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Warm Customer Engagement for Digital Financial Services

Author: Dante Cassanego

Mensajería de Texto: Herramienta para Generar Relaciones

July 6, 2015

Posted by Dante Cassanego

Escrito por Verónica Pugin, Latin America Relationship Manager

Explosión de la mensajería de texto (SMS) como herramienta de comunicación

El teléfono móvil ha abierto puertas en cómo se puede desarrollar y mantener relaciones entre dos personas, entre grupos de personas y también entre organizaciones y negocios.

Las empresas y las organizaciones han identificado al teléfono móvil como un canal de alta penetración para la comunicación con sus clientes a través de SMS, con la idea que ésta es una comunicación fácil y rápida para generar mejor relacionamiento con sus clientes.

Dado que más del 47%[*] del mundo tiene un teléfono móvil, y que el 95% de los clientes, que han acordado recibir mensajería de texto de una empresa, abre el mensaje de texto dentro de los tres minutos después de recibirlo[†]. Es natural que las empresas y las organizaciones están aumentando su inversión en este tipo de comunicación.

La pregunta es, ¿abrir un mensaje de texto significa el desarrollo de una relación?

Para crear una relación, el escenario mejor es cuando dos individuos participen en conversaciones entre los dos en persona para aprender de cada uno, pero este escenario se hace difícil para las empresas y organizaciones por factores de costo y tiempo. Entonces,¿cómo se utiliza a la mensajería de texto para crear relaciones entre un individuo y una empresa u organización?

Estrategias débiles para crear relaciones con clientes por mensajería de texto (SMS)

Hay varias estrategias que se implementan para aprovechar del uso de la mensajería de texto (SMS) para relacionarse con los clientes. Dos estrategias comunes son las siguientes:

  • Mensajería de una vía: Esta estrategia sirve para difundir información. En términos de crear relaciones, es difícil crear una relación con un ser humano con comunicación de una sola vía. Imagina alguien que dice querer conocerte pero que nunca quiere escucharte.
  • Mensajería de Doble vía sin Adaptaciones: Esta estrategia participa en conversaciones de doble vía pero no incorpora la adaptación del contenido de los mensajes de texto. En términos de crear relaciones, un participante en una conversación se frustra si las respuestas que reciban indican que no le están escuchando. Imagina si alguien te pregunta qué quieres de tomar, respondes jugo, y luego te entrega agua; ¿frustrante no crees?

Características para generar relaciones por mensajería de texto (SMS)

En nuestra experiencia de miles y miles conversaciones con clientes cada día por mensajería de texto (SMS), hemos aprendido ciertas características que son clave al utilizar la mensajería de texto (SMS) como una herramienta para crear y fortalecer relaciones con los clientes. Estas características generan comunicación de calidad mientras mantienen un nivel bajo de costos logrando ser escalable a miles y millones de clientes:

  • Doble-Vía: Repito, una buena relación se basa en una buena comunicación entre las dos partes involucradas. Si una de las partes no tiene la oportunidad de expresarse, es normal que ese participante no se sienta incluido en la relación, y su contraparte pierde la oportunidad de escucharlo. Los comentarios del cliente son las piezas de su historia personal que decide compartir y deben ser tratados como una oportunidad para entenderlo mejor como persona.
  • Adaptable: La comunicación en doble vía puede llegar a ser una oportunidad perdida si el contenido no se adapta a lo que comparte el cliente. En una relación, es siempre clave recordar que las perspectivas de los clientes son personales y como personas somos dinámicos y podamos cambiar de opinión. Se debe utilizar las respuestas propias que envían los clientes para adaptar el contenido para comunicar que están siendo escuchados y que el contenido sea lo más relevante posible. La adaptabilidad permite que el contenido responde a las opiniones de los clientes y que cambie con el tiempo como sea necesario.
  • Darle el Control al Cliente: En una relación, un participante no apreciaría si la comunicación no respeta sus deseos. Gran parte de las estrategias de mensajería de texto (SMS) de empresas y organizaciones deciden lo que el cliente va a hablar de y a que hora en vez de dejar al cliente decidir. En una relación, es importante tener oportunidades en que cada lado decida el contenido de conversación.
  • Individualizado: Muchas empresas y organizaciones ven el valor de la mensajería de texto (SMS) como oportunidad para la comunicación masiva. Es cierto que la mensajería de texto (SMS) es una buena herramienta para ese fin, pero si la meta es establecer relaciones, es necesario tomar un enfoque más individualizado. En una buena relación, cada participante responde a los comentarios y preguntas específicas del otro participante de manera personalizada.

Juntos ha aprendido como crear relaciones por mensajería de texto (SMS)

En Juntos, llevamos años aprendiendo a comunicarnos y relacionarnos de la mejor manera con los clientes de las instituciones financieras por medios de mensajería de texto (SMS). Con experiencia con clientes en los Estados Unidos, México, Colombia y Tanzania, hemos desarrollado una metodología de diseño iterativo que utiliza conocimientos de economía conductual, investigación etnográfica centrada en el usuario y análisis estadística. Esto nos permite entender al cliente y su historia, sus necesidades y perspectivas con respecto a los productos financieros, y así desarrollar contenido relevante para promover comportamientos financieros específicos; siempre adaptando el contenido para asegurar que la comunicación sea la más eficaz.

