low-hanging fruit can create opportunities to grow quickly and achieve economies of scale. While it isn’t an easy process, especially in a country where data on markets are hard to come by, it can insure against wasted effort and unprofitable investments. We recommend starting by estimating the size of different segments, then prioritizing them based on the costs and rewards to serve them, and finally planning a strategy to capture the segments that present the highest returns.
To see how we prioritized the segments in Haiti and to read a profile of one of the most promising – the agricultural value chain – see our report here.
by Sarah Rotman : Wednesday, January 4, 2012
One of the exciting and yet challenging aspects of the branchless banking industry is how fast things change. Topics discussed just 3 months ago can seem out of date today. That’s why it’s fun to look back over the topics we blogged about in 2011 starting from last January to see how the discussion has evolved over the last 12 months. Here are just a few of the blogs you may have missed or you may be interested in reading again:
This is a guest post by Peter Goldstein and Caldwell Bishop of InterMedia. Peter is Director of Communications for InterMedia and Project Director of AudienceScapes, an African research program and online knowledge center for the global development field funded by the Bill & Melinda Gates Foundation. Caldwell is a communications intern at InterMedia and is currently pursuing a Masters in International Development at George Washington University.
We all remember the devastating 7.0 earthquake that struck Haiti in January 2010 reportedly destroying about one-third of the country’s bricks-and-mortar bank branches, limiting Haitians’ ability to send and receive money transfers, cash checks, or simply access much-needed cash resources.
In June 2010, the Financial Services for the Poor initiative at the Bill & Melinda Gates Foundation partnered with USAID on the Haiti Mobile Money Initiative (HMMI), featuring a $10 million fund to provide incentives to mobile service providers to quickly launch and expand m-money services. Notably, Digicel, Haiti’s leading mobile provider, won the first-to-market prize of $2.5 million in January 2011 after launching its Tcho Tcho Mobile service. Soon thereafter, Voila, Haiti’s second largest mobile provider, released its T-Cash m-money service and received a $1.5 million USD second-to-market award. The CGAP Technology Blog has had several posts on this initiative (here, here, here, here, and here).
To help monitor the impact of the HMMI as well as m-money service use and financial access in general, the Gates Foundation commissioned InterMedia to design and conduct a series of household surveys of Haitian adults (aged 18+). The first Haiti Mobile Money Tracker (HMMT) survey was conducted in March 2011, in the early days of m-money usage, and sampled all ten Haitian administrative departments based on figures from the latest census in 2003. Follow-up surveys will be conducted to establish usage trends – hopefully based on a more up-to-date 2011 census.
InterMedia’s HMMT Online Data Analysis Tool allows financial access practitioners and stakeholders to dive into the survey data themselves in a user-friendly way. The combinations of financial, mobile and demographic data are easily cross-referenced to support project planning and analysis.
Meanwhile, the first survey yielded some helpful insights and provided rare baseline data for a mobile money deployment. Here are some of the highlights:
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This is the fourth post in a series about product innovation in branchless banking. In the last post we threw the focus on direct observation of consumers to source deep insights that lead to better products. We also released our detailed analysis. Today’s post describes a second key feature of the three Product Labs which will be established by CGAP’s bank, telco and other partners.
Let’s say you are a manager who has bought into developing products beyond the standard liquid wallet and P2P functionality ubiquitous in branchless banking. You want to innovate. But the procedures, biases, and requirements of your own company are holding you back.
If you are not careful, your good ideas will die a slow death of endless internal analysis or be outright rejected because “the data’s just not there”. As one manager told us about his company, “This place is run by accountants. If you don’t have the data, you go nowhere.” How can you meet existing business needs, and also move forward rapidly to approval?
This is the question confronting senior managers CGAP interviewed at more than a dozen firms that ranged from a success story in mobile money in East Africa to the largest bank in a major Latin American market, the world’s largest handset manufacturer, and a leading South African supermarket chain adding financial services to boost customer loyalty.
This isn’t just a problem for senior managers. It is also a challenge in our Product Labs initiative. Each Lab will be implanted in a bank, telco, or other firm capable of massively scaling newly designed products via branchless banking channels. Labs will need to work with the ways that firms already design products. But the Labs could also help firms improve on two counts.
Picking the best ideas to pursue. All the firms interviewed said they rarely suffered for a lack of ideas. But they do suffer from the inability to tell which are worth chasing. As a result, choices are made haphazardly or, sometimes, all ideas are pursued with equal vigor. Managers felt stretched in too many directions and concepts that time showed to be worthwhile often took longer to emerge for want of enough resources. Nearly all our interviewees agreed that earlier testing of ideas would help. But in many firms access to transactional platforms and core banking systems was tightly guarded. Pilots were something you do later in the product development process, not earlier.
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This is the third post in a five-part series about product innovation in branchless banking. Read the first and second posts. This post includes a detailed presentation of CGAP’s analysis of 23 firms from banking, microfinance, mobile, fast moving consumer goods, and Silicon Valley. It also describes the key features of three Product Labs which will be established by CGAP’s bank, telco and other partners.
Some managers just aren’t interested in innovation. They see being on the leading edge as being on the bleeding edge. “Let someone else fail and then I’ll copy the successes.” Quite reasonable, if you can afford to be second.
For those who cannot, where can they turn for help crafting breakthrough products and services? Standard market research tools and data mining often fail to deliver the kind of unique insights needed to identify new growth opportunities. Several new approaches are in pilot in the microfinance field: randomized controlled trials, financial diaries, behavioral economics. These have already expanded our foundational knowledge about the financial lives of the poor. But they’ll need adaptation to fit the rapid timeframes preferred by the private sector.
