Lao PDR

Lao PDR

Lao PDR Annual Monitor 2016

Lao PDR

Thu, 07/06/2017 - 08:46 -- anna.ferracuti

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.

The Roaming Agents of Lao PDR

Lao PDR

The Roaming Agents of Lao PDR

By David Kleiman, DFS Expert
December 14 , 2017

Above: BCOME pilot in the center meeting at Thakad Village, Beng District

In the body text: Financial Literacy and awareness of XMI and BCOME service to Grade 12 students of Beng District High School

Vientiane, 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)
For more information, please contact
Aliska Bajracharya
KM Consultant, Lao PDR
Additional Information
Aliska Bajracharya
KM Consultant, Lao PDR

Creating a new world of banking in Lao PDR

Lao PDR

Creating a new world of banking in Lao PDR

A vision for branchless banking realized
June 28 , 2017

Image: Syavone, BCOME agent.

FiguresFinMark Trust, ‘FinScope Consumer Survey: Lao People’s Democratic Republic, 2014,’ launch presentation on 3 July 2015.

Vientiane, LAO PDR - 

On 12 May 2015, the first branchless banking transaction was completed in a rural village in the Lao People's Democratic Republic (Lao PDR). This ground-breaking transaction took place with a service launched by Banque pour le Commerce Exterieur Lao Public (BCEL), one of the country’s leading banks. The service, BCEL Community Money Express (BCOME), was the first of its kind in this largely agrarian and rural nation. Digital financial services (DFS) in Lao PDR can have significant impact by providing access to services that the dispersed population is sorely missing. The first branchless transaction opened a new world of banking that is fast, safe, inexpensive, convenient and reliable, though the story behind the project was neither swift nor simple. The journey to launch digital finance and branchless banking took investment and planning that began years ago, in 2012, with the engagement of the Bank of the Lao PDR (BoL) and the United Nations Capital Development Fund (UNCDF).

Bringing digital finance to Lao PDR required a serious commitment by BoL, which had not yet established a regulatory framework for DFS at the time. But BoL had a vision for digital finance, that it would be an important service to broaden financial inclusion and to accelerate local development. The 2014 FinScope survey of the country revealed that access to banking services was twice as high in urban areas than in rural, with the areas without year-round road access severely affected. The two main reasons for the finding were the following:

  • Distance: It takes more than one hour of travel time for at least 40% of rural people to travel from the often remote mountainous areas where they live to a bank branch or an ATM.
  • Income: Most rural dwellers have unpredictable income.

In sum, banking was an awkward, time-consuming and expensive proposition for many people (see the figures for greater understanding of the financial context at the time).

In 2013, BoL hosted a two-day stakeholder conference with the support of UNCDF and International Finance Corporation to explore the benefits of digital finance for financial inclusion and to develop a strategy to implement DFS for the benefit of rural Lao people. BoL also requested a scoping mission to assess the potential for DFS in the country be conducted by the UNCDF programme Mobile Money for the Poor (MM4P), through the national implementation programme called Making Access to Finance More Inclusive for Poor People (MAFIPP). The project received generous financial support from the Australian Government.

In parallel, with the support of UNCDF, BoL went to work on creating an enabling regulatory framework for DFS to permit banks and non-banks to offer services. As Akhom Praseuth, Director General of the Financial Institution Supervision Department at BoL, explained, “The Bank of the Lao PDR has a vision for digital finance and we work on its promotion. We are focused on building a strategy for expanding access to financial services, and set the laws and regulations for mobile banking as a tool to control digital finance.” UNCDF supported BoL in its regulatory efforts by assisting BoL staff to attend different workshops and go on exposure visits to Cambodia as well as providing international regulatory experts to advise on the development of appropriate regulations. In 2014, two members of the BoL regulatory committee also travelled to the United Republic of Tanzania to meet with staff of the country’s central bank, Bank of Tanzania, to understand its role and the framework that had helped that country develop its own successful DFS ecosystem.

In the intervening period, BCEL became attracted to DFS and started developing its own vision to promote a suitable service for the Lao context. BCEL worked concurrently with a UNCDF-supported consultancy to develop a five-year business case that established a target of serving 150,000 customers annually through a network of 410 agents. “The inspiration to create this project began when we received the statistics on Lao people’s access to financial resources and the banking system in the country,” said Nanthalath Keopaseuth, Deputy Director at BCEL (the service provider for BCOME). “We like to bring the technology into the system to reduce costs and at the same time to offer the communities accessibility to funding resources. That is how it made BCEL to be interested, to carry out studies and have a hands-on approach to the project,” stressed of Mr. Keopaseuth.