[*] The Mobile Economy 2014, GSMA

[†] http://www.forbes.com/sites/marketshare/2013/03/04/pulling-back-the-curtain-on-text-message-mobile-marketing/

The Keys to Building Relationship with SMS

July 6, 2015

Posted by Dante Cassanego

Written by Veronica Pugin, Latin America Relationship Manager 

The explosion of SMS as a communication tool

Mobile phones have opened doors in how relationships can be developed and maintained between two people, between groups of people, and between organizations and businesses.

Companies and organizations have identified the mobile phone as a tool for massive and scalable communication with customers via SMS, with the idea that this is a quick and easy communication method to better engage their customers.

Over 47%[*] of the world owns a mobile phone, and in fact, 95% of mobile customers who have agreed to receive text messages from a company open those messages within the first three minutes of receiving them.[†] It makes sense that companies and organizations are dramatically increasing their investment in this type of communication.

The question is: Does an opened text message mean a relationship has actually been developed?

In terms of building a relationship, the most ideal scenario is for two individuals to have in-person conversations to learn about each other, but this method is not cost nor time effective for a company or organization to employ. How can text messaging be used to build relationships between an individual and a company or organization?

 

Weak approaches to developing customer relationships via SMS

There are several strategies implemented to take advantage of the use of text messaging (SMS) to interact with customers. Two common strategies are:

  • One-way Messaging: This strategy serves to disseminate information. In terms of building relationships, it is difficult to build a relationship with a human being via one-way communication. Imagine someone who says he wants to meet you, but he never wants to hear from you
  • Two-way messaging without adaptations: This strategy involves participating in two-way conversations but never adapting the content of the messages. When trying to build a relationship, a participant in a conversation will become frustrated if the responses he receives indicate that the other party is not listening. Imagine if someone asks you what you want to drink, you respond juice, and then they give you water—how frustrating?

Successful approaches for developing relationships via SMS

In our experience of thousands of conversations with customers every day via SMS, we have learned that there are certain characteristics that are essential to using text messaging as a tool to build and strengthen customer relationships. These features foster quality communication while maintaining low costs and allowing for scalability to thousands and millions of customers:

  • Two-Way: Again, a good relationship is based on two-way communication between both parties involved. If the customer does not have the opportunity to express herself, it is no surprise that she would not feel included in the relationship. The provider also loses the opportunity to listen to the customer. A customer’s feedback represents elements of her personal story. If the customer has decided to share pieces of his personal story, that information should be treated as an opportunity to better understand him as a person.
  • Adaptable: Two-way communication can be a missed opportunity if the content of the messages do not match the information the customer shares. In a relationship, it is important to remember that the customers’ perspectives are personal and that people are dynamic and can change their minds. Using their personal responses to send tailored content to them lets them know that they are being heard. Adaptability allows for messages to be based on customer feedback and to change over time as needed.
  • Giving the Customer Control: SMS marketing campaigns decide what the customers will talk about and what time they will talk about it, instead of letting the customer decide. In a relationship, it is important to have opportunities where each side can decide the content of conversation.
  • Individualized: Many companies and organizations see the value of text messaging as an opportunity for mass communication. While text messaging is a good tool for that purpose, if the goal is to build relationships, it is necessary to take a much more individualized approach. In a good relationship, each participant responds to comments and specific questions of one another in a personalized way.

JUNTOS has learned how to build successful relationships with SMS

At JUNTOS, we have spent years learning how to best communicate with and relate to customers of financial institutions via SMS. With experience with clients in the United States, Mexico, Colombia and Tanzania, we have developed a methodology of interactive design that employs behavioral economics, user-centric ethnographic research, and statistical analysis This allows us to understand the client and their history, as well as their needs and perspectives on financial products, and develop relevant content to promote specific financial behaviors. We are always adapting the content of our messages to ensure that communication is the most effective.

 

[*] The Mobile Economy 2014, GSMA

[†] http://www.forbes.com/sites/marketshare/2013/03/04/pulling-back-the-curtain-on-text-message-mobile-marketing/

Texting People Out of Poverty

June 25, 2015

Posted by Dante Cassanego

Written by Laura Shin

Carmen Hernandez, 34, lives in Dallas with her husband and five children. Her husband works in construction, earning about $50,000 a year. Hernandez makes party decorations and tailors clothing, making $800 to $1,000 a month.

In February 2014, the family only had $300 in savings. That month, Hernandez began using a program called Juntos that sends text messages to her mobile, a basic cell phone.

