- 7th December 2017: UGANDA - FINTECH4AG Meet up, Kampala
Lao People's Democratic Republic (Lao PDR), a country in Southeast Asia with 6.9 million people, has started the journey towards digitizing its cash-based economy and introducing digital financial services (DFS) to thousands of previously unbanked customers. There are several providers in the market that have begun to develop their DFS offerings.
This whitepaper outlines major findings of a diagnostic exercise conducted by the MM4P team in August 2017. This exercise involved desk research and an in-country mission to gather data, conduct interviews with agents, tellers and customers, and survey the insights of local stakeholders.
Mototaxis, ambassadors of mobile payments in Benin
Caption : Zem are the most commonly used means of transport
Cotonou, BENIN- Over 250,000 moto taxi drivers “Zemidjans” or “Zem” are circulating in Benin. Collectively, they represent a sizeable contribution in Benin’s economy: one million people depend on the income generated by the Zems activities and two million Beninese are regular patrons of their services. However, as most of the Zems do not have bank accounts, their transactions are conducted largely informally, in cash. This represents an opportunity for the digital financial services sector to offer this group of users’ financial services that could benefit their lives.
The MM4P program in Benin is currently assisting the mobile network operator, MTN Benin on a merchant payment initiative aimed at enabling customers to pay their mototaxi fares using mobile money.
Co - create solutions with mototaxis
Launched in July 2017, the first phase of the project focused on the design on the mobile payment solution. With the support of design firm, Innate Motion and consultancy firm, PHB Development, MM4P and MTN adopted a “Human Centric Design” (HCD) approach to understand the typical Zems journey including their wants, needs and aspirations when it came to financial services. This approach helped uncover insights a classical market study might have overlooked.
Subsequently, we explored mobile payments from different angles: from the point of view of the mototaxis drivers, their suppliers, MTN teams and their affiliated communication agencies. In small groups, we developed different scenarios keeping mototaxis drivers at the center of the discussion. The idea was to enables customers to pay their fares with mobile money, and simultaneously enable the Zemidjans to use part of the money collected to make payments using the same mobile money platform. In contrast to standard design processes, the scenarios focused on the life of Zemidjans and not on the financial product itself.
We asked the Zemidjan whether the scenarios presented matched their real-life experiences? What improvements could be made? What changes were needed? Their answers helped us rewrite scenarios so that they became Zem’s stories, stories they want to live or experience and in which mobile payment may play a role. Utilizing this co-creation approach, we were able prioritize the mix of value propositions not only for the Zem, but also for their customers to use mobile money payments. With the HCD approach, we not only tested innovative solutions but we validated them with the primary stakeholder, the Zem. The active participation of various MTN teams (Communication, Marketing, Technical, etc.) throughout the process facilitated the choice of payment solutions that were acceptable to all.
The Zem, to promote the adoption of mobile payment
By deciding with MTN to explore the world of Zemidjans via an approach centered on users, MM4P put the customer at the heart of the digital financial services ecosystem. Experience has shown that the adoption of these services depends, to a large extent, on whether they resonate with the customers and truly meet their needs. As such, the needs and constraints of customer should always be factored into the products and services design process.
We chose the Zem because they are powerful vectors of information or even of behavioral transformation. They can position themselves as ambassadors to impact the use of digital financial services in Benin and to influence the populations.
The adventure with the Zemidjans continues. But we are already seeing signs that the HCD approach an excellent tool to convey and leverage the benefits that digital finance can have. It is our belief that HCD can help leverage on all innovative products for which increased adoption and usage are proving to be difficult.
We are in the process of selecting a representative sample of these moto taxi drivers for the implementation of a pilot in the next phase. In a future blog, we will share some of the initial results obtained, as well as the challenges and/or new ideas discovered.
By Bery Dieye Kandji, KM Consultant, and Jamelino Akogbeto, DFS Expert
The Roaming Agents of Lao PDR
On October 16th 2017, Yong Duangphachanh did not make the 2-hour journey to a banking agent point in the district town to deposit money for her children’s educational fees. Instead, she attended a Xainiyom Micro Finance (XMI) center meeting in her village in northern Lao PDR and was the first in her area to experience the latest evolution in branchless banking.
