Jacqueline Jumah, Digital Financial Services Market Specialist and Managing Director at Intermarc Consulting
Digital channels can drastically drive presence and scale when offering financial services, opening doors to the unbanked and underserved populations. Financial regulators around the world have realised the tremendous role that digital financial services (DFS) can play for financial inclusion and have sought to unlock this potential by creating evolving enabling environments. Financial inclusion, at its most basic level, starts with having an account (financial institution account or mobile money wallet), but it doesn’t stop there, people can only fully benefit when there is regular usage.
In recent times, we have witnessed incredible innovations in products, and initiatives to support the delivery of financial services, promoting the uptake and usage of products and services and showcasing the business case for financial inclusion. The advent of fintech has also propelled developments in the industry, where solutions have come with alluring ‘convenience’ value propositions, translated to accessibility, immediacy, affordability, security, reliability, among others.However, after closely working with low-income people it is critical to explore how comprehensible the convenience is, in the eyes of customers. The convenience perception is a key influencer in the adoption and regular usage of these solutions by customers. Perhaps, we would understand how to develop better products and services and hence experience higher customer activity rates in DFS.
My experience places me in the contextof the financial behaviour and mindsets of the low-income segment people. They are involved in multiple informal money management activities, which work for them, and which form archetypes to evaluate any new offerings by financial service providers. Reflections on the accounts of Portfolios of the Poor and What do Low-income People Know About Money?is that low income segment people have money management mechanisms that work for them and are content, even when these mechanisms could be improved, as Ignacio Mas exemplified in the Digital simulations to digitising financial access for the poor.
DFS has so far mostly achieved to replicate the traditional offerings provided by conventional institutions and the informal financial services workarounds. Here, ‘sign up with us for your convenience’ is the overarching value proposition by a good number of leading providers and which now seems somewhat imperceptible by this segment.For most providers, the inclusion effort of providing these products and services to the bottom of the pyramid customers has not been effectively considered. Providers are offering products and services in pre-determined three main categories – savings, credit and insurance which have been derived from mainstream or traditional financial services. Think about it!
In order to understand how best to address the existing pain points of typical low-income households, through providing improved digital alternatives, I set out to find typical personas and engaged one couple in Kenya on how they manage finances.
Adhis is a woman in her mid-thirties living in Kibera – a slum area in Nairobi, Kenya. She is married with five children, all of whom are still in primary school. Adhis’ husband,Mr. Obende works as a casual labourer at construction sites in the Langata area in Nairobi, while she runs a chapati (some form of local bread) and porridge business, providing meals to the construction casual labourers. Adhis earns an average revenue of USD 4 per day. Her business is involving, as she has to wake up at 3 am in the morning from Monday to Saturday to cook chapati and porridge for purposes of selling to the construction workers.
The construction site jobs are quite unpredictable, sometimes the workers are dismissed after arriving at the site, citing no work. Both Adhis and her husband are often affected by the irregularity of the construction jobs and are forced to go back home where Adhis sets up a stall to sell the chapati and porridge – experiencing lower returns. Sometimes she never clears her stock,therefore, converts the stock to the family meal of the day.
Adhis stores away some money ranging from USD 0.2 to USD 0.5 every day in an old BlueBand margarine tin in her house, for rainy days. Every Sunday, she visits her “chama” (women savings group) and contributes USD 0.5,where she from time to time borrows money for her upkeep and school fees payment. Unlike Adhis, Mr. Obende prefers borrowing funds from Mr. Otonglo the local money lender even though there are higher repayment interest amounts. On rainy days, he would pledge valuable household items,for example, the radio or Adhis’ Kitenge (african fabric) against some money from Mr. Otonglo ranging from USD 5 to USD 50.
These are basically the couple’s day to day money management mechanisms as they heavily depend on the Mr. Obende’s construction site income, profit from Adhis’ business, savings collected over time from their little BlueBand margarine jar, loans from Adhis’ chama and from the local money lender – Mr. Otonglo. Some key insights into the perceptions and challenges of this household, as regards formal financial services are as follows.