Pati_phone_2 (1)The texts would ask her things like, “Do you want to save more?” If the answer was yes, she would respond with an amount, which would be deposited into her savings account. Or, they might ask if she had an emergency and remind her that she could use her savings. Or, they might just encourage her to continue saving.

A year later, the family savings was closing in on $5,000.

“All the messages they send really help me,” said Hernandez, with her 14-year-old son acting as translator. “If I didn’t use it, I would save less.”

The San Carlos, California-based company behind the program, Juntos, promotes financial inclusion and helps first-time bank account holders, or the “newly banked,” to manage their money. “Our hope is to increase active client rates and active balances in accounts,” said Katie Nienow, cofounder and vice-president of business development.

The company got its start in 2009 at the Institute of Design at Stanford, when a student named Ben Knelman (now CEO) created a simple app to help the school janitors. Initially, a janitor named Karina laughed at the idea that she could save on her $21,000 salary. But a year later, she had saved $2,000 by using the app. Juntos went on to win the innovation award for financial inclusion at the 2012 G20 summit in Mexico City.

In a pilot study in Colombia, participants working with Juntos ended up with 50 percent higher balances than the control group. Many users, who already feel connected to their phones—one referred to hers as her baby—end up feeling such a personal connection to the app that they respond with messages like, “I just want to thank you for your help. Your motivation has been very useful.”

The company now has 200,000 users, obtained through partner financial institutions, in Colombia, Mexico and Tanzania. A team of writers with backgrounds from psychology to design use behavioral economics and on-the-ground research to customize each version to the dialect and culture of that country. Juntos also has a version for users in the United States, which is targeted at recent immigrants who are new to the banking system.

“In recent years, innovations like branchless banking, mobile banking and mobile money have meant that banking services could be provided to the poor at cheaper cost, so access to financial services was becoming a reality for the poor,” said Nienow. But while banks have an easy time getting people to open accounts, customers often immediately let their accounts fall dormant, or unused. Dormancy rates for the newly banked range from 40 to 90 percent around the world.

People who don’t have active accounts may engage in behaviors that put their money at risk. They may keep cash at home, where it might get stolen. Or they may use risky or difficult-to-liquidate informal savings vehicles, such as asking a family member to hold their cash or buying inventory for their small business.

“When the poor have their money weighing too heavily on their minds, they’re not able to give their mind to other things with their full presence, which has implications for their job performance and their future earning potential,” said Nienow, citing studies that showed that people perform less well on IQ tests when money is scarce.

Dormant accounts also cost the banks, which spend time and money to develop, advertise and maintain them. That makes Juntos and financial institutions natural partners: the banks have customers that Juntos can target for financial inclusion, and Juntos can help banks lower dormancy rates.

After enrollment, which may or may not be automatic, depending upon the institution, a user receives a note from Juntos explaining that the service acts as a free financial coach. The company will try several different texts to see what gets the person to write back, then refine its algorithms based on the responses it receives. “We’re constantly testing different messages to see what resonates the best,” said Nienow.

Once a customer replies, Juntos will ask her if she’s interested in a particular aspect of the account. For instance, if she gets free health insurance for maintaining a certain balance, the company will send reminders of that.

Antonique Koning, a financial sector specialist at The Consultative Group to Assist the Poor (CGAP), says that Juntos’s use of algorithms to analyze big volumes of customer data and continually update responses is innovative among organizations tackling financial inclusion. She feels that the Juntos platform helps people to believe in their banks.

“Providers need to become much more focused on the customers, better understand the customers’ realities, needs and preferences, and develop solutions that help,” she said. “People don’t trust the financial system because the system doesn’t speak their language.”

 

Originally published here on the Impact Journalism Day website. 

The idea behind Impact Journalism Day is to show that the media can also fulfill their role by reporting on inspiring solutions to the world’s problems. http://impactjournalismday.com/

Juntos takes innovative customer engagement platform to Africa through partnership with Tigo Tanzania

June 4, 2015

Posted by Dante Cassanego


SAN CARLOS, Calif. and DAR ES SALAAM, (June 4th, 2015)—
Juntos today announced their partnership Juntos partners with Tigo Pesa (1)with mobile money provider company Tigo Pesa in Tanzania, to provide new account support to Tigo Pesa customers through the Juntos innovative engagement platform. The partnership is the first step on a plan to expand the Juntos platform to markets throughout Africa.

“Tigo Pesa has established itself as one of Africa’s leading mobile money services and proved to be the ideal partner for our debut in Africa,” said Ben Knelman, CEO and co-founder of Juntos. “Through this partnership, Juntos is looking to help Tigo establish long-lasting relationships with its customers, increasing levels of usage in newly opened accounts and loyalty among current users.”

“We are excited to partner with Juntos on this digital innovation, piloting this free service for our customers”, said Ruan Swanepoel, head of Tigo Pesa.

Juntos designs mobile personal financial management tools that empower newly banked individuals to develop new financial habits and build confidence in their financial lives. These tools are designed by experts in financial behavior change and user-centric design and are delivered to users via a mass customized, automated, two-way SMS conversation. Juntos continues to demonstrate success: in a partnership in Colombia, the Juntos group had a 33 percent higher active client rate compared to the control.