XMI has partnered with BCEL’s Community Money Express (BCOME) and since February 2017, has been providing BCOME transactions to its customers via their 7 branch offices; including Beng where Yong Duangphachanh has her XMI account. But what delighted her was that now she did not have to travel to the agent - now the agent could travel to her.
This pilot initiative is supported by the UNCDF Making Access to Finance More Inclusive for Poor People (MAFIPP) programme jointly operated with the Bank of Lao PDR, with support from the Australian Government and technical assistance from UNCDF MM4P. The programme aims to integrate microfinance institutions (MFIs) in to the digital finance ecosystem in appropriate ways. As a follow up to MAFIPPs “Training on Digital Finance and Interventions Models for MFIs” in and building upon the UNCDF MFI strategy toolkits to enter the digital financial service (DFS) arena, XMI was ready to take the next step.
To provide convenience and continuous service to its remote customers XMI conducts weekly center meetings in all villages accessible by motorbike. Meetings only occur in the mornings, and take about one hour typically for clients to make loan repayments, to deposit or withdraw on their savings accounts. Now, as part of the center meetings, the XMI field staff travels to the community with a laptop, printer and, most importantly, a 3G Pocket Wi-fi router to allow the loan officers to connect to the BCOME platform. There are already plans to replace the equipment with a more portable tablet and a pocket-sized Bluetooth printer. Although now customers can avail opportunities like BCOME transactions including depositing and remitting funds. Currently, XMI conducts center meetings in 3 provinces (Oudomxay, Luang Namtha, Bokeo) and 14 districts covering 415 villages.
And with all that traveling, XMI staff are well known in the communities that they serve, and they look for innovative ways to bring valuable services and raise awareness about them. As part of their mission, they conduct promotional activities at schools. Such as the outreach to high school seniors conducted by XMI at Meuang Beng High School where students were introduced to the benefits of savings and educational loans. Although XMI accounts cannot be opened by minors, it is presumed that parents will be able to avail of these services on their behalf. Additionally, XMI explained how BCOME transfers can help students who study away from home and need to receive financial support from their relatives.
XMI continues to make further inroads for financial inclusion and values its relationship with BCOME as it is a positive way to associate with BCEL (the largest bank in Lao PDR with 41% market share in retail savings and 4% in lending). The association makes people more confident in conducting banking and financial services with XMI.
This pilot activity of offering remote transactions has been well received by customers but it is not without its challenges. BCEL is cautious about allowing agents to conduct transactions away from the designated and approved premises. BCEL understands the importance of trust in agent banking transactions. And they ensure it by having an authorized sign board and customer pricing clearly displayed. XMI and their well-trained staff could offer significant assurance to BCEL. XMI has been authorized by BCEL to conduct only on-line BCOME transactions, so that the BCOME remittance occurs in real time. The customer either gives cash or the amount is debited from her/his savings passbook – the transaction will be recorded in the XMI monitoring information system only when the credit officer returns to the Service Unit. The XMI savings passbook (containing the client’s picture) can be used for formal client identification in lieu of the common ID card of family book – a procedure mandated by BCEL to fulfill the anti-money laundering obligations applicable to commercial banks.
XMI is hampered by the lack of suitable mobile data connectivity at many communities, which would require offering off-line transactions. For example, when a customer wants to deposit or remit funds, that transaction would be executed once the officer returns to the branch office where there is a stable internet connection. BCEL is considering authorizing off-line transactions based on the success of this initial pilot with a roaming BCOME agent.
“A service such as this makes banking more accessible and can also increase business for us,” said Khanthaly Saenvilayvong, Managing Director of XMI. He accompanied the team on this first experiment and is pleased and proud that XMI is the first to bring a real time DFS solution to a remote community in northern Lao PDR. “These DFS services will continue to develop and provide opportunities to offer more and more services - once people become aware of the service they will try it and then become regular users due to the security and convenience.”