The feeling of discrimination and judgement
People in the low-income segments often want to manage their finances in the most comfortable way possible. They hope to do so without feeling like they would be judged in anyway, and that they will be treated with dignity. They may feel intimidated by the formal structures or even agents who are their neighbours and somewhat know them. In Adhis’ case, she prefers accessing and juggling her money without feeling the need to dress up in her ‘Sunday best’ clothes and shoes, or to remove her usual head gear (old stockings she frequently wears to protect her hair from smoke and roadside dust, as she performs her daily business operations) to go to snazzy looking buildings. She is uncomfortable with prim and proper looks which she feels is for the rich. Adhis compares the immediacy and flexibility value proposition from digital financial services to her experience saving money in the BlueBand jar at home.
While accessing her funds from the jars in the house, she does so discretely and feels that no one would judge how she looks. She also believes there is no judgement when she decides to switch her savings goals or even go against the saving period plan. Adhis admits that although she has an M-Pesa wallet, it is not her preferred financial management medium so she rarely does anything on M-Pesa. This is because she feels she would be opening herself up to the nearby agent, who happens to be a woman, and who she feels may judge her or tell other women about her money usage.
How can providers leverage technology to mimic Adhis’ savings plan and improve on it? How might technology be used to instill confidence in Adhis by creating a perception of privacy when she is depositing or withdrawing funds at the agent location? The answers to these questions would inform some design thinking for financial services propelling innovation and the development of highly usable products and services.
Money in formal systems is not multipurpose
Money in formal systems is deemed not to be as flexible as cash. At any point in time, cash can be exchanged to instantly access goods and or services as opposed to e-value which is not easily accepted. This is because to some extent,at the moment, the focus is on the interconnectivity of systems to promote functionality. Digital channels are more of bridges to money, enabling funds to move from one point to another, with high preference to conduct cash out transactions among customers. The micro level payments ecosystem has not been adequately tapped to enable the likes of Adhis to make payments digitally for their day-to-day needs, hence the perception of money in formal systems being inflexible. Adhis talks of the hurdles in having funds in her M-Pesa wallet when she wants to make payment for the chapati flour or sugar. Her supplier only accepts cash and so this means she has to find an agent to conduct a withdrawal, and at the same time gets charged for the transaction. Withdrawal charges reduce her working capital amounts, discouraging her from holding funds into her M-Pesa wallet. She argues that funds in the M-Pesa wallet are not equal to funds in her purse.
Customers should be able to access their funds whenever there is need. They compare accessing funds from their social groups and other informal borrowing avenues to the formal processes and make decisions basis the ease of access and usage. Flexibility in the availability of funds can be created by driving the acceptance of digital currency. This may be done by providing incentives for electronic transactions and waiving charges in the short-run. In the long run, when e-value is highly acceptable in the low-income segment, minimal charges could be re-introduced.
Perceived confusing, beguiling or hidden conditions pegged to formal financial solutions
The liquidity features commonly known as terms and conditions and other fees for digital financial solutions are not clear and, in many cases, not known to many households. During customer registration to digital financial services, very little information on product features is passed on to customers leading to low trust levels to formal systems. Adhis does not fully trust bank accounts or mobile wallets because she feels that she does not have adequate information regarding operating the said accounts. She reported that she is also not clear on the funds transfer pricing structure and is therefore scared of getting charged hence prefers to keep her money in the house, where she can access the money for free. She also expressed that the fees fluctuate without notice to her and that she would only realize the change upon sending funds. Despite there being measures to help in price transparency in Kenya, awareness among users is still low.
There is need for the introduction of product features that give users a sense of control over when they need the go ahead to sign up for solutions, when they want friction – not to sign up or even how best they could use the solutions. A situation where products are driven by real use cases.By so doing the perception around these solutions, their uptake and eventual regular usage would improve.