BCEL is one of the oldest and largest banks in Lao PDR in terms of retail customers, branches and ATMs. In the last few years, BCEL has successfully rolled out i-Banking—a corporate Internet-banking platform—within its organization as well as a popular, highly functional mobile banking application for individual clients called BCEL One. Introducing branchless banking was a wholly new concept for BCEL and for the country that required the bank to think outside the box and to be ready to manage a range of complex challenges like merging traditional retail banking with branchless banking and digital finance. Addressing these challenges meant considering not only the technology required but the manpower and knowledge needed—as well as the capital required. Most significantly, BCEL had to change its views of the customer.

Typically, a bank builds branches and customers go to the branches. In the new world of branchless banking, the bank is in the position of going to the customer, bringing them much needed services. The concept of banking at the customer’s doorstep is highly appealing to customers, but at the same time, it can represent some level of risk for the bank.

The BCOME service relies on agents, so BCEL needed to build a relationship of trust with them and in turn inculcate trust in the agent within the community and by individual customers. To create a meaningful value proposition for BCOME agents, BCEL invested significantly in training its agents, conducting substantial marketing campaigns with agents, and teaching agents how to proactively promote the service and serve customers.

To create a clearer picture of the service, UNCDF and MAFIPP brought the BCOME development team to visit countries that have similar market situations. The team exchanged lessons learned and brought back know-how to develop a system that was well-suited to the bank, its customers and the Lao context.

After operating for over a year, the BCEL branchless banking service has seen positive signs of development. By the end of 2016, there were 128 agents working in all provinces nationwide.

“What surprised me is the result of the products that BCEL has developed, and it has been introduced to communities. The service has been well accepted in society and the product has been widely used by customers, and the number of the agents has increased,” reported Sengchanh Manivanh, BCOME Coordinator.

The success of the BCOME project is a result of the hard work of the BCEL team—and that team clearly includes the agents. As trusted leaders in their communities, they have become the face of banking for many people and are educating them about financial services. People are understanding the services and realizing that banking is not something incompatible with them. With the creativeness of BCEL to build its business model around the circumstances of the country and with the help of external organizations, BCOME is now a reality.

This is the third blog post of a series about the dawn of digital financial services in Lao PDR. Read also "Community development through digital finance in Lao PDR" and "Agents—The revolution on the ground in Lao PDR" .

 

June 2017. Copyright © UN Capital Development Fund. All rights reserved.      

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.

For more information, please contact
Aliska Bajracharya
KM Consultant, Lao PDR
David Kleiman
DFS Expert
Additional Information
Aliska Bajracharya
KM Consultant, Lao PDR
Video

Community development through digital finance in Lao PDR

Lao PDR

Community development through digital finance in Lao PDR

Using branchless banking to support education, agribusiness and more
June 21 , 2017

Image #1 (above): Student receiving money through BCOME at an ATM.

Image #2: Sompong Veosy, a farmer from Souvannaphoum Village in Paklai District.

Figure from FinMark Trust and UNCDF-Making Access Possible, FinScope Survey Highlights: Laos 2014, p.9 (n.p., November 2015).

Vientiane, LAO PDR - 

There is an old Lao saying, ‘If you don’t go out of the village, you will not see the land far away; if you don’t go study, you will not have any knowledge.’ It is still commonly used in the Lao People's Democratic Republic (Lao PDR)—a country with a surge in demand for education, with 78% of youth enrolled in lower secondary education[1] while 56% of adults have primary education or less[2] (see the figure for more detail). Sending children away from home for higher education is considered a requirement for parents to build their children’s future. So, there is little surprise that sending money to support children’s education has become a primary use case for the first branchless banking service in Lao PDR.

Banque pour le Commerce Extérieur Lao Public (BCEL), one of the country’s leading banks, developed the branchless banking service, which is called BCEL Community Money Express (BCOME). It is entirely new; no other bank offers this kind of service in Lao PDR. Supported by United Nations Capital Development Fund (UNCDF) and its national implementation programme Making Access to Finance More Inclusive for Poor People (MAFIPP) and PHB Development, BCEL launched BCOME 

in June 2015 with a small pilot of only 11 agents. Today, with more than 125 agents in every province of the country, BCOME has more than doubled the size of the BCEL branch and service unit network. Villagers perceive BCOME as convenient, quick, safe and friendly, the latter because it is offered by someone they know in their community—a neighbour, relative or acquaintance in town whom they can trust and with whom they can comfortably share their needs.

Agriculture is the backbone of the Lao economy, but farmers are dispersed, living in remote, rural areas throughout the country. Travelling to a district town can be an undue burden for them, and accessing formal financial and banking services is even more difficult both because of the distance to a bank branch and because of insufficient income and low financial literacy. These challenges have understandably led farmers to depend on cash. For them, sending money to family members in other provinces by a bus driver is a method often used, but it is time consuming and sometimes risky.