To find better tools we looked at 5 industries that overlap with branchless banking: either they sell financial services (traditional banking, the microfinance sector), have low-income consumers as a target segment (microfinance, fast moving consumer goods), or use electronic channels (the mobile industry, Silicon Valley). We looked at 23 firms in total. The powerpoint here includes further details.
The common connection across most success stories was observing consumers rather than asking them. In interviews or focus group discussions consumers aren’t always honest, don’t remember accurately, may believe one thing but actually do otherwise, or may simply be of several minds about a topic but only tell you one facet of their viewpoint. Observing their lives and behavior allows us to pierce the fog cloaking unstated opinions and deeply-felt needs. That’s the space where breakthrough products evolve from. We’ll give an example:
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Reaching the poor with a range of useful, convenient, and affordable financial services is challenging for all the reasons we know. In the context of Mexico, access has increased significantly in the past few years (nearly 60% of all households), and changes in regulation enabling correspondent banking are likely to bring the access barrier down even further. However, the challenge of delivering a relevant offering, tailored to the needs of the lower-income population still remains. This may be one of the reasons why many people who have access to formal financial services are not using them.
While consumer goods companies have developed an understanding of these segments, few actors in the financial services space have a deep knowledge of how “bottom of the pyramid” (BoP) customers use money and financial products, and what sort of products these customers may want in the future.
We conducted a study (available in both English and Spanish) in collaboration with McKinsey and Company, seeking to provide a closer look at the financial habits, needs, and wants of low-income customers in Mexico. The goal is to provide the kind of information that will enable financial service providers to design better products (i.e. products that reach more people and solve felt needs) and to implement products and business models with a greater chance of success.
We hope this study will help orient assumptions about customer behavior that can lead to improved product design and less risk in business models. Even though the study is intended to serve the Mexican market, we intend it to be useful and applicable to other markets.
Here are the key findings:
- Segments at the BoP save significantly. Deposits (both short term and long term) represent an amount equivalent to 20.4% of these segments’ annual aggregate income. If these deposits were to be held in formal financial institutions, the current deposit base in the formal financial sector would increase by 23.4%. Read the rest of this page »
This is the second in a five-part series on product innovation in branchless banking. In the first we described how developing products beyond payments is one part of driving scale for providers, and ultimately boosting financial inclusion.
 Henry Ford famously said, “If I’d asked people what they wanted, they would have said faster horses.”
There’s two ways to understand what he meant. One is customers don’t know what they want, so why bother asking. But for every Henry Ford or Steve Jobs (Who said “It’s not the customer’s job to know what they want.”) there are 1000 businesspeople who thought they knew the next brilliant product and are now staring at a cash flow statement soaked in red. Genius is in short supply.
The rest of us mere mortals must subscribe to a second interpretation: customers often can’t or won’t tell you what they want, so you must work to dig down to what they really need. To understand this requires knowledge about not only their current use of substitute products, but also their broader life context: their household situation, their aspirations, and their worries.
A prime example of this need for deeper customer understanding is the vastly different levels of success which very similar mobile money products have encountered across markets. M-PESA Kenya’s success has spurred providers across the globe to launch services with similar functionality: a liquid wallet with an emphasis on P2P transfers (“send money home”) and bill pay functionality. As we highlighted in the first post in this series, the “send money home” proposition has not yielded as much success outside Kenya where just 1 in 15 services launched since 2007 have accumulated more than 250,000 active users. This can be explained by differences between markets that have profound effects on how consumers perceive the value of otherwise similar services.
A truly valuable service would meet two criteria: they must fill both a deeply felt and a poorly met need (see figure): Read the rest of this page »
by Steve Rasmussen : Tuesday, October 18, 2011
Tanzania is one of the fastest growing mobile money markets in the world. Today mobile telephone penetration is 49% according to Wireless Intelligence as of Q3 2011. There are four active mobile money businesses, the largest of which is Vodacom’s M-PESA which has over 2 million active users.
A visit to community-based women’s savings groups in Arusha provided an opportunity to find out how people are using financial services. Savings groups are expanding rapidly in Tanzania as well as other countries in Africa. Group members save weekly, take loans as needed, and distribute profits and return share capital at the end of a year (what the experts call “time bound distributing accumulating savings and credit associations”). The groups we met had accumulated $6,000-7,000 in capital and were capable of approving loans to members that went from $100 to as high as $1,000, usually requiring repayment in three months. They had been together for almost two years and clearly knew their business well.
Twenty five percent of the more than 50 women we met with have bank accounts, and groups keep some of their accumulated capital in banks. The women live on the edge of a major city and some have salaried jobs in addition to their side businesses. Salaries might be paid into a bank account and a few individuals have personal bank accounts to accumulate larger amounts of savings than what they keep in the savings group. But what is interesting is that they do not use these bank accounts to transact any of their day-to-day business nor do they try to get loans from banks, for all the well known reasons.
The surprise came when we found out that all but one of these fifty women owns her own mobile handset and SIM connection. What was even more interesting was that two thirds have a mobile money account and many of the rest of the women want to get one. Given the fact that they are members of good, active savings groups, have access to banks if they so desire, and can even get services from MFIs if they so choose (none have so far), what exactly do they use their mobile money account for? It turns out that they use these accounts to send money to children studying or living in other towns, receive money from relatives living far away (to help them make their group payments amongst other things), load airtime for themselves and other family members, and in some cases receive payments from customers who make telephone orders for goods or services. These women took to using mobile money on their own and see it as a natural, useful addition to the value they derive from their savings groups.
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