Category Archives: Customers

Delivering social program benefits using mobile financial services

This post is written by Muhymin Chowdhury, the Deputy Project Manager for the bKash Mobile Money project in Bangladesh.

Photo credit: Raisa Chowdhury

Photo credit: Raisa Chowdhury

On a recent work trip I had the opportunity to visit Chars Livelihood Programme (CLP) beneficiaries in the northern part of Bangladesh. ‘Chars’ are riverine islands created and destroyed by floods and erosion. These islands are located in very remote areas, requiring a minimum of twelve hours (via bus, car, motorbikes, boat and motorbikes again) to get to the nearest island from the capital city, Dhaka. The project beneficiaries receive a monthly stipend of Tk 350 (equivalent to $ 4.38), which is delivered to them in cash. In order to reduce the hassle of travel and carrying cash, CLP has started using bKash (a mobile financial services company) to transfer the stipend directly to their project beneficiaries. Our main motivation for the trip was to:

  • Observe how the service is rolling out
  • Understand whether people start using bKash for other purposes (e.g. savings, money, domestic money transfer)
  • Identify spillover effects of the service to non-project beneficiaries. Continue reading →

Marketing – for whose benefit?

This post is written by Debbie Watkins, SBI’s Head, Implementation for the Alternative Delivery Channels practice.

Photo Credit: Marketing Sherpa

An unfortunate truth:  the vast majority of advertising agencies design beautiful campaigns that will get THEM new clients, when they should be designing relevant campaigns that will get YOU new clients. Mark Stevens, the author of “Your Marketing Sucks” and owner of MSCO.com (I’m a big fan), advises his readers to check whether the company they’re hiring has won any awards for creativity – and if so, not to hire them.

I like that approach. The aim of your marketing campaign is not to get people to say “ooooooh, that’s a nice ad” but instead “that product can really solve some problems for me.” As the old adage goes, when you want to sell a drill, don’t actually sell the drill – sell the hole…

Trying to convince low-income consumers currently operating in an almost exclusively cash-based society to change their financial services provider is not easy. And when their existing “financial services provider” could be a hole in their mattress, or the next-door neighbor, relevance and clearly understood value is essential . A large percentage of the informal services they’re using right now are “free” (although they undoubtedly have a cost associated with them).

So marketing messages shouldn’t focus on the phone and how cool it is. They also shouldn’t focus on the bank and how large it is – the consumer knows that anyway, and they haven’t been using it for a reason (and I hope you know what that reason is, and if it’s for any reason other than accessibility I hope you’ve done something to fix it).  Marketing should focus very clearly on how your solution addresses the problems faced by your target market that were identified in the market research you undertook. bKash, SBI’s mobile financial services client in Bangladesh, has some great examples.

Creating brand and product loyalty among those who really matter

This post is written by Khurram Sikander, SBI Resident Advisor for UBL Omni in Pakistan.

During the last couple of months, the SBI Pakistan team has had the opportunity of meeting various stakeholders in the branchless banking arena in Pakistan. A lot of interesting conversations took place about the roadmap of the industry and how new players entering the market would shape the path of financial inclusion for the 90% unbanked population. From our experience of working with different initiatives in Pakistan and analyzing the State Bank of Pakistan’s branchless banking quarterly reports, we have observed that over the counter (OTC) transactions remain the most popular service used by customers. OTC domestic remittances and bill payments form a major chunk of the branchless banking business and are a source of consistent revenue for agents, as well as service providers.

The State Bank data as of December 2011 shows that 80% of the transactions are being conducted OTC. Agents favor OTC over account-based transactions since they view the former as sustainable revenue on top of their core business.

In the present environment, branchless banking service providers have been discovering that when a walk-in customer requests to pay a bill or transfer money, the agent chooses the platform that provides them the best commission. This theme has resonated in numerous agent surveys we have conducted over the last 18 months. The revenue earned through walk-in customers may provide existing service providers a false sense of security that the agent network can be sustained around OTC payments. As new service providers start offering OTC services through organically built agent networks or start cannibalizing agents, institutions will realize that the agents are as loyal to the brand as the next best incentive. Continue reading →

The psychology of pricing, Part 2

This post is written by Debbie Watkins, SBI’s Resident Advisor in Dhaka, Bangladesh.