The friction in this case is critical too as it empowers users to think of the consequences, plan and make choices on the basis of how these solutions would address their daily pain points. For example, digital credit solutions are exuding a myriad of challenges mostly because the providers have focused in making them readily available and not to address real problems among users. If well considered and structured, digital credit solutions can promote financial inclusion, dignity of users and poverty alleviation. Could providers introduce digital credit solutions that mimic traditional hire purchase arrangements for both goods and services? Asset financing? Instead of easily issuing funds to users, could they identify the need for these funds and create customized impact-oriented credit solutions? Maybe, as an industry, we need the doctor and patient perspective where every patient’s symptoms and treatment prescriptions are treated as unique. Here, users’ pain points would be uniquely addressed.
Saving in formal systems is deemed inoperative
The low-income segments deem formal savings as for those with surplus money. The people in this niche want to see their money working for them or to engage in animating money. Adhis prefers belonging to a savings and credit group to “help others” with the money as she feels this is a wiser way of managing finances and that she will in turn access loans whenever she is in need. She also prefers storing her money in the house to cater for the unanticipated payment for security whenever the vigilante groups from neighbourhood groups knock at her door. Basically, funds saved in formal financial systems are regarded as idle funds.
Providers may pitch savings products as futuristic payment solutions. Such that these products would be perceived as developmental milestones towards future payments. There are already a number of goal-oriented savings products across markets, maybe some repackaging and messaging customization can improve user perception and ultimately regular usage. This way they would seem favourable and aligned to working for the users to achieve their future payment needs.
My interactions with this family shed some light on some of the true perceptions and challenges they face in embracing formal financial services. It is not just about providing digital alternatives; the digital solutions would be meaningful if they are perceived as superior to informal alternatives. Understanding these perceptions and challenges will go a long way in generating daily relevant financial solutions to the low-income segments, those that seem to be better than existing alternatives to encourage regular usage. Some offerings that might seem obvious to other segments seemed imperceptible to this household. Quite some room to improve today’s solutions!
Author: Jacqueline Jumah
Digital Financial Services Market Specialist and Managing Director at Intermarc Consulting
AOC dazzles visitors with a special game room at GITEX Technology 2021
AOC Sales Director Middle East & Africa, Carol Ann Dias (Image: Hazem Abed)
AOC, the world’s leading manufacturer of computer monitors, highlights its presence at GITEX Technology Week 2021 through their authorized distributor, Hiperdist. At GITEX, AOC is showcasing a special game room where visitors can get try out the latest lineup of gaming monitors, some of which are made for professional e-gamers.
“Being one of the largest information technology exhibitions not just in the region but the whole world, AOC would not want to miss the opportunity to participate at GITEX 2021,” said Carol Ann Dias, Sales Director Middle East & Africa at AOC. “More than making our presence felt at the show, we are now focusing on emerging markets which is why we have partnered with Hiperdist due to their strong presence in the MEA region,” she added.
Some of AOC’s well-known monitors that include the Agon and the G2 line up are all on display at GITEX. Where visitors are encouraged to try out the new displays that offer some of the best technologies that make it fit for the gaming crowd.
Already a top choice by gaming professionals, the AGON AG352UCG6 features a 35-inch display with a 120HZ refresh rate. The curved design supports a WQHD (3440 x 1440) resolution that has 2.4x more pixels than a standard widescreen monitor. It also features a lighting panel at its rear which can be customized in colours of red, green or blue.
Also on display is the AOC C27G2 gaming monitor that comes in a 27-inch size with a 165Hz refresh rate. There’s also a 1ms response time for more accurate play. And Freesync support so high-intensity games are razor-sharp without ghosting.
Visitors can join and experience AOC monitors at the Hiperdist stand in Hall 3 E1 at GITEX Technology Week in the Dubai World Trade Centre.
