Archive for: Customer adoption

Nobody gets up in the morning and says “I want an efficient payment instrument today.” Nope. But they might say, “I really want that Hello Kitty lunchbox.” Several clicks, and its yours. There’s a lesson here: what will be desired by BOP consumers, whose tastes might run a little different from the typical American nerds? And how can the incipient mobile money industry tap into that? Is there a metaphorical eBay out there?

That’s why I was so excited to talk, and listen, at last week’s huge mHealth Summit. For those of us in mobile financial services, it may just be that adjacent industries like mobile health drive demand for mobile money through their understanding of what BOP consumers want. Vaccinate your kids? There’s an app for that, and a way to pay for it. If this report is even half right, there could be tens of millions of mhealth clients needing efficient, convenient, safe ways to pay in the not too distant future.

Here’s my presentation from the Mobile Money meets Mobile Health session of the Summit.

- Mark Pickens

Last week, my colleague Claudia McKay continued our blog series on our new CGAP Focus Note which tries to answer the question: “Is the hype around branchless banking justified?”  To dig into some answers, we gathered data on more than 16,000 clients of branchless banking institutions in 10 countries. Today, I’ll discuss the third and final finding from the study.

How do we meet demand for products that go beyond payments?

Most branchless banking services help clients move money over distance : a money transfer to a family member in the countryside, a bill payment to the utility company, a social benefit from the government. Clients also want products that move money over time  – i.e. savings and insurance paid out today to use in the future, credit to be used today and repaid in the future.

We know the poor are very active money managers. Financial diaries used by Collins, Morduch, Rutherford, and Ruthven show low-income families in Bangladesh, India, and South Africa used an average of eight different financial instruments primarily to move money over time, and quite intensively: the average household moved more than US$1,000 through the instruments over the course of a year.

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Last week, my colleague Mark Pickens started a blog series on the 3 main findings in our new CGAP Focus Note, which looks at several aspects of branchless banking across 18 branchless banking providers with more than 50 million customers in 10 countries.  You can read a full web feature about the paper on the CGAP website.  In this post, we’ll look at the second question we asked in the Focus Note:

Is branchless banking cheaper than traditional banking, and by how much?

To answer this question, we compared the prices charged by 16 branchless banking providers across 10 countries and by 10 traditional banks in five countries across 8 use cases.  We first released the results of our analysis on this blog in May.  Here are the highlights:

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After several years of very high profile attention on mobile money and other branchless banking schemes, we think it’s time to test the hype. Or more accurately, we’ve wanted to for awhile. But acquiring good data is really, really hard. We’ve been unable to say in anything but a fragmented, mostly anecdotal way whether the unbanked really use branchless banking, what they use it for, if it saves them any money, and what more they might want (but aren’t getting yet). Just because we are excited about branchless banking doesn’t mean it is living up to the promises we make on its behalf.

Over the past year, my colleague Claudia McKay and I have pulled together data on 16,708 branchless banking customers in 18 branchless banking providers with more than 50 million customers in 10 countries. Some of the data we had to go and generate ourselves in new field work; we gained access to other people’s research; and some, particularly prices, are public and just needed to be aggregated (somewhat laboriously). We are pretty certain this is the first analysis of branchless banking with a multi-country perspective. What we found is released in a new CGAP Focus Note.  Over the next week, we will look at each of the 3 main findings.

Today: Is branchless banking really reaching the base of the pyramid?

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We’ve been pointing out the deficit of fresh thinking on mobile money products (see my blog post after the GSM World Congress, and more recently Bill Mauer and Olga Morawczynski’s take on the subject and my colleague Sarah Rotman’s opinion as well). The topic came back to mind when Gartner released its annual hype cycle for emerging technologies, and tech investor guru Ron Conway made his list of tech megatrends – few if any of them seem useful to the majority of humanity that is low-income and living in a developing economy. Location-aware electronic paper might be cool in Palo Alto, but who is it going to help in the Amazon, Ahmedabad or Abidjan? That’s why we loved the strong nods to the potential of mobile phones at last week’s Clinton Global Initiative (including mobile money in Haiti) and Nokia World earlier this month.

To some extent, falling hardware prices and mobile data transfer costs make it inevitable that we will see suddenly cheap technology applied to old problems. But isn’t there more we could be doing? Since CGAP focuses on financial inclusion, I’ll restrict my musings to mobile money, but these might be applicable to mobile health, education and a variety of other fields.

I can see three avenues we ought to be looking down.

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Bill Maurer and Olga Morawczynski’s blog post from a few weeks ago discussed a topic that seems to be on everyone’s mind: innovation in mobile money…or the lack thereof. This has generated a lot of comments and even follow-up blog posts, like one by Bill Barhydt from m-Via. Bill and Olga made some good points about the nimbleness that MNOs and other players have to exercise in order to stay competitive and generate innovation. However, I’m not so convinced that there is a lack of innovation in mobile money because MNOs are partnering with banks. I’d say that there is at least as much of a lack of innovation in mobile money because MNOs are simply trying to copy M-PESA. The link-up between Tameer and Telenor (a bank and an MNO) in Pakistan has received big acclaim for innovation. It’s easy to blame the regulators, as Bill and Olga say, but it’s also quite easy to blame the banks.

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The UN estimates that there are approximately 800 million illiterate consumers worldwide and in addition not all consumers use products that support their primary language. To what extent do designs need to cater for, or specifically design for the illiterate?
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For many living on the edge of the grid, power comes in the form of a car battery which in domestic contexts can last up to one month to run a light bulb or two; keep a radio and mobile phone charged; and for occasional television use. Refrigerators are not worth purchasing unless there is continued access to electricity. Charging a car battery take ~3 days: one day to pick up and drop off; a day to charge, and this can take significantly longer if the locale where it is normally charged does not itself have electricity.

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Is it possible to experience the core benefits of mobile phone ownership without having a mobile phone?

In contexts where income is highly variable people living on the poverty line are more likely to be forced to sell off assets in order to buy essentials such as food. The mobile phone is such an asset. The net result is that there are people with a sufficient technological literacy to understand what a phone can do, a nuanced understanding of the communication norms, own an active SIM card but no mobile phone and most likely live in a community where people understand the variability of income and ownership. In these contexts it can be socially acceptable to ask peers, even strangers to borrow their phone, take out their SIM, insert their own and send off text messages or make calls – since the monetary costs are passed on the SIM card owner.

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A few weeks ago, CGAP released a study comparing the prices of 16 branchless banking pioneers and 10 traditional banks across eight use cases. We found that the average monthly cost of using a branchless banking service is $3.90 (PPP adjusted) compared with US$4.80 when using a traditional bank. The conclusion: branchless banking is cheaper than traditional banking, but the gap is not as wide as some may think.

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