XMI key figures (as of Q3 2017 unless stated otherwise, source: mixmarket.org)
|Nb clients||34,280 (60% women)|
|Nb borrowers||9,223 (72% women). Largest Lao MFI by number of borrowers|
|Loan Outstanding||45.1 billion Kip ~$5.4mn. Agriculture loans 65-70% of portfolio|
|Portfolio at Risk 30days (PAR30)||2.29%|
|Total assets||57.0 billion Kip ~$6.9mn|
|Return on Assets (RoA)||11.9% (2016 annual)|
|Nb Service Units||
7 all acting as BCOME Service Points
|Nb & value BCOME transactions||117 with total value 259,457,000LAK ~USD 31,600
(October 2017, at roaming agent and XMI Service Units combined)
Six development challenges for Fintech in Senegal
« Fintech », contraction of «technology» and «finance», refers to a structure that offers innovative financial products and services without itself being a financial institution (bank, microfinance institution...). In Senegal, Fintechs are entering into the market, offering various products and services that could contribute to the growth of digital finance in the market. However, they are having to experiment in an environment that is not necessarily set up to favor them.
If you're a Fintech start- up be prepared for the following challenges:
- As a Fintech, you must develop innovative offerings, in accordance with the existing legal, financial and tax regulations in Senegal. But who are the authorities with whom you need to validate this compliance? Identifying them will be your first big challenge. There is more than a dozen in the country: Bank of West African States (BCEAO), Directorate of Money and Credit (DMC), Regulatory Authority for Telecommunications and Posts (ARTP), Directorate of Micro Finance (DMF), just to name a few.
- You will also have to deal with regulations that are not always aligned with your commercial realities. For example, if crowdfunding is your core business, you may suffer from banks’ monopoly on providing credit and the regulatory context around public offering.
- The regulatory framework on electronic signature, set up by the Agency of Information of the State (ADIE), can be complex for Fintechs to understand. To dematerialize contracts, you will need a lot of time and patience. This may be tough for a structure whose originality is its ability to develop instant and digital offers.
- A Fintech needs to build partnerships to expand its offerings. In Senegal one of the difficulties in this area is the weak bargaining power with big billers and incumbent financial institutions and operators. This may impose constraints for Fintechs whose business models are mainly based on the aggregation of services. This leaves little room for them to maneuver which could in turn affect the viability of their business model.
- Despite robust growth potential, finding financing remains a challenge for Fintechs. The banks are still reluctant to finance emerging business models. And even if there are guarantee funds, their processes are often too long and unsuited to the development cycles of Fintechs.
- Another problem, you must be aware of, is the lack of an ecosystem fostering the development of Fintechs. There is almost no framework in Senegal to share your projects with research centers, large companies, public actors, and investors, and develop partnerships.
This last point probably includes all the obstacles to the development of the Senegalese Fintechs. So where does this leave Fintechs? Is there a future for these new market players?
Yes, because innovation, the main added value of the Fintechs is one of the core drivers of digital finance. When it comes to digital financial services, people are hungry for innovative services tailored to their needs and aspirations
Fintechs in Senegal need assistance to overcome their challenges, whether these are related to regulation, funding or establishment of partnerships.
The MM4P program whose mandate is to act as a neutral broker in market and bring together all the relevant stakeholders in digital financial services, is actively working on assisting Fintechs in the regard. A first meeting was organized on the 7th of September2017, in the offices of MM4P, to broker an exchange with Fintechs on their current projects, challenges and perspectives. The next step will be to formalize a framework to assist them in the market.
Pour lire en français, cliquez ici.
Easing Access to Liquidity for Mobile Money Agents
Although there is ample demand for mobile money services across Zambia, one of the key contributors to slow uptake of these services among customers is the challenge of liquidity management that agents have continuously faced. It leads to situations where agents ‘bounce’ customers when they do not have enough float to handle the customers’ requests to deposit or withdraw money. Bouncing of customers in turn leads to low trust by customers, less traffic of customers, lower commissions for agents and slower business growth for agents.
FINCA Zambia, with the support of the United Nations Capital Development Fund (UNCDF), decided to explore the current challenges confronting agents and whether FINCA could provide a solution to them. To properly understand the contexts in which mobile money agents (specifically those of Airtel Money and MTN Mobile Money) work, the FINCA research team met with 331 agents (109 urban, 93 peri-urban and 129 rural agents) in 16 locations across 8 of 10 provinces in Zambia between May and June 2017 to understand their varied processes, constraints and financial lives. In a previous post, the UNCDF programme Mobile Money for the Poor presented profiles of some of the agents encountered during the study.