Philips Introduces Momentum 559M1RYV 4K HDR display with Ambiglow for Xbox
Philips 55 lifestyle in situ Xbox (Image: Supplied)
MMD, the leading display specialist and brand license partner for Philips monitors, today announced the release of the world’s first designed for Xbox console gaming monitor. Philips Momentum 559M1RYV featuring 55-inch panel size boosting 3840×2160 resolution with 4K / 144Hz, 4ms GTG response time, and many other features that will be available in the UAE, Saudi Arabia, Kuwait and Pakistan.
Philips Momentum 559M1RYV: Design and Sound
This new “Philips Momentum 559M1RYV” bears the name Momentum 559M1RYV and bears the same exterior appearance as the previous version, including the adoption of a VA LCD panel with a W-LED backlight system with Ambiglow technology that adds a new dimension to your viewing experience. Innovative Ambiglow technology creates an aura of light on the surrounding wall from behind the screen panel. Its fast processor analyzes the content of the displayed image, and continuously adapts the color and brightness of the emitted light to match the displayed image. This technology also helps reduce eye strain to enjoy the scenes, it also supports DisplayHDR 1000 standard. The gaming monitor includes a specially designed speaker enclosure from the engineers at Bowers & Wilkins, the British loudspeaker company globally renowned for their innovative designs and sound engineering, that completes the experience.
Pankaj Budhiraja, Category Manager – Philips Monitor – Middle East & Africa, said: “The new Philips Momentum monitor offers unique user experience especially for gamers who demand exceptional graphic quality display and flicker-free pictures. This monitor is a wholesome entertainment package with build-in stereophonic speakers, sharp picture quality, vibrant colors and dynamic contrast and excellent resolution”.
Philips Momentum 559M1RYV: Performance
Philips Momentum 559M1RYV including Displayport 1.4, a USB-B port along with 4 USB 3.2 ports, two of them with fast charging. The Philips Momentum Monitor delivers designed for Xbox validates performance with ultra-clera 4K resolution at a minimum 120Hz refresh rate. 3840×2160 pixels with a 16:9 aspect ratio and a good response time of 4ms, as for the brightness rate in the mode up to 750cd / m2, while in the HDR mode it reaches 1200cd / m2. As for the color weight, we will notice that it offers DCI-P3 color gamut with 95% coverage, NTSC color gamut with 104% coverage, and sRGB with 125% coverage.
“As Philips always prioritizes user health, we introduce Ambiglow technology for eye-friendly productivity and a premium sound system. The monitor been extensively tested, and validated by engineers at Microsoft and MMD to ensure perfect compatibility, Philips Momentum meet’s the high expectations of the Xbox fans, creating an integrated gaming atmosphere to enjoy.” Budhiraja added.
Key features for Philips Momentum 559M1RYV:
- Screen size: 55-inch
- Resolution: 3840 x 2160 UHD 4K
- Panel type: VA
- Refresh rate: 120Hz (HDMI 2.1); 144Hz (DisplayPort 1.4)
- Response time: 4ms
- Aspect ratio: 16:9
- V-Sync method: Adaptive Sync
- Contrast ratio: 4,000:1
- Ports: HDMI 2.1 (x3), DisplayPort 1.4 (x1), USB-C (x1), USB-B (x1), USB 3.2 (x4)
- Ambiglow: 3-sided
- Power supply: Internal, 100-240VAC, 50-60Hz
The Philips Momentum 559M1RYV monitor is available through MMD authorised distributors in the UAE, Saudi Arabia, Kuwait and Pakistan and comes with a standard 3-year warranty, and EUP in UAE AED 6999*.
GSMA Report 2021: Over Half World’s Population Now Using Mobile Internet
The GSMA has launched its global State of Mobile Internet Connectivity Report 2021 showing that, despite the COVID-19 pandemic, more than half of the world’s population is now using the mobile internet. Mobile internet usage translates to just over 4 billion connected people, 225 million more compared to 2019, and up from a third of people globally just six years ago.