Photo credit: Cengage Learning

We talked in the previous article about how pricing can encourage customer behavior to develop in a certain way – and that most people are able to spot a good deal (or a dummy) when they see one.

When we’re talking about mobile money, there are generally 3 price “events” – at cash-in, when one person transfers to another, and at cash-out. If you’re aiming to offer a true mobile wallet (a virtual “current account” as opposed to purely a money transfer service), I would argue for making person-to-person fees a very, very low, flat fee (something in the order of one US cent or its equivalent). Here’s a small scenario that explains this:

Nazmal is a security guard in Dhaka. He sends money home to his parents every month – a lump sum when he gets his salary. His parents spend the money on rent (a monthly payment); food (daily); school fees for their youngest child (weekly) and try to save a small amount in case of emergencies.

Nazmal deposits the amount he’s sending into his mobile wallet, and transfers it to his parents’ mobile wallet. They have a choice now of what to do with it, which will be driven by how the pricing you have established works best for them:

  1. They can withdraw the whole amount and keep it under the bed. They are more likely to do this if cash-out fees are structured on a flat or slab basis, as it works out cheaper for them to withdraw one larger amount than a number of smaller amounts.
  2. They can withdraw some now and some later, when they need it – this would be more expensive for them than option 1 with flat or slab pricing. If you have percentage pricing there’s no difference for them either way, except for the additional costs/time involved in visiting the cash-out agent more often.
  3. They can pay their expenses directly to the landlord/grocery store/school using the person-to-person feature on an ad-hoc basis, “save” the rest, and only withdraw cash when it’s necessary. Continue reading →

Are we cooking what the customer wants to eat?

This post is written by Nimrah Karim, SBI Associate Consultant based in Karachi, Pakistan.

Last week, a few SBI staff members visited Hala, a small town of 160,000 situated in the heart of Sindh, Pakistan. Our car weaved through narrow passages to reach the neighborhood of one of our focus group participants. We observed donkey carts navigating puddles, a herd of cows causing a traffic jam for rickshaws and pedestrians alike, and within alleyways, rows of small stores with male shopkeepers either tending to customers or chatting casually amongst themselves. As we traversed Hala’s winding backstreets—thriving with simple trade and services activities common to small, peri-urban towns —I reflected on the purpose of our visit. We were on our way to conduct focus group discussions (FGDs) with groups of women, to understand whether local recipients of one of the largest government cash transfer programs in the world could benefit from financial services offered by way of alternative distribution channels.

The FGD participants were beneficiaries of a grant of US $12 per month, disbursed by the Benazir Income Support Program (BISP) to adult female members in Pakistan’s poorest households. BISP has used various implementing parties to deliver payments to beneficiaries. A majority of transfers have been disbursed via money order, dropped off by postmen to beneficiary households. BISP has also piloted alternative delivery mechanisms, including disbursement of funds through magnetic-stripe enabled smart cards, mobile phones, and branchless banking agents. To date, BISP has allocated cash transfers to 3.2 million families, with an aim to increase outreach by two-fold by the end of 2012.

Our research seeks to uncover whether there is a compelling value proposition to convert these one-way distribution flows into a financially inclusive account. The account in question would offer customers the ability to save and store funds safely and also afford them transactional capability—such as options for paying bills, making person-to-person fund transfers, and eventually, paying for merchandise and services through their account. A body of research on pioneering programs in Mexico, South Africa, India, and Brazil suggests that G2P payment recipients use financial services if available to them. In theory, it sounds perfect: G2P programs successfully reach millions of the poor and financially excluded through various channels. Why not go a step further and use these platforms to reach this very segment with financial services? Continue reading →

Are you selling a blue or orange product? Sociocentric activities for branchless banking

This post is written by Debbie Watkins, SBI Resident Adviser for the bKash project in Bangladesh. This is part of her ongoing series on “The Goal.”

The American philosopher Ken Wilber describes the three general stages of human development  as egocentric, sociocentric and worldcentric; or “me”, “us” “and all of us”. Starting at around the age of 7, a profound shift in consciousness occurs – a child is able to take the role of another and has the ability to step out of his own skin and inhabit someone else’s for a while – the move from egocentric to sociocentric. Here’s an example of what I mean (try it at home!):

Say you have a book whose front cover is blue and back cover is orange. Show the book, front and back to a five-year-old

Photo credit: Flickr, cp.writer

child. Then hold the book between you and the child. You are looking at the orange cover and the child is looking at blue. Ask the child what colour you are seeing – he will say blue.