Testing agents’ appetite for a credit line
FINCA is currently building ‘push-pull’ functionality for its customers to link their accounts to their Airtel Money or MTN Mobile Money wallets. This push-pull functionality would allow movement of money between the mobile money agents’ accounts to increase capacity to serve clients with adequate float. The research FINCA completed with agents would help the organization define how to adapt its services so that agents could access instant float or capital from an overdraft/lending facility as well as what interest rate would be acceptable to agents.
Reception from agents
During the research, 86% of agents interviewed indicated a willingness to take up the proposed liquidity management solution, once it is available on the market. Concerns that would affect the development and marketing of the proposed solution were also uncovered. Read more to find out what the research revealed.
DOWNLOAD THE CASE STUDY HERE
FINCA Zambia, with the support of UNCDF, decided to explore the current challenges confronting agents and whether FINCA could provide a solution to them. FINCA is currently building ‘push-pull’ functionality for its customers to link their accounts to their Airtel Money or MTN Mobile Money wallets.
Gestion d’un réseau d’agents au Bénin
La composante « Distribution » est un des éléments clé de l’approche écosystémique du programme MM4P. Pour cause, les agents représentent les canaux principaux par lesquels les clients sont servis; ils constituent donc des leviers essentiels pour « délivrer » une bonne expérience client et assurer un bon usage des services financiers numériques (SFN).
Au Bénin, nous avons choisi de soutenir l’un des principaux fournisseurs de SFN, l’opérateur de téléphonie mobile Moov, pour renforcer son réseau de distribution à l’échelle nationale. Notre pari est alors de pouvoir impacter positivement l’usage des SFN en améliorant la distribution de Moov Money dans les zones urbaines et rurales du Bénin.
Notre première approche a été d’évaluer la stratégie de distribution de Moov Money. En 2016, nous avons commandité cette évaluation auprès de l’Institut Hélix qui a fait ressortir quatre principales recommandations:
- Le contrôle et la gestion du réseau d’agents Moov Money par une équipe dédiée à l’activité de monnaie électronique;
- La mise en œuvre d’un plan incitatif basé sur les indicateurs clés de performance pour l’équipe chargée du suivi de Moov Money;
- La refonte de la structure de commissionnement des agents pour la rendre plus incitative;
- La mise en place d’un dispositif plus efficace de gestion de la liquidité et du réapprovisionnement des agents.
A l’issue de cette étude, nous avons chargé le consortium MicroSave/Amarante d’opérationnaliser ces recommandations. Quatre communes ont été choisies pour une phase pilote, dont la commune productrice de coton Banikoara, située à près de 700 km de Cotonou. En dépit du potentiel économique de la zone, l’agence Moov la plus proche se trouve à 70km des usagers. Du fait de ce positionnement géographique, la commune souffre de certaines problématiques : absence de suivi régulier des agents, processus de réapprovisionnement contraignants et longs, etc. Les conséquences qui en découlent sont néfastes pour l’activité : mauvaise qualité du service client, faible rentabilité perçue par l’agent et donc perte d’intérêt pour le service et décrochage de l’activité.
Pour répondre à ces problématiques, Moov Bénin a appliqué la première recommandation de l’étude, en déployant une force de vente dédiée qui, par le biais de visites régulières, développe et anime le réseau, tout en créant une nouvelle relation dynamique entre l’agent et la marque Moov Money.
Les résultats sont plutôt encourageants : le volume des transactions Moov Money a pratiquement doublé en 6 mois, tout comme le nombre d’agents actifs impactant ainsi le niveau des revenus du service Moov Money.
« Avant, je faisais difficilement une transaction par jour ; aujourd’hui, je peux en faire plus de cinq dans une journée » a confié un agent Moov Money rencontré lors d’une visite-terrain.
Pour autant, le pari n'est pas encore gagné. En effet, certains défis spécifiques aux zones rurales restent, notamment l’éducation financière. Le fort taux d’analphabétisme en zone rurale justifie un grand besoin d’éducation des populations à l’utilisation des services via le téléphone mobile. L’exemple le plus patent est la gestion des codes pin qui pose un véritable problème aux utilisateurs ruraux. L’agent doit donc être formé afin de jouer ce rôle d’éducateur en aidant les populations à trouver des techniques pour garder et protéger leur code pin.