Sompong Veosy, a farmer from Souvannaphoum Village in Paklai District, grows rice and raises buffalo and cows for his income. He normally spends all day looking after the rice paddy and livestock, only leaving his farm after sunset. Taking time from his work to travel to town to complete a transaction is exhausting. But, since a BCOME agency in his village opened, his outlook has changed. “In the past, I had to travel a long way to send money to my children for their education, but now it is easy, fast and convenient. I am very, very happy now. It is perfect,“ he explained with a happy smile.

The BCOME service has drawn this new customer segment to BCEL, which has been surprised to learn just how much money from rural farming communities flows throughout the country. Through the service, BCEL can stay close to these new customers and learn about their requirements.

Thong Khoun, a villager from Thakokhai in Pakngum District, regularly sends money through BCOME to her son who is studying in the southern part of the country. Sometimes, though, it is the opposite: she has an urgent expense of her own, and her son sends money back to her. “My son asked me to open a bank account so that he can send money to me in the future. So, I wish that BCOME can open the account here. It is convenient because it is close to our house,” Ms. Khoun explained. “I used to ask the agent if I can open my account with her. I want to save money, and I also want to have an ATM card. I feel that I don’t want to carry cash anymore. If I have a card, wherever I go I can withdraw money from the machine—that is what I want now. If we can open the account with BCOME, it would be wonderful,” she added.

BCOME is not only a solution for farmers to support their children’s education, it also allows them to have more opportunities to trade their products more broadly—helping them to break free of poverty. It helps farmers increase their income by providing a quick and easy payment system. BCOME responds directly to the needs of communities with a service that old-fashioned banking cannot provide. Siavone Phomavong, an agent in the capital city of Vientiane, shared an example: “I have a customer who sells organic vegetables. He sends money to buy them from farmers in Pakse, Champasak Province.” The BCOME service assists the growth of agribusinesses, as the money from buyers in the main cities flows out to farmers in the provinces, where the farmers can save and re-invest for better techniques and more productivity.

The access afforded by branchless banking does not only support education of farmers’ children and their agribusiness, it is also suited to many different types of business requirements, such as paying for insurance and making monthly payments for the purchase a car. Early adopters who have experienced the efficiency of the first branchless banking service in Lao PDR have greater understanding of the new system and value the system more. It benefits them in many ways, relieving stress in their lives and reducing the time and the cost of transactions, which in turn gives them a chance to save and thereby prepares them to take a first step out of the poverty trap.

In the future, BCOME will continue to grow with new product and service offerings and to play an important role in accelerating the growth of all kinds of businesses. The convenience and accessibility can be applied to any customer segment, from low-income populations who deal in small transaction amounts to large organizations that can network with people in any isolated region. These advancements will contribute to a greater number of people improving their livelihood by using a low-cost, easy and friendly system, which will drive the economy of the household and in turn the communities that form the core of the country’s wealth.

This is the second blog post of a series about the dawn of digital financial services in Lao PDR. Read also "Agents—The revolution on the ground in Lao PDR" for an agent's perspective.

June 2017. Copyright © UN Capital Development Fund. All rights reserved.      

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.

 

[1] Lao People’s Democratic Republic, Ministry of Education and Sports, Education and Sports Sector Development Plan (2016–2020) (Vientiane, December 2015).

[2] FinMark Trust and UNCDF-Making Access Possible, FinScope Survey Highlights: Laos 2014 (n.p., November 2015).


 

For more information, please contact
Aliska Bajracharya
KM Consultant, Lao PDR
David Kleiman
DFS Expert in Lao PDR
Additional Information
Aliska Bajracharya
KM Consultant, Lao PDR
Video

Agents—The revolution on the ground in Lao PDR

Lao PDR

Agents—The revolution on the ground in Lao PDR

June 14 , 2017

BCOME agent with client

Vientiane, LAO PDR - 

The mixed emotions of excitement and nervousness would be the best way to describe how new branchless banking agents feel in the Lao People's Democratic Republic (Lao PDR). For many prospective agents, who humbly regard themselves as rural, less-educated people, having the opportunity to work with the country’s largest bank is an unusual, unexpected opportunity.

In June 2015, one of the country’s leading banks—Banque pour le Commerce Extérieur Lao Public (BCEL)—launched a new concept in banking for the country: branchless banking through agents, a service the bank branded as BCEL Community Money Express (BCOME). The project was supported by United Nations Capital Development Fund (UNCDF), its national implementation programme Making Access to Finance More Inclusive for Poor People (MAFIPP) and PHB Development, from concept through pilot and on to commercial launch. Today, BCOME has more than doubled the size of the BCEL branch and service unit network, and with more than 125 agents, it is represented in every province of the country.

