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Warm Customer Engagement for Digital Financial Services

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

The Power of Short SMS

January 23, 2015

Posted by Dante Cassanego

Constraints have the ability to “make us more than we were, rather than less than we could be.” A Beautiful Constraint , the new book by Mark Barden and Adam Morgan, calls our attention to this truth. Larry Page, one of Google’s founders, created the search engine’s home page with such simplicity because that was the extent of his coding abilities. However, that was what set Google apart from its cluttered competitors. They harnessed the power of their constraints and benefitted from it.

At Juntos, we took the limitations of a text message—160 characters—and turned it into an opportunity: a powerful personal financial tool. But based on further user research, we learned that even a 160 character message was too long. We watched a video of one of our users reading aloud these first messages and learned that it took them over 20 seconds to read aloud a single message. This feedback helped recenter us around the needs of our users. We then had the challenge of shortening our messages even further. However, shorter proved to be more effective (The Challenge of Simplicity). Accessible on any mobile phone via SMS, our products help families increase their savings and feel financial confidence and control. We believe that everyone should have the opportunity to reap the benefits that formal financial services offer, not just the wealthy. 89 percent of the developing world has an active SIM card, which makes SMS a reliable and effective delivery platform to mobile phone users all over the world. By working through a delivery channel that is accessible on any phone in the world — SMS, and recentering our design around what users need — shorter messages, we have developed a product with incredible results empowering users to change their financial habits. Constraints that at first appear limiting to product development have forced us to solutions that instead make us “more than we were.”

How A Text Message Can Help You Feel Different About Your Money #SpotlightOnChange

January 14, 2015

Posted by Dante Cassanego

A few months ago, American Express sponsored a documentary called Spent: Looking for Change, in order to help improve financial inclusion in the U.S. The movie has sparked a lot of encouraging dialogue around this issue. American Express also created short films in their Spotlight on Change series about companies involved in innovative solutions for financial inclusion. We are thrilled to be part of this series, and you can watch our video below.

People want to create a connection, and Juntos Finanzas helps consumers do that. Accessible on any mobile phone via SMS, Juntos works with families to increase their savings and financial confidence.

User-experience Design: The Link Between Design and Engineering

December 26, 2014

Posted by Dante Cassanego

This is a guest post written by Cristina Gorrino, who, as a user-experience designer, serves as the link between our design and engineering teams.

Things are always moving forward at Juntos. From our earliest attempts at creating our messages, the focus has been on iterative design based on feedback from our users . Although this philosophy extends across all parts of the company, the core remains with the development of our products. For us, this means a deep connection and collaboration between engineering and design.

On a weekly basis our designers set the course, detailing which new SMS experiences we want to test, and which existing ones need to be re-designed or removed. Their vision of how users will receive and interact with our text messages then gets queued up, ready to be integrated with our software.

In most cases, the new experience is scheduled to go live within a week. By the time it goes live, the design team will have the next iteration ready to be queued up and integrated. These quick iterations fed by the data we collect from our users are essential for finding the best way to talk with our users and to create content that engages them with information they can truly use.

To maintain agility in creating these experiences we’ve designed a process that does not require an enormous commitment of resources from our software engineers. Instead, they have built a highly flexible and configurable framework that can accommodate any design. My work as a user experience (UX) engineer consists of translating each design into this framework, and using the available building blocks to bring the designer’s vision to life.

The addition of an extra step in between design and engineering benefits both teams. The designers are free to create complex experiences and to run frequent tests without having to wait a long time for a finished product. And the software engineers are able to focus on keeping the framework working well and to develop new capabilities. If the data tells us that a set of messages doesn’t work, then we can remove them without feeling like resources were misspent.

Working within a flexible framework to continuously improve our products makes communication and connection between the teams essential. The point where a design reaches configuration is where all the “what if” questions get answered.  All the paths that the users can take through our messages get defined here, which often means several rounds of questions and comments back and forth between the UX engineer and the designer.

The idea is to create a product that is easy for the user to have a conversation with, so that the user’s responses will dynamically shape the experience they receive. Ultimately, it is the user who shapes our products and shows us the way to design the Juntos experience.  Their part in the feedback process gives us our cue to refine our products and gives us insight into new ideas we can explore.

Technology for Storytelling

December 12, 2014

Posted by Dante Cassanego

Storytelling is as old as language itself, but some people fear that storytelling is dying in the digital age. The argument that storytelling is becoming a lost art usually focuses on how technology has shrunk our attention span to the extent that we are now bored by any soundbite that cannot be summarized in 140 characters.

At Juntos, we believe that storytelling is actually one of the best applications of technology. The power of technology boils down to three things: 1) communication, 2) automation, and 3) scalability. Basically, technology allows you to connect with lots of people, over and over again. Despite being simple, those are really powerful tools when you’re trying to tell a story.

Many financial institutions use technology to try to tell their institution’s story to customers. What sets Juntos apart is that we offer our partner financial institutions technology that creates a space where customers can tell their own stories and feel that their financial institution is listening.

We do this through a messaging platform that takes advantage of technology’s strengths. Juntos facilitates communication with customers by allowing for SMS conversations that are personalized and two-way. Thanks to automation, our partners can do this type of high-touch customer engagement on a large scale for low cost compared to alternatives.

Our use of technology to enable customers to tell their own stories to their financial institutions helps our partners better meet the wants of their customers. A recent survey by the CGI Group indicated that a majority of financial consumers want their financial institutions to “see me as a person,” “provide me with wealth-building advice,” and “tell me what I am spending money on and how I can save.”

By creating a space where customers can tell their stories and feel that their financial institution is listening, Juntos helps our partners’ customers feel seen, feel known as a person. What’s more, because Juntos allows for a two-way conversation, we help our partners to provide personalized advice, even to their low-income customers.

Just as old as storytelling is the human desire to have our stories validated. At Juntos, we use technology to provide our partner financial institutions with a powerful new way to meet this age-old need.

Software Engineering, Legos and Car Cannons: An Interview with CTO and Co-Founder Dante Cassanego

November 28, 2014

Posted by Dante Cassanego

As Chief Technical Officer (CTO), Juntos Co-Founder Dante Cassanego feels his job is to be able to tell the rest of the team, “Yes, we can do that”–whatever “that” may be. We asked him to tell us more about why he loves being a software engineer. Our interview captured the commitments to creativity, big thinking and iterative design that are central to Juntos.

“To me, software engineering is like spending all day playing with Legos. I have a set of building blocks that I’m pretty familiar with–I know how they all fit together, I know how they work.

Each time I start a new project, in my mind or on a whiteboard, I draw a picture of the thing that I want to build and then I go about the task of building that thing, that picture that I want.

I particularly like software engineering as a discipline because it’s such a flexible engineering discipline. I’ll draw a metaphor that I use to help describe what I mean by that.

For types of engineering that have to do with the physical world, there are very important fundamental rules that you need to follow. For example, let’s say there’s a river you need to cross. If you were a structural engineer, you would probably build a bridge, starting with the pylons and the structure from the bottom. You need to put some fundamental things in place, you’ve got to check these things and make sure they work.

But in software engineering, there are no rules like that. If you just want to cross the river–forget the bridge–you can start by getting a big car cannon and shooting cars across the river. You can just try things. And then you can later learn what is ‘necessary.’

So software engineering is this really fungible medium that allows you to just try things and then iteratively arrive at stronger and deeper solutions.”

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