En outre, les zones rurales étant par excellence des zones de retrait d’argent, les agents se retrouvent fréquemment confrontés à un problème de liquidité pour faire les opérations de retrait d’argent. Pour s’approvisionner en espèces, ils doivent se rendre, non sans contrainte de temps et de coût, chez leur distributeur. Il convient donc de trouver un mécanisme pour faciliter leur réapprovisionnement en cash.
Par ailleurs, le modèle de gestion du réseau doit améliorer son attractivité pour mieux répondre à des besoins spécifiques de la clientèle rurale. Cette dernière souffre du manque de services périphériques en téléphonie et en connectivité, et est handicapée par le très faible niveau d'accès à l'électricité – seulement 16% de la population rurale est raccordée (selon les estimations 2014 de la Banque Mondiale).
Entre autres défis, on peut également citer le faible maillage du réseau qui est perfectible et le mode de suivi commercial et de motivation des agents, qui peut encore gagner en efficacité.
Le projet avec Moov suit son cours. La fin du pilote sur les zones cibles nous permettra d’évaluer la pertinence des recommandations mises en œuvre et surtout de voir comment les dupliquer à l’échelle nationale. A suivre...
Par Jamelino Akogbeto, Consultant en Finance Digitale, MM4P Benin, et Manohisoa Boulier, Consultante Services Financiers Digitaux , Amarante Consulting
Digital finance is gradually taking root in Benin. While 2015 saw major challenges in the adoption of digital financial services (DFS), two years later the situation could not be more dierent. For DFS providers, specifically mobile network operators, 2017 has been an extraordinary year: activity rates are higher than ever before, the proportion of active customers rose from 56 to 61 percent, and the number of transactions per customer increased from 6.9 to 8.3.
Briefing Note also available in French below.
Goodbye Notebook, Hello Tablet
Digitizing basic transactions such as records of milk delivery and sales, is essential for the further growth of the dairy sector in Uganda. A small change can bring big changes. If instead of writing down the 15 litres brought to the collection centre by farmer Godfrey this data is entered into an application, farmer organisations unlock the power of data. And with this information farmer groups can potentially access financial services which are now not willing to provide financing, because of the lack of collateral.
Nearly 80% of the people in Uganda live in rural areas where banks have no or limited presence. Consequently, the countryside is lacking financial services needed to develop the local economy. Over 70% of Ugandans are active in agriculture. The sector is largely organized through farmer organisations such as cooperatives, who typically have their own Savings and Credit Cooperative Organisations, SACCOs, that provide financial services to their members.
However, cooperatives and SACCOs struggle with many issues such as limited access to finance, high loan default rates, safety concerns around large quantities of cash and cumbersome admin processes. It is challenges such as these that prevent cooperatives and SACCOs from growing and professionalizing their business; becoming an agri-business that can impact the lives of small-holder farmers, their members. Especially in rural areas.
That is why the UNCDF supports the development of an app that will provide dairy cooperatives with the right tool to digitize their transaction records. Across the dairy sector UNCDF is supporting digital payments on mobile phones instead of in cash. One of the key lessons learned from digitizing these payments, is that the foundation first needs to be laid. Paper-based cooperatives need to go digital.
Together with Laboremus Ltd., UNCDF is designing and creating an app that will do just what is needed for dairy cooperatives. Pius Peter, General Manager from Dwaniro Dairy Cooperative says that he is looking forward the new application being used. “I feel with the step to digital we are entering a modern Uganda, where we can ensure our members, small holder farmers, access to the finance they need to grow. Entering our delivery and sales in this application will advance and strengthen our cooperative and the way we serve our farmers.”
In order to build on experiences from organisations that already digitized their records, UNCDF is organizing the third FinTech4AG meet-up on the 7th December 2017. In this event, cooperatives SACCOs as well as NGOs and other organisations, will share their main learnings. What are the main challenges for farmer groups who would like to go digital? And how can these challenges best be overcome?
Jointly answering these questions will provide feedback and a clear way forward for the further development of the application. Insights that will accelerate the digitization of farmer cooperatives all across the country, in different value chains to drop their notebooks and pick up their tablet.
FinTech4AG: Digitizing Farmer Organisations
7th December 2017
The Design Hub
10:00 - 12:30