“Omidyar Network is extremely proud of supporting Juntos’ journey in enhancing engagement of mobile money users across Latin America and now in Africa”, said Arjuna Costa, investment partner at Omidyar Network. “Juntos technology is addressing the last mile in the financial inclusion effort, which is really helping consumers to better engage with providers and take advantage of financial products to improve their lives.”

Tigo Tanzania is among the most forward-looking providers in Africa, becoming the first telecom to offer international money transfers with currency conversion and the first to offer free Facebook in Kiswahili. Africa has been at the forefront of financial inclusion through mobile money; there are 146 million registered mobile money accounts in Sub-Saharan Africa. However, only 61.9 million of those are active. In late 2013, the government of Tanzania pledged to increase the level of Tanzanian adults with formal access to financial services to 75 percent in the next six years.

The expansion of Juntos to Africa has been made possible through a recent round of investments closed in June of last year. Juntos raised US$3 million in its Series A financing round led by Aligned Partners and Omidyar Network.

 

###

About Juntos:

Juntos is a Silicon Valley tech company designing financial tools that drive engagement and usage of financial services among the newly banked. For more information, visit www.juntosglobal.com. For media inquiries, please contact pr@juntosglobal.com.

 

About Tigo:

Tigo is Tanzania’s leading innovative digital lifestyle company. For further information visit www.tigo.co.tz or contact John Wanyancha, Corporate Communications Manager, at john.wanyancha@tigo.co.tz.

How Can Communicators Better Engage an Audience on Mobile?

June 3, 2015

Posted by Dante Cassanego

“Mobile commands 24 percent of time spent with media but accounts for only 8 percent of advertising dollars spent.” A great article (below) by Geoffrey Colon brought attention to this fact. Which leads to the question, how can communicators better engage an audience on mobile? We believe the answer is not better marketing, but better design. To simply add more marketing to the wealth of communications that is already out there creates more noise. As Colon points out, “the fragmentation of attention due to an abundance of information only causes a domino effect.” Human centered design helps your audience cut through the noise, because you are offering them a product which sees and then meets their needs within social and cultural contexts. JUNTOS helps financial service providers deeply engage with their users on mobile. By using human-centered design to talk with users and identify their needs and wants, we can answer questions before users even realize they have them. That cuts through the noise.

 

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The Biggest Takeaway from Mary Meeker: When Information’s Cheap, Attention’s Expensive 

by Geoffrey Colon

The most important insight I saw released in Mary Meeker’s 2015 Internet Trends Report is the following: “Mobile Internet use is growing faster than Internet usage in general: There are 2.8 billion Internet users, up 8 percent from 2014, and 2.1 billion mobile Internet users, an increase of 23 percent.”

This is a monstrous amount of transformational growth from big box desktops to slender laptops into a world of “tiny screens.” Much of our ecosystem is moving into this matrixed world at a blistering rate based on this other nugget insight: “The mobile ad industry is still short $25 billion. Mobile commands 24 percent of time spent with media but accounts for only 8 percent of ad dollars spent.”

What this means is there are a lot of communicators out there who still haven’t figured out how to engage an audience on mobile. The data shows it. Only 8 percent of advertising dollars are allocated to mobile experiences. Much of this might be because we’re treating communications like communications from the desktop era which was a replicant of the print world rather than the way it should be treated: as part of the modern world of design. Communications today is more about design than it is about marketing. If you really want to be successful in the 21st Century you will realize as a communicator, a marketer or a storyteller that you are now part of what is called, “The Creative Persuasion Economy.”

You will hear a lot about this term in the next two years. Why? Because it is reported that 30% of global jobs contribute to this area of GDP. That means there are a lot of people paid to persuade others to do something, make some sort of decision, take some sort of action, buy some sort of product.

The way to do this on mobile is not through more text or hard-to-read case studies. It’s not even through display banner ads. The way to approach this issue on mobile is through a mobile by design strategy which incorporates a 360 action plan that looks like this:

  • social by design conversation that includes a heavy entrenchment in social customer relationship management. Most brands think consumers pick their product on price alone. But social data suggests customers look more at customer service issues as a reason to get rid of a product and/or service.
  • content creation that inspires others to create their own user-generated content in response to your point of view. Your PR team can’t do it all nor should they. Communications design is all about how to incite your desired audience to take action and do the legwork of talking about you. Good modern communicators don’t have to say much because in a mobile first world, that information will be shared and distributed quickly as long as you can draw attention in a positive manner to your cause. Day-to-day work of modern communications designers is planning for what these experiences will look, sound and feel like.
  • on demand media creation and distribution. Don’t decide for your audience. Let them decide for you by offering them a diverse selection of video, audio, photographic and text formats that can be chosen based on their personal preferences.
  • using social data and paid social to generate awareness or “attention” while using paid search and organic search to capture customer intent. Social and search aren’t opposing forces. They are integrated accomplices. You shouldn’t just be running Facebook or Twitter campaigns without running Adwords or Bing Ads campaigns in tandem.