One of the most outstanding agents in the country, Nouteng Sybounheueang of Souvannaphoun Village in Paklai District, briefly shared her story:

First, I was worried [that] I did not make the decision right away when the staff of BCEL approached me about being an agent. I just replied to them that I needed time to think about it. And in my thoughts, I started to wonder how can one walk into my shop and offer me such a big job? Being a bank’s agent, how much money would I have to have? What kind of tasks would I be dealing with? I am only a low-educated rural woman, running a small shop selling miscellaneous goods, and I had never touched a computer or iPad.

After taking a night to think it over, Mrs. Sybounheueang called bank staff the next day to confirm her interest. She then spent two weeks preparing the agent documents, to apply and to be approved. After that, she transformed a storage room for her goods into her new office. She purchased a laptop and a printer as required by the bank, though as she completed primary school only, she did not know how to use them. However, the BCOME team arranged a one-day training at her place on how to use the computer, how to access the BCOME system and how to conduct transactions for her customers.

Mrs. Sybounheueang was among the first few BCOME agents registered in July 2015 when the project was still in its pilot phase. Since that time, BCEL has expanded the BCOME agent network across the country, with over 128 agents in every province and a target of 410 agents by the end of 2019. Yet, the quantity of agents is less important to BCOME than the consistent, high-quality service that agents must deliver. As the agents are the face of the service and there is a reputation risk to the bank for non-compliance, the quality of the service should be its first priority.

BCEL supports its agents in several ways, such as the service system, technical and operational training, marketing and publicity material, and encouragement of the agents to do conscientious self-promotion, carefully focusing on three components of performance: trust, high visibility, and location.

A successful agent like Mrs. Sybounheueang attributes her success to these three attributes but primarily to the trust she has from her customers and the bank. She knows how to use the promotional material (brochures and posters) that the bank provides, and she speaks to her community about the value of the BCOME service and the convenience it can offer them. Situated on the main road, her location is premium and highly visible. Her converted storage room serves as a dedicated BCOME service office, providing her customers a comfortable environment to conduct their transactions. She is now involved in supporting the construction of a new market for the region that is only 100 metres away from her agent location. When completed, the market will attract more customers to transact at her location.

Agents in different parts of the country serve communities with different standards of living and different circumstances. Khaek Phanthalath, an agent in Ban Tha Kok Hai, Pak Ngum District (a village about 50 kilometres from a city), explained that the transaction type that she deals with the most is receipt of remittances. People from other provinces send money to their parents or relatives who live in the village or nearby, and they come to get the money at her shop. In contrast, Mrs. Sybounheueang, the agent from Paklai District, mostly serves customers who send money to their children who are studying in the capital or other large towns. Another agent, who represents BCOME in the busy and crowded capital of Vientiane, handles more business-related transactions.

These various use cases and requirements from different communities are carefully considered by the BCOME development team, as Nanthalath Keopaseuth, Deputy Director at BCEL, explained, “Sometimes our development team even thinks that we should modify the specific product to meet the particular need of each province and locality. This is a subject that we are thinking about for the possible development of our service—we keep thinking how we can create the best product to fit the rural community.”

It is noticeable that most BCOME agents are women—women who have a business to manage, who hold a lot of responsibility in their family and who are eager to support their community. All are happy to bring the service to their village and provide more convenience for their relatives and fellow villagers, to save them the time and money of travelling a long way to a city to complete their transactions. For farmers in their village, the agent’s extended service hours, from early morning until late in the evening, help them so that they are able to focus on production and not lose valuable time conducting transactions; they can stop by and do the transaction whenever is convenient. Suddenly banking is easier and less stressful.

The commission is not the only benefit of being a BCOME agent. Agents also build friendships and share convivial moments during their work day. They also benefit from the prestige conferred on them by the brand of the first commercial bank in the country, giving them considerable standing in their local community. And, the new, efficient service of BCOME draws in more customers to agents’ existing business location; it helps their existing business grow.

BCEL has brought the new age of banking—branchless banking—to Lao PDR with a service that relies on local people becoming engaged as agents to serve their own community at their community members’ doorstep. BCOME is designed to help a new group of customers, who have until now been unfamiliar or even unaware of financial and banking services, experience these services and benefit from them. In fact, BCEL has discovered just how much money flows from people in remote, rural areas to the capital city of Vientiane and other main cities, for their children’s education, for their families and for their commercial needs.

With their enthusiastic approach to providing accessibility and to helping support growth of their communities, agents are raising the awareness of villagers (e.g., through careful self-promotion at their agent location) and educating them about the low risk, inexpensive cost and speed of the new system. BCEL supports agents with periodic awareness-raising campaigns to promote overall services of the bank, while focusing attention on the agents as the primary source of the service in the community.