A seven-year-old will say orange.

The reason I’m writing about this is that is relevant to branchless banking (yes, really).  All of the various players involved need to be able to inhabit someone else’s skin, at least for a little while.

If you’re the provider of the service you need to “be” the client and the agent on a regular basis, to see the service offering the way they do. This goes back to the pain point analysis I was talking about before – it’s easy to convince yourself the pricing is right/the marketing is relevant, but you’re not the one that needs to be convinced. Put your client hat on – understand their life, their challenges and their perspective – and ask “what’s in it for me?” Then do the same for the agent.  Be honest to yourself.

The agent also needs to “be” the client. With branchless banking implementations, the agent IS the service provider – they’re the one who may convince clients to sign up, will encourage people to use the service and effectively be your champion on the street. In order to be effective, they need to understand the customer’s perspective too, and to be able to empathise with them. Continue reading →

The Goal: Getting inside the customer’s head

This post is written by Debbie Watkins, SBI Resident Adviser for the bKash project in Bangladesh.

Humans have a propensity to label people, ideas or things based on our initial opinions of them. Ori and Ron Brafman, the authors of “Sway – the irresistible pull of irrational behaviour” term this the “diagnosis bias,” and it includes our inability to reconsider those initial value judgments once we’ve made them. Once a person is given a label (and even indirectly, a diagnosis), it’s hard for people to see other people in a way that isn’t biased by that label.

Here are some labels to think about: “Low income”. “Disadvantaged”. “Unbanked”. Typical biased diagnoses include “stupid” (a real conversation I have had with someone I worked with in the past was centred around their view that “if poor people were clever, they wouldn’t be poor, would they?”). The truth of course is generally entirely different – although often lacking in formal education, the “street savviness” of your typical ADC prospective client, and especially their ability to work out whether a new offering is a good deal for them, is pretty high…

Photo credit: Shadowbend Studios

The only way to be sure that your planned ADC offering will be embraced by the people you’re planning to offer it to is to get inside their heads. You need to understand their hopes (so you can help them be realised), their fears (in order to quell them) and their challenges (in order to overcome them). Once you have an offering that can meet these three basic needs (and you’re able to articulate it – but more of that another time), you know you have a value proposition.

The only way to get inside their heads is to get out there and talk to them. As we all know, you need to talk to a lot of people, and to ask them very neutral and non-leading questions, and then to see the patterns of what they’re saying. The big problem with this is – being neutral. You WANT this to succeed. You WANT people to want your great idea. (And you perhaps WANT them, just a little bit, to not be smart enough to decide that your offering has no distinct advantages over the informal/illegal channel they’re currently using).  And because you want this, you (often inadvertently) structure or phrase the questions you’re asking in a leading way, making it almost a selling exercise. It’s easy to make people give you almost any answer you want, if you ask it in a certain way. So the first part of “meeting the customer need” is to be true to yourself.

Next in this series:  Getting research data that speaks to you


The Goal: the “value add” question

This post is written by Debbie Watkins, SBI Resident Adviser for the bKash project in Bangladesh.

“Every network evolves around delivering value to the core constituents who are currently using the network.  Networks also evolve around a business and revenue model, as a network matures value evolves out from the process of coordinating transactions to managing interactions.” (HBR Where Value Lives, Jan 2001)

Photo credit: Small Business Planned

The first step in achieving The Goal is being clear about your business model (i.e. what you’re going to charge, how and when), your Unique Selling Point and the value proposition to your customers. For many ADC implementations, the customers are likely to be low income people – notoriously difficult to sell to, as money is of course tight and there are many other demands on their hard earned cash. Somewhere along the line you’ve recognised the opportunity for an ADC implementation – perhaps as a new channel for your existing financial institution, perhaps as a startup business, perhaps as a diversification for your mobile network. You will also (hopefully by now!) have a general idea of what you’re expecting this deployment to achieve – be it transaction-based revenue, increased stickiness of your existing clients/reduction of churn, or new clients that you can cross-sell your other products to (and are able to express the benefit of ADC to your business in financial terms -whether tangible or intangible). And your model will likely include agents as cash-in cash-out points. All in all, an evolution of an existing network. Continue reading →