But before you jump up to begin designing those four areas noted, take one step back and start by answering this simple question my small scrum team at Microsoft always asks prior to designing any communications in an attention-stressed world:

  • How will the person we are trying to connect with engage with us on various networks and platforms if they only do it from a mobile handset?

Think about this and act on it for one week if you are more of a person locked to your desk with a big monitor. Go to work and do most of your consumption and sharing of media and experiences strictly on your iPhone, Android phone or Windows phone. Do you run into experiences on mobile that frustrate you? Are there opportunities to try to engage with those content creators in all areas of media or do they only operate on an owned environment like their website?

Modern design thinking is rooted in the human experience. The day and age of “build it and they will come” is a ticket to go find another calling in life. That strategy no longer works due to the fact that the world we live in currently and moving forward will be one of abundance. There will be abundant access to cash or business finance (though it’s not evenly distributed at this point in time), abundant technology (although this is not evenly distributed either) and of course, the issue we use design to solve for which is a world of abundant information (look at that glass device in your hands and think to yourself how it can answer any question via a search engine. Well, with the exception of the most complex issues).

This fragmentation of attention due to an abundance of information only causes a domino effect. The more information and devices, the more distraction. The more confusion, the more communications that are pushed to help alleviate the issue. The additional communications only causes more noise and frustration amongst your desired audience. Helping your audience by providing them with the most legitimate insights, solutions, services or superior products is a way to cut through that noise.

Communications infused with design is the solution.

Geoffrey Colon is a Communications Designer and Social Data Expert at Microsoft. Follow Geoff on Twitter or on LinkedIn for a group conversation around the intersection of communications design, technology and human behavior. 

Why is Financial Security out of Reach for so Many People?

May 8, 2015

Posted by Dante Cassanego

written by Ben Knelman, CEO of Juntos

Many of the answers to the question in the title above may seem too complex or obvious: unemployment, poverty, corruption, discrimination, or lack of access to financial services and opportunities. All of these could keep a newly banked woman from getting to an agent and making a deposit in her new savings account. But so could much smaller events like a bus with a flat tire or a dead cell phone battery. At JUNTOS, we see everyday the ways that these kinds of seemingly mundane, simple obstacles can have such an outsized impact on financial outcomes and behaviors.

In our work, much of the power of behavioral economics as a tool stems from how it helps us unearth the emotional, social, and environmental factors that influence the decisions people make with their money and the financial lives they create for themselves.

Often this means experimenting with what kinds of information truly put users on the path to reaching their goals. It’s simple to teach users through SMS, coaching how to check their bank balance from their phone. Is it helpful, though? Users may feel encouraged by the amount they see on that little, black screen, knowing they are slowly and steadily approaching their goal. On the other hand, behavioral economics also helps us understand that users are perhaps even more likely to feel tempted to spend that money today when they see those numbers. They may even do this out of dismay, feeling so far from ever achieving a high balance that they may as well give up.

Behavioral economics gives insight into which of these two scenarios is more likely in a given situation, and how simple changes in messaging can push people in one direction or the other.

Financial decisions, though influenced by our knowledge and feelings, may be even more powerfully directed by our social and physical environment. In a deep dive interview in Mexico, we were told the story of a man who every other month would travel many hours by bus with cash in his pocket to make deposits at a branch of his bank in his small hometown. He took this trip even though there were branches of his bank where he lived in Mexico City.

As he went about his business in Mexico City, he would often pass these branches emblazoned with the name of his bank. In the interview, he voiced his doubts about these city branches. Were these really there for him? Could he use them? Or were they just other banks that happened to have the same name as his bank?

The man could have asked someone around him – or inquired at the branches he continuously passed on the street – to resolve his uncertainty. And it would certainly have taken less time for him or his wife to do so, than to travel all the way back to their home village every time they needed to make a deposit.

But he didn’t want to ask what might turn out to be a “dumb” question. A question that would allow others to judge him. They might even confirm a fear in the back of his own mind that maybe he didn’t belong inside this world of formal financial services, because he didn’t have the comfort with financial services that a middle class consumer might come by naturally. Behavioral economics points to the emotional logic behind this outwardly irrational behavior: avoiding embarrassment is worth wasted time on the bus and the cost of a bus ticket. From a cognitive standpoint, convenience holds little weight in decision making when it is paid for in emotional costs.

Each of these moments is an opportunity for JUNTOS. As a text message service available to our users at any moment of every day, we help frame their experience of the financial services around them. Slowly building habits, providing information, and lessening the emotional risks involved with these simple but powerful financial tools. Both the research we do in-house and the exciting findings produced by other behavioral researchers around the world, form an essential piece of how we design tools that have a lasting impact on financial behaviors and the users who choose them.

Originally published here on the Omidyar Network blog.