As Mrs. Sybounheueang summarized, “I can give them friendly advice to use this new service—it is convenient and safe. Before they sent money to their children by a bus driver. Their children would come to pick up the money at the bus station, but they had difficulties with timing and missing the bus. It was high risk. Now more and more come to use my service. They like it here because some of them feel uncomfortable to go to the bank branch.”

 

June 2017. Copyright © UN Capital Development Fund. All rights reserved.      

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.

For more information, please contact
Aliska Bajracharya
KM Consultant, Lao PDR
David Kleiman
DFS Expert
Additional Information
Aliska Bajracharya
KM Consultant, Lao PDR
Video

Human Centered Market Research to Develop the First Mobile Wallet in Lao PDR

Lao PDR

Human Centered Market Research to Develop the First Mobile Wallet in Lao PDR

March 29 , 2017
Vientiane, LAO PDR - 

Lao PDR is a greenfield environment when it comes to mobile money. Some mobile banking initiatives have been implemented, but there are no mobile money wallets as such – yet! UNCDF has been supporting Star Telecom (Unitel), a mobile network operator in its efforts to launch the first ever mobile money wallet in the country. 

Unitel is part of the Viettel Group, with operations in many countries with millions of mobile users. They have developed mobile wallets in several other markets, but always when they were entering after other providers and in some cases when the digital financial services ecosystem was well developed. In early discussions with UNITEL, UNCDF identified the common risk that Unitel or their vendor could replicate the services from these other markets without specific attention to the differences of the Lao environment.  

It is important to frame the project to specifically fit the cultural context and needs of the Lao people in order to trigger service adoption and usage.

While the MNO’s team began shaping the product and processes, UNCDF and its Fund for Inclusive Finance structured a performance based grant agreement and support for a team of consultants to carry out a Human-Centered Design (HCD) research study.  The objective of the research was better understanding social and financial behaviours of Lao people, their goals and aspirations in life, as well as their needs and priorities. These insights would give the MNO an overview of its potential mobile money users, and a basic segmentation of its clients.

PHB Development was selected by UNCDF and Unitel to carry out the project. Ultimately the research involved 65 participants, with 18 in-depth interviews and 6 focus groups conducted in the regions of Khammouan, Xayabouli and Vientiane Capital. The research mostly focused on ‘early adopters’, i.e. people between 18 and 45 years old, from the urban and peri-urban areas. Although the clear objective is to reach the rural population, where 2/3 of the people live, the first wave of adoption – as demonstrated by other examples around the globe- is generally led by young and technology-fit people living in (semi) urban districts.

66% of respondents in this research were women.  The research clearly underscored that in most households, women are in charge of money management and are responsible for family expenses. In some cases, business management decisions are also guided by women, as indicated by this male respondent, “I used to work in the tourism sector. Then I met my wife, and she decided we had to pursue my father’s small shop business so that is what we did"

The research’s main output has been to build personas and identify the factors that influence a certain persona’s choice to use or reject a product. Using personas nurture empathy for the specific users we are designing for, and gender awareness is a key component. The approach helps break away from the attempt to design for everyone, so the MNO can build a strong and inclusive value proposition for all of its different client types.

“Unitel is in a good position to support financial inclusion with our new services due to our network, distribution and large customer base” said Ms Latsamy Thammavong, Chief of Business Department at Unitel. “Through this HCD approach we can now understand the aspirations of our customers - which is very important when building a trusted financial service.”

Overview of the personas

Five distinct personas were identified. Each persona was characterized partly by their financial and technological habits – but more intimately by their personality, goals, challenges, values, passions and a motto which encapsulates this character.

  1. The Entrepreneurs: Business owners that are driven by the goal of growth. They are careful opportunists: they go forward little by little, without rushing into things. They are from different age groups, but committed to make life better through a successful business.

"Successful people are not gifted; they just work hard then succeed on purpose”

  1. The Tech-savvy: The youth (18-25 years old) who are growing up with technology. Tech-savvy people are well educated (students or young graduates) with a natural understanding of technology developments, but sometimes without budget for the technology they so enjoy.

“I cannot live without technology”

  1. The Resilient: The working-class people with low education levels. They come from poor and rural families to work in the city, and live in modest houses without many amenities.  They work hard – mostly in the informal sector - to support their extended families living in the village.

“A bitter life leads on to a better life”

  1. The Safety-seekers: Educated people working in government offices or government related-organizations. Their life choices are predicated on a need for security and stability. They are trusted and respected people. 

“One day I would like to have my own company and do something I really like. But today, security for me and my family is more important than passion”

  1. The Old-school: Elder people (>40 years old), born before the ‘digital revolution’ of the 2000s. They have a long-life journey and plenty of experiences to share. They have worked hard to get where they are and are now dedicating their life to their family.