Even with this impressive growth in mobile internet connectivity, both in terms of mobile internet coverage and usage, the report highlights that work must accelerate to bridge the digital divide. Of the 3.8 billion people who remain unconnected, only 450 million people do not live in areas with mobile broadband coverage, (“the coverage gap”). The coverage gap represents a significant improvement year on year.
The far bigger challenge is the 3.4 billion people who live in areas that are already covered by mobile broadband, but are not using it, (“the usage gap”).
The report examines trends in the coverage and usage of mobile internet over the last six years and identifies the key barriers to mobile internet adoption. It also looks at the early impacts of the COVID-19 pandemic and the most significant regional effects. Finally, it makes recommendations to help close the digital divide and ensure greater access to mobile internet connectivity.
“The COVID-19 pandemic made clear the importance of mobile internet access to people’s lives and livelihoods and has accelerated the digital transformation around the world. Mobile is the primary and often the only way to access the internet in low- and middle-income countries. While more people than ever are now using the mobile internet, some fundamental barriers stop far too many people from using mobile internet. To close this usage gap, all of us – government and industry – need to do more,” says the GSMA’s Chief Regulatory Officer, John Giusti. “In particular, we must address the key barriers to usage of mobile internet services, most notably literacy and digital skills, as well as affordability. Only through targeted and collaborative action can we bridge the digital divide.”
Coverage and usage gap in mobile internet is narrowing
During the last six years, the coverage gap has continued to narrow:
- In 2014, almost a quarter of the world’s population did not have access to a mobile broadband network.
- By the end of 2020, that figure was only 6%.
- Now, 94% of the world’s population has access to a broadband network, with most progress between 2014 and 2018.
- In 2020, global coverage increased by one percentage point, from 93% to 94%. This reduced the number of people living in areas without a mobile broadband network to 450 million. Those who remain uncovered typically live in sparsely populated rural areas with difficult terrain.
The number of people using mobile internet has also increased for the second year in a row:
- However, the usage gap remains large and accounts for the majority of the unconnected.
- In 2020, 3.4 billion people (43% of the world’s population) lived within the footprint of a mobile broadband network but were not accessing mobile internet services.
- Although the usage gap is narrowing, it is now seven times larger than the coverage gap.
- In 2014, the usage gap accounted for 64% of the total unconnected population – this figure grew to 88% by 2020 due to the increase in mobile broadband coverage.
- Low- and middle-income countries (LMICs) now account for almost 93% of the world’s unconnected population and more than 98% of the uncovered population.
- Between 2019 and 2020, the most significant increase in mobile internet usage is in East Asia (61%), which grew by 4%.
Barriers to mobile internet usage
The pandemic has highlighted the importance of mobile internet connectivity to the social and economic well-being of people around the world. People with mobile internet access were able to stay connected with friends and family, conduct business, gain access to critical information and services, and otherwise ease the monotony of lockdown life. Yet 47% of the population in LMICs are still not using the mobile internet despite living within mobile broadband network coverage.
Key barriers include:
- Lack of awareness of mobile internet and its benefits, literacy, and digital skills make up the largest barrier to adoption. Nearly a quarter of adults across the report’s surveyed countries are not aware of mobile internet and its benefits.
- Affordability: internet-enabled handsets and data became less affordable in many LMICs in 2020 due to the economic impact of the COVID-19 pandemic.
These barriers often disproportionately affect specific segments of the population, especially people living in rural areas and women.
A Collaborative Approach
The global climate challenge shows that mobile connectivity can be a lifeline for people during crises, re-emphasising the importance of doing more to improve access to mobile services. The only way to close the digital divide is through a strong collective effort to address people’s barriers to accessing and using mobile internet. It requires targeted action by all stakeholders including mobile operators, policymakers, government and the broader private sector.
This report is the output of a project funded by the UK Foreign, Commonwealth & Development Office (FCDO), and the Swedish International Development Cooperation Agency (Sida). The views expressed are not necessarily those of either organisation.
The GSMA’s State of Mobile Internet Connectivity 2021 is available at: www.gsma.com/somic