Know Thy (Irrational) Customer: Connecting with the Newly Banked Using Behavioral Economics

April 30, 2015

Posted by Dante Cassanego

Ben Knelman discusses how financial institutions and mobile network operators are overcoming the barriers to financial inclusion through behavioral economics tools, while improving financial products usage and building consumers’ confidence in their financial lives.

 

We are proud to be part of Omidyar Network’s behavioral economics series.

 

 

Using HCD to Make Mobile Money Relevant

April 16, 2015

Posted by Dante Cassanego

images-Giacomin_HCDI-e1409851755938-655x175

This post originally appeared on the Mondato blog and is reproduced with permission.

Earlier in 2014, two consecutive Mondato Insights examined the role of Human Centered Design (HCD) in enhancing the user experience and closing the gap between registered and active users of Mobile Money. In the six months since then, the value of the HCD approach in creating MFS products that meet the needs of, and are attractive to, low-income customers has further been highlighted by a number of research projects in Southeast Asia. Once again, many of the assumptions made by MFS providers about the market segments they hope to target have been challenged, showing that significant knowledge gaps persist between providers and potential customers, and these must be addressed by anyone hoping to create attractive value propositions for Base of the Pyramid (BoP) consumers.

Central to the HCD approach are deep dive interviews that seek to understand BoP customers not merely as individuals, but as the totality of their relationships as members of families, communities and business networks. Interviews take place in a very unstructured fashion, allowing free-flowing discussion that gives subjects the confidence and space to express themselves in their own terms, without the potential for design bias that formal questionnaires carry with them. The goal of the research is to form a number of “personas”, which are representative of market segments, and to identify what are their needs.

Partners Not Supplicants

Following on from similar projects undertaken by IDEO in Ghana and Brazil, and Continuum in Kenya, CGAP, the World Bank-housed think-tank, recently published some of its findings from a research project for the Indonesian bank BTPN, which was undertaken by Dalberg, and the design firm, frog. Despite having spent over 20 years working in financial inclusion, the results were “humbling but very, very exciting” for CGAP consultant and project lead Leesa Shrader. Not only did most of the ‘personas’ believe that banks had little interest in working with or for them, but some believed (with some justification) that, in any event, formal financial institutions had no products on offer that were attractive to them.

‘The Elevator’ is the nickname that was attached to the persona of the young dynamic entrepreneur whom the HCD research identified: an owner of a micro-enterprise, it was assumed that ‘The Elevator’ would be keen to gain access to financial institutions in order to help his business grow. As a bank whose focus is largely on underserved market segments in Indonesia, ‘The Elevator’ was a potential customer BTPN were keen to attract. During the course of the research, however, HCD demonstrated that, in fact, these dynamic entrepreneurs had little interest in banks and bank accounts. They were investors rather than savers, and the returns that bank savings products could offer were unattractive to them. Rather, they preferred to borrow from and invest in each other (or family or friends). The returns were better, getting the loan tended to be fast and relatively cheap, and through it they accumulated not only financial capital, but also social capital within their communities.

For some of these personas, the idea that a bank wanted to work with them was, literally, unbelievable. They saved and/or purchased assets like chickens and pigs that they could touch, feel and see, and that could be liquidated whenever the necessity arose. Building on the HCD research, BTPN has been able to leverage what Ms. Shrader described to Mondato as “a cultural understanding of a business partnership” to meet these market segments halfway. It generated a collaborative model of banking, setting up savings goals and sub-accounts, into which the bank is also making a “contribution” via its WOW mobile banking offering. Customers do not feel like supplicants to the banks, but partners.

Cultural and Seasonal Contexts

These results were echoed by the findings of another frog-led project, on behalf of Myanmar-based NGO Proximity Designs (an instructive video demonstrating the HCD research project in action can be found here). As highlighted in last week’s Mondato Insight, Myanmar is a country undergoing enormous change as it rapidly transitions from a largely closed-off society with mobile phone ownership rates on a par with North Korea, to a dynamic mobile-enabled economy that seems likely to be the first in the developing world where smart phones are in the majority. Much like the “dynamic entrepreneur” in Indonesia, Myanmar’s “socially savvy vendors” like Nang Phong use community peer savings groups and borrow informally, as well as investing in fungibles such as gold.

Although it is an underlying principle of HCD that its findings are specific to the social and cultural context in which the research was undertaken, enough examples are emerging of trends with broader application. It is, of course, generally understood that the poorest income segments, in particular the most agrarian, in many developing economies experience the most fluctuation and volatility in income. Large fluctuations in income across almost all personas were, in fact, observed in the Proximity/frog Myanmar research. Nonetheless, other research that CGAP has conducted in Brazil, through ethnographies and collecting data from financial diaries, has indicated that in that country it is families who have recently emerged into the middle class who experience the greatest volatility in income, and who are in many senses the most vulnerable to a sudden drop in living standards in the event of a ‘shock’. (For an HCD-based exploration of why micro-insurance is such a hard sell in developing economies, and how the mobile channel may be able to overcome these barriers, see here). It is vital that MFS providers have an understanding of their (potential) customers’ needs not just on an annual basis, but also on a cyclical one.