"Electronic payments are not for me. Maybe my children will do it, but me, I’m too old to learn that"

With these personas clearly in mind, the consultants worked with the Unitel team and identified the key influencing factors for each group to adopt and use mobile money. This will have impact when deciding what the MNO should propose/communicate to the different customer segments.  Finally, the different personas were ranked according to their adoption and usage potential (ecosystem potential, early adoption potential, outreach potential, and literacy towards digital). The Entrepreneurs and the Tech-savvy were identified as the most relevant segments to focus on in this first phase of adoption. 

Integrating HCD Research into Marketing and Product Design

Integrating HCD findings into such a fast-moving environment can be challenging. UNCDF recommended this HCD approach because the leap from research findings to actionable ideas is very short and natural. For product development, the marketing and management team all received very concrete actionable recommendations on what steps to take.

Throughout all phases, the increased understanding of the importance of gender awareness became evident. Rather than a “one size fits all” approach, Unitel has acknowledged the role of women in the finances of the family and therefore the relevance of the Unitel mobile money service for women.   For example, early marketing materials lacked a human element while later versions were not only more human centric - but also addressed women directly.  Unitel’s integration of approaches to reach specific personas will continue to guide their marketing strategy.

With respect to product and USSD menu design, the outcomes of the HCD research informed some of the language used and elements of the menu. Notably, the Lao language menu was revised to reflect true meanings rather than simply a translation of words. This approach will be carried forward in all communications with customer facing materials and agent training.

Perhaps most significantly, Unitel management’s willingness to engage in the new level of customer awareness started from the recognition that customers - the actual users of the service - are individuals with specific aspiration and habits.  Willingness to engage in direct qualitative research regarding marketing and product has been directly evidenced by Unitel’s reiterating several similar activities and focus groups as they move through the iterative process of developing materials and services.

As a next step, Unitel is considering leveraging their mobile usages data to market specific personas.  The ability to identify sim cards who maintain a balance, use data, and access certain domains (I.e. Facebook) may be indicative of a Tech-savvy persona, a likely early adopter.

The challenges of research in such a greenfield environment were not what we anticipated!

Before starting the research, it could be assumed that it would be difficult to discuss something that people don’t know about – like talking about snow with someone who has always lived in the desert. But that is not the case in Lao PDR. Even though mobile wallets do not yet exist in the country, mobile banking is rising, with mobile apps like BCELOne becoming increasingly popular. Furthermore, the Lao PDR Finscope 2014 survey indicates that 25% of Lao people (even at that time) were aware of mobile banking.  Hence it was easy for the people we met to imagine what mobile money could be –assimilating it to mobile banking operations. The challenge of making people understand and accept ‘virtual’ money was not as important as we thought it would be (this depends, of course, on the client segment considered). Additionally, in Lao PDR, many people travel periodically to Thailand, a close neighbour, where mobile money is available. These people could relate to what they have seen there and are interested to see that happen in their own country. Bearing this in mind, it appears that the targeted personas of the people of the Lao PDR are ready to try and use mobile money.

Introduction of HCD approaches and methodology in a new environment

Lao PDR is a very diverse country, with a literacy rate of nearly 80% and with more than 80 living languages.  The local language is very strong and English speakers are rare. PHB Development teamed up with a local research firm, Enterprise & Development Consultants (EDC), composed of Lao speaking consultants. This partnership has been a great experience to reinforcing local capacities in HCD approaches. Qualitative market research is not a frequent practice in Lao PDR – which was confirmed by the local consultants and by some clients’ surprise while diving into the HCD discussions. After initial reluctance, the team got comfortable with the methodology and could develop a high degree of empathy for the participants, trying to understand their aspirations and challenges as they were theirs. A debrief session was organised at the end of the two-week long field research, to share insights and start building personas. The debrief session has been a break-through for local consultants to really understand the benefits of using an HCD methodology. Ms Buakhai Phimmavong, Managing Partner and Consultant at EDC commented,  “There is no doubt that bringing the remote researchers together for a debrief session was a real awakening to the power of HCD. Through the personas that we identified together, we could see the evidence of our work and the power of this HCD approach.” 

The Unitel team is on an aggressive timeline to roll-out services and agent network through a six-month pilot slated to begin in Q2.  With the research and personas in hand, the team will test product and marketing materials through a series of focus groups and interviews with the addressable personas to make sure they are well aligned with real customer needs and anticipated use cases.  As the first mobile wallet in Lao PDR, it is sure to bring change to the financial services environment and to have an impact. Watch for future news about how digital financial services are being used for the first time by the Lao people.

