This post is written by Zain Bhatti, Deputy Resident Advisor for SBI’s project with UBL Omni, and Zara Naeem, SBI Business Analyst based in Pakistan.
We were recently travelling from Karachi to Lahore on a 20 hour bus ride. While driving from a metropolis to remote rural locations, one cannot help but notice the billboards and signs of prominent branchless banking services. The amount and frequency with which these signs are on display today provides us with a fair estimate of the sheer size of advertising capital flowing into marketing domestic remittances, bill payments and branchless banking account services. This is especially true if the service is backed by the muscle of a telecom marketing budget. However, despite this onslaught of marketing, the growth in the number of financially included in Pakistan remains nominal at best. This begs the question that whether branchless banking’s marketing muscle is even being put to the right use or not.
Branchless banking providers are currently marketing products such as bill payments and domestic remittances, which they believe will drive people to adopt the wider range of financial services they have to offer. In light of the slow rate of absorption of low cost bank accounts as a result, it would be worthwhile to examine if these campaigns are effectively addressing the basic question of how having access to a bank account can assist a financially excluded individual in better managing his finances. Or more importantly, to examine if the financially excluded have started asking themselves this very question.
Given that branchless banking is a relatively new concept in Pakistan, it is worth considering that the need of the hour might be to do some groundwork on branchless banking before actually marketing the products. The potential market for branchless banking mostly includes the lower and bottom of the pyramid; individuals who are illiterate and deprived of a number of basic necessities, such as education or quality healthcare. This low income segment often lives on a daily cash flow, with little need for anything other than that needed for their survival. They borrow from family members and friends, save under pillows and pay bills through the local post office. To cater to these individuals, current marketing techniques are successful in creating awareness of branchless banking brands and products, but not necessarily in educating them about how a bank account and other formal financial services can help them financially and socially. This makes it imperative for all stakeholders in the branchless ecosystem to evaluate if perhaps the energies in marketing are being channeled in the wrong direction.
In the current scenario an alternative approach might be to develop a market for financial services within the financially excluded by helping low income segment identify their own needs for financial services. This market development mandate can be executed in a number of ways, the most effective of which, in my opinion, has been educational or informative campaigns at the grassroot level. For this however, it is important for service providers to differentiate between education and marketing, as the former has a longer term focus and is more conceptual rather than a focused on a particular brand/product and certain features. A couple of successful campaigns that are worth mentioning here are the Tetra Pack campaign for packed milk and the ‘Green Star’ campaign for the use of contraceptives. Both campaigns had challenging objectives to significantly change consumer behaviors and for the latter, educating rural population about contraceptives which is considered a taboo required a lot of time and commitment from stakeholders involved.
Every stakeholder does have a role to play in marketing branchless banking. While players in the financial services industry need to market their brands to build their own advantage, it might be useful to channel public or philanthropic funding to execute such a campaign to aid the private sector. Government needs to consider upgrading the primary education curriculums to include basic financial literacy classes and can leverage the prevalent training expertise of the NGO sector in the country to accomplish this. Entrepreneurs need to play a role in developing cost efficient and effective tools that can be utilized to maximize the spread of the campaign.
In our opinion the need of the hour is to shift focus from supply side of financial services to development of the demand side. Once the ball gets rolling and the demand pressure starts mounting, we trust the economics of supply to push commercial financial institutions to develop propositions that will effectively and efficiently deliver to the needs of the financially excluded.