Creating a Unique Value Proposition

This is an area where HCD and the mobile channel may allow for the delivery of the value added component, in addition to digital savings, payments or loans, which could empower the new Brazilian middle class or Myanmar’s farmers to even out the peaks and troughs of fluctuating incomes, and create more opportunities to make sound financial decisions. Living “on the verge” need no longer refer to a precipice, but instead even greater success. One of the insights from the BTPN/CGAP/frog/Dalberg research in Indonesia was that mobile money or a mobile loan lacked the unique value proposition to make it attractive to ‘The Elevator’. Using smartphones to provide mentoring and financial education, however, created added value that at least generated competition to informal financial services. No longer unbanked, or under-banked, ‘The Elevator’ was now relevantly banked.

A paternalistic attitude towards BoP customers still pervades many formal financial institutions, up to and including central banks. In Indonesia, for example, the categorization of certain segments as “unbankable” is commonly used, Leesa Shrader told Mondato in a recent interview. The perception is that low-income market segments are “waiting for crumbs to fall from the table” of banks and formal financial institutions. By turning market segments into personas, however, HCD is increasingly showing it is not just a poorly designed UX that causes high numbers of registered users to drop to low levels of active users, but the fact that these individuals, even if persuaded to register, then find themselves “irrelevantly banked”.

Financial institutions have to do better than merely stoop to the level of the BoP and expect to reap rewards: they are entering a market in which there is often already viable, meaningful competition. An open-minded and customer-centric approach, such as that adopted by BTPN in Indonesia, has demonstrated that it is possible for FIs to do better than many have to date in not only identifying the challenge, but by adding HCD to the toolbox they can ensure that the end product is not only functionally usable, but relevant.

 

 

© Mondato 2014. Mondato is a boutique management consultancy specializing in strategic, commercial and operational support for the Mobile Financial Services (MFS) industry. With an unparalleled team of dedicated MFS professionals and a global network of industry contacts, Mondato has the depth of experience to provide high-impact, hands-on support for clients across the MFS ecosystem, including service providers, banks, telcos, technology firms, merchants and investors. Our weekly newsletters are the go-to source of news and analysis in the MFS industry.
 

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Helping Early Adopters to Continue As Valued Customers

March 3, 2015

Posted by Dante Cassanego

Early Adopters have been referred to as the rare breed of people who have the insight to match emerging technology to a strategic opportunity. What does your mental picture of this visionary person look like? I doubt it is a single mother earning under $30k per year with no college education. Yet that is what the data tells us about early adopters of digital financial services in the U.S. The contrast is stark when you think about the profile of early adopters of internet technology; they are what you would expect: men, especially young, white, educated, and fairly affluent. One high-income early-adopter talked about how information and influence are his driving factors in gaining the newest technology. They want a breakthrough and are the least price sensitive, writes Geoffrey Moore in his book Crossing the Chasm. This is not true of low-income early adopters; so what is driving them to make the jump to digital financial services? They are motivated by their need for a technology that allows them to optimize two things they don’t tend to have a lot of: time and access. The convenience of alternative online  banking services eliminates the need to commute to a physical bank just to execute simple financial transactions, as well as the high fees charged by retail banks. But the resources that exist to guide them through their financial lives are disconnected from their day-to-day problems.

Innovative banking services–whether reloadable prepaid accounts or new mobile banking apps–are becoming available to the U.S. market, and it is surprising that the demographic among the first to adopt alternative online banking services has been African American mothers with no college and incomes below $30k. And Hispanic consumers are adopting smartphones at a higher rate than any other demographic group. A report in 2007 found that cell phone users are more likely to be found in groups that have generally lagged in internet adoption, such as senior citizens, blacks, and Latinos. A study in 2013 showed that 74% of African American cell phone owners are also cell internet users, as are 68% of Hispanic cell owners. In fact, 45% of cell internet users living in households with an annual income of less than $30k mostly use their phone to go online–rather than some other device such as a desktop or laptop computer, compared with only 27% of those living in households with an annual income of $75k or more. In fact, Latinos rely significantly more on their smartphones for digital access: they are more likely to bank online, check a balance, and download an app than any other demographic group. “Hispanic consumers are not only the fastest-growing demographic in the U.S., they’re also trendsetters in digital, leading the growth in device ownership and online usage” (Nielsen Digital Consumer Report 2014). But Hispanic consumers are also particularly likely to be underserved by the financial services industry. “Adoption of electronic banking services are typically motivated by goal achievement or rewards” (International Journal of Bank Marketing); and the rewards they are seeking are solutions to very tangible problems. However, the existing mobile banking apps with feature-rich designs can overwhelm users with information, demand for prioritization, and a focus on cash flows and scarcity. Services should be user-friendly–not just for those who have had previous experience with electronic systems. There is a great need for clear, timely, present-centered guidance in moving these users through their financial lives.