For more information, please contact
Jaspreet Singh
Technical Specialist Digital Finance
David Kleiman
DFS Expert
Additional Information
Jaspreet Singh
Technical Specialist Digital Finance

ຮຸ່ງອະລຸນຂອງ ການເງິນດິຈິຕອລ ໃນ ສປປ ລາວ

Lao PDR

Wed, 03/29/2017 - 10:19 -- anna.ferracuti
Embed Video: 
Description: 

ໃນຂະນະທີ່ປະເທດອື່ນໆ ໄດ້ມີການພັດທະນາເຄືອຂ່າຍຕົວແທນ ຢ່າງກວ້າງຂວາງ, ແລະ ສ້າງການຮ່ວມມືທີ່ມີຄວາມຊັບຊ້ອນ ໃນການສະໜັບສະໜູນລະບົບສາຍພົວພັນ DFS - ສປປ ລາວ ແມ່ນຍັງຄົງຄວາມເປັນພື້ນທີ່ສີຂຽວ ພ້ອມສິ່ງແວດລ້ອມທີ່ຍັງບໍ່ຖືກແຕະຕ້ອງ ສໍາລັບການບໍລິການດ້ານການເງິນດິຈິຕອລ. ບໍ່ມີຕົວແທນ, ບໍ່ມີການບໍລິການ ແລະ ບໍ່ມີລູກຄ້າທີ່ນໍາໃຊ້ບໍລິການ DFS ໃນປະເທດທີ່ມີພົນລະເມືອງ 6.5 ລ້ານ ຄົນ. ວິດີໂອນີ້ ເປັນສ່ວນໜຶ່ງຂອງກໍລະນີສຶກສາ ໂດຍຕັ້ງໃຈທີ່ຈະສະແດງໃຫ້ເຫັນການເດີນທາງສູ່ການພັດທະນາ ການທະນາຄານທີ່ບໍ່ຜ່ານສາຂາ ໃນສະພາບແວດລ້ອມທີ່ ໃນເມື່ອກ່ອນ ບໍ່ມີແຜນໂຄງສ້າງການຄຸ້ມຄອງດ້ານລະບຽບ ຫຼື ຮູບແບບທຸລະກິດທີ່ຜ່ານການທົດລອງແລ້ວ. ການນໍາສະເໜີວິດີໂອ "ຮຸ່ງອະລຸນຂອງ ການເງິນດິຈິຕອລ ໃນ ສປປ ລາວ: ການເດີນທາງສູ່ການພັດທະນາ ການທະນາຄານທີ່ບໍ່ຜ່ານສາຂາ" ໃຫ້ເຫັນໄດ້ເຖິງເສັ້ນທາງການເຂົ້າເຖິງການບໍລິການທາງການເງິນທີ່ເພີ່ມຂຶ້ນ ເຊິ່ງສາມາດປ່ຽນແປງຊີວິດການເປັນຢູ່ຂອງປະຊາຊົນ ທີ່ຢູ່ໜຶ່ງໃນແວດລ້ອມພື້ນທີ່ສີຂຽວ ສໍາລັບ DFS ໃນທະວີບອາຊີ.

The Dawn of Digital Financial Services in Lao PDR

Lao PDR

Wed, 03/29/2017 - 10:14 -- anna.ferracuti
Embed Video: 
Description: 

While other countries have developed extensive agent networks, and complex partnerships to support DFS ecosystems - Lao PDR remains a greenfield and untouched environment for digital financial services. No agents, no services and no customers using DFS in the country of 6.5 million people. This video is part of broader case-study intended to showcase the journey to develop branchless banking in an environment with no previous regulatory framework or tested business models.  This video gives a rare look at the ways in which increased access to financial services can change lives in one of the last greenfield environments for DFS in Asia.

Greenfield digital finance providers meet in Lao PDR

Lao PDR

Greenfield digital finance providers meet in Lao PDR

Bank of the Lao PDR, supported by UNCDF-MM4P and MAFIPP, host the seventh quarterly Digital Financial Services Working Group
December 14 , 2016

Photo #1: Over 50 DFS stakeholders gather in Lao PDR for the seventh time.

Photo #2: Wave Money Marketing Manager Hnin Nu Hlaing presents.

Photo #3: Team member demonstrates marketing game.

Vientiane, LAO PDR - 

On 29 June 2016, Bank of the Lao PDR (BoL) hosted the seventh quarterly Digital Financial Services (DFS) Working Group meeting, with the support of the United Nations Capital Development Fund (UNCDF) programme Mobile Money for the Poor (MM4P) and the programme Making Access to Finance more Inclusive for Poor People (MAFIPP). Chaired by Visone Saysongkham, Deputy Director General of the Financial Institution Supervision Department, the event focused on the importance of targeted and innovative marketing initiatives to introduce DFS to rural communities in the Lao People's Democratic Republic (Lao PDR). In a country where 72 percent of the population own a mobile phone and only 47 percent are financially included, DFS hold significant potential to provide accessible and convenient services to Lao people. However, low literacy and limited understanding of technology represent major challenges to penetration and adoption of DFS in rural areas, as Mr. Saysongkham reminded participants in his opening remarks. 

Initiated in 2015, the DFS Working Group provides a platform for DFS stakeholders to learn, dialogue and partner to advance DFS in Lao PDR. This seventh meeting gathered over 50 representatives from banks, microfinance institutions, telco operators and the Government. As in previous meetings, this gathering offered an opportunity to spread learning from market research and DFS initiatives from abroad. 

David Kleiman, UNCDF-MM4P DFS expert for Lao PDR, presented the 'Lao PDR Annual Monitor 2015’—a sort of state of the nation with respect to DFS. Starting with a global view and looking at the broader opportunities for and growth of DFS, particularly in Asia over the past year, Mr. Kleiman provided some context for the progress made in Lao PDR in 2015. Lao PDR is clearly in an inception phase, with its first and only branchless banking initiative launched within the past year (Banque Pour Le Commerce Exterieur Lao [BCEL] began BCEL Community Money Express [BCOME]). Since the launch, the BCOME agent network has spread to serve customers in every province of the country. In parallel, the market is evolving thanks to the efforts by BoL to build the foundation of a favourable regulatory environment for DFS. An example of this evolution is seen in the engagement of multiple microfinance institutions acting as agents in the BCOME network. 

The Working Group also hosted Hnin Nu Hlaing, Marketing Manager of Wave Money, a mobile financial services provider in Myanmar that was jointly established by one of the world’s major mobile operators (Telenor) and a local bank with 20+ years in the market (Yoma Bank). Ms. Hlaing manages Wave Money marketing and promotional programmes that support brand growth, ensure effective brand positioning in the market and increase brand awareness with the aim of enlarging market share through customer acquisition, activation and retention. 

Ms. Hlaing presented the below-the-line marketing strategy developed by Wave Money in Myanmar. She shared some of her specific experiences with marketing games to help expose rural customers both to the concepts of financial literacy and the benefits of new services. 

One example Ms. Hlaing shared was the game ‘Financial Inclusion Snakes and Ladders.’ Snakes and Ladders, she explained, is a popular children’s game in many countries based on morality lessons: players move up and down the game board, representing their movement through life, and are confronted with vice (snakes) and virtue (ladders). Financial Inclusion Snakes and Ladders presents financial situations commonly faced by target customer groups (unbanked farmers, informal consumers and informal enterprises). Players face situations of poor financial decisions, which make them lose turns, and smart financial moves where they gain financial strength and are propelled towards financial inclusion. The goal of this life-sized board game is to navigate through financial situations and reach financial inclusion first! This example of a game as a way to educate and to build brand recognition for new DFS appeared to resonate with the large group of participants. 

Overall, the DFS Working Group has proven to be an excellent forum for Lao stakeholders to enter into discussion with each other while also gaining insights, ideas and understanding about DFS issues from international practitioners. The Working Group has fostered partnerships amongst stakeholders and provided a conduit for a market-development–oriented approach. BoL has strengthened its knowledge of international best practices in DFS while simultaneously taking a leadership role in promoting innovative services. The next Working Group meeting will be held in December and is intended to address the complexities of various types of agent networks. 

 


About MAFIPP
MAFIPP is a joint UNCDF-UNDP sector support programme, in partnership with BoL, which seeks to improve access of poor rural households to a variety of financial services and markets, improving rural household incomes. MAFIPP is funded primarily by the Australian Department of Foreign Affairs and Trade. For more information, visit http://mafipp.org/

About UNCDF-MM4P
MM4P is a programme launched by UNCDF in partnership with the Swedish International Development Agency (Sida), the Australian Department of Foreign Affairs and Trade (DFAT), the Bill & Melinda Gates Foundation and The MasterCard Foundation. MM4P provides support to digital financial services (DFS) in a selected group of least developed countries (LDCs) to demonstrate how the correct mix of financial, technical and policy support can build a robust DFS ecosystem that reaches low-income people in LDCs. For more information, visit mm4p.uncdf.org, follow @UNCDFMM4P and check out Mobile Money for The Poor.

 

December 2016. Copyright © UN Capital Development Fund. All rights reserved.     
The views expressed in this publication are those of the author(s) and do not necessarily represent the views of UNCDF, the United Nations or any of its affiliated organizations or its Member States. 

For more information, please contact
Jaspreet Singh
Regional Technical Specialist
Additional Information
Jaspreet Singh
Regional Technical Specialist

Pages

Subscribe to RSS - Lao PDR