While low-income early adopters are visionaries in that they are opening mobile bank accounts, there are very high dormancy rates of these accounts. A study done by the International Review of Social Sciences on the barriers and adoption triggers of mobile banking services revealed that the use of these services is much lower than expected in both developed and developing countries. Why is mobile–such a simple and popular device–still underused for accessing banking services? The reasons are myriad. But there is an overall consumer perception that the use of these services is expensive, risky, and relatively complex to use, and relative advantage is questionable. Researchers found that adoption and usage of mobile banking will largely depend upon customers’ perception of its ease of use and usefulness. There is a need for a bridge between financial institutions and their customers to dispel the fears and false perceptions customers often have about digital financial services. Through short and simple messages sent directly to your phone, Juntos builds trust in the ease of use and usefulness of mobile banking. We offer a solution to not only help people feel confident to adopt mobile banking services, but also empowered to continue to use their accounts. Juntos is intimately connected to the day-to-day financial burdens facing our users and the challenge of using unfamiliar technologies and new financial products to ease those burdens.

The Technology Trade-Off

February 6, 2015

Posted by Dante Cassanego

Mobile tech boosts financial access but limits engagement. Can it also help build banking relationships?

The first step of financial inclusion is basic access. And with mobile payments and mobile money opening the world of formal financial services to billions of lower-income people, this access is increasingly a reality. But this is not where financial inclusion ends.

This newly banked population is making the huge leap from paper money to digital money, and from informal systems for managing their finances to formal accounts. In the process, they are adopting new technologies and mastering new procedures – all at once. These transitions are psychologically and emotionally complex, and the statistics show a pervasive adoption and engagement problem. As of June 2012, only 20 percent of registered mobile money users were active in East Africa, with only 9 percent in West Africa.

Bonn, Hauptpostamt am Münsterplatz

Bank tellers may seem old-fashioned, but can mobile services replicate their human touch? Photo credit: German Federal Archives

The first step of financial inclusion may have been achieved – access to financial services is at an all-time high. But true financial inclusion will require major changes in financial habits by consumers. The newly banked have a particular need for post-account opening support to guide the process on how to use the full range of their new financial services.

Account dormancy rates for the newly banked range from 60-90 percent, depending on the market. To take just one example, even though India’s widely heralded Jan Dhan Yojana financial inclusion program has opened over 100 million new bank accounts, a large majority of those accounts have zero balance. The reasons for dormancy are varied and complex, and have not been easily solved by one-way marketing campaigns designed to educate and motivate. This unbanked and newly banked emerging middle class represents such a significant portion of any developing market’s customer base that finding a way to deeply engage with them is critical to success. Banks are trying to leverage technology to drive down costs, allowing customers to save time by making transactions directly from the comfort of their cars, their living rooms or from the palms of their hands. However, the bank no longer has a relationship with the customer, and accounts remain unused.

So what can be done? Financial services providers are taking a number of different approaches. For instance, a mobile money deployment in East Africa had success creating an outbound call center to connect with customers directly over the phone, to discuss their onboarding questions and concerns, build trust and drive usage. This worked, but at the incredible cost of hiring, training and retaining good call center employees. Some voices in the industry insist that we are at a crossroads in financial inclusion: Is the future of financial services highly scalable, technology-driven and distant? Or is it highly relational, high-touch and high-cost? It appears as though there’s a trade-off to be made: services can be cost-effective and scalable, or they can be trust-building and relational, driving deep engagement.

But by reframing the issues, we come to a new question that avoids this tradeoff: How can we harness technology to build relationships with customers in an affordable and effective way?

At Juntos Finanzas, we believe that customers can be brought into the financial system by engaging with them directly in new ways. To achieve this, we’ve developed a turnkey, text message-based platform that deepens bank and MFI clients’ engagement, and increases their usage of accounts. Through this platform, we have succeeded in conducting mass-customized, automated, two-way SMS conversations with a financial services provider’s new customers. These conversations build trust and relationships, ease issues related to onboarding or complicated technology, and solve customer service questions. The automated SMS platform makes this solution both cost effective and scalable. Juntos conversations are formulated through a user-centric iterative design process, starting with qualitative deep-dive, ethnographic research. We develop conversations that are guided by the user’s interests, leading to unexpected insights that short-answer survey questions would not produce. The engagement generated by these conversations has been impressive: In a partnership in Colombia, Juntos users had a 50 percent increase in average account balances compared to the control group, and the Juntos group had a 33 percent higher active client rate compared to the control.

Our own experience and research make us sure that the financial institutions that will consistently win in this digital age will be those that manage to leverage technology – not just to drive down costs, but also to develop deep and meaningful relationships with their customers. Through these relationships, customers feel supported in their financial lives, develop deep loyalty to their providers and increase engagement with their valuable financial services.

This post originally appears here on Next Billion.

Co-written by Katie Nienow and Rebecca Wise

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