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
How Non-Techies Are Breaking Into Tech Jobs
Image credit: Tasnim Shamma/WABE
Technology startups are at the forefront of innovation. However, while there are plenty of opportunities to influence technological growth, many people lack the necessary training to succeed. This means people need to attend training programs designed to help acquire the skills needed to break into careers in tech. Many college graduates were prepared for jobs that no longer exist or will soon become antiquated.
A 2017 report by McKinsey found that around 50% of current work activities are “technically automatable”. With this in mind, the reason is clear why so many regular people are starting to consider jobs in technology.
Whatever statistic you want to use, one thing is for certain: millions of workers are vulnerable to automation, and many future jobs are in the technology industry.
As automation continues to take hold and disrupt new markets, there are a number of available programs to support people who want to transition into the tech industry. This article will discuss the three main paths being used to support workers in their transition: coding bootcamps, upskilling, and reskilling.
Coding Bootcamps as a Training Method
Coding bootcamps are short-term, intense training programs focusing on employment. Whereas college is focused on teaching a wide range of theoretical knowledge which builds the foundation for a career in Computer Science, coding bootcamps have one specific focus: to help people find jobs in tech.
A recent report on the bootcamp market found that 33,959 people graduated from coding bootcamp in 2019 alone, a 4.38% increase from the previous year.
Coding bootcamps, which have been around for about a decade, have grown in popularity because they promise to help people pursue specific careers in technology.
Bootcamps often position their courses in fields such as Data Sciencea and Web Development, both of which are expected to realize strong growth in the coming decades. Also, bootcamps bundle services such as career support and hiring partnerships together with offerings. These services assist people in their transition from a training program to a job.
Learning New Skills Through Upskilling
Often, a worker will be in a stable field but needs additional training to keep up with technological changes. For instance, a retailer may need to be trained in a few Sales tracking tools, or an Engineer may need to learn a new programming language. This type of training, called upskilling, is an important part of workforce training.
Upskilling refers to when people learn about new technologies to help them stay viable. While a particular job may not be directly affected by automation, new technologies have emerged, allowing employees to be more productive and efficient.
Many companies looking to largely incorporate technology in their business have in-house upskilling initiatives. The Guardian Life Insurance Company, for instance, is training its workforce in new technology like sensors used to improve underwriting and risk management procedures.
Upskilling allows people who work in more traditional roles – like Marketing, Business Development, Sales, and Payroll – gain exposure to new tech ideas, and may act as a springboard to further training opportunities. For instance, a marketer may be trained in how to use SQL to analyze campaign data. Also, after finishing an upskilling program, an employee may decide to commit to pursuing a career in tech, capitalizing on the skills acquired during training.
Reskilling Existing Workers
There is another training option in addition to coding bootcamps and upskilling which has become popular among technical training programs in recent years: reskilling programs. Reskilling programs are initiatives where a business invests in its workers and help build the skills employees need to remain viable.
In contrast to bootcamps, reskilling programs are designed for workers whose job is at risk of automation. An employer will create a training program in a field of growth within their business–the Cloud, for example–and offer some workers the opportunity to retrain in a new field. AT&T, for example, is investing $1 billion in workforce retraining. The telecom giant did so after learning only half of their employees had the skills needed to be protected from automation.
Reskilling programs have grown in popularity because they allow businesses to simply retrain existing employees instead of hiring a new workforce. Often, companies will work with external training providers such as Udacity to design a reskilling program and offer to retrain any employee whose job is likely to soon become obsolete.
Reskilling programs offer dedicated workers an opportunity to stay with a company while being trained for a job in tech. This is an especially worthy proposition for workers who do not want to invest months training beyond work hours. With a reskilling program, a worker can stay with an employer – and earn a paycheck – while being trained in the new skills they need.
Each training method mentioned above has the potential to support people who are breaking into tech from non-technical backgrounds. Upskilling, coding bootcamps, and reskilling options are only three of the many workforce training options being explored. Apprenticeships and education-as-a-benefit, among other programs, are being seen as additional ways for workers to gain new technical skills.
Automation presents a threat to millions of workers, but jobs in techare likely to keep growing and provide job security. But before workers can get a job in tech, they need to find the training, and that’s where coding bootcamps, upskilling, and reskilling have become crucial in the workforce development puzzle.
Blockchain breakthroughs in Africa signal enterprise adoption readiness
Technological breakthroughs such as blockchains and distributed ledger technologies are digital infrastructures that enable innovation. Businesses across the globe are already benefiting from blockchain-based technologies which are predicted to create over $3 trillion in business value by 2030 according to Gartner. Despite the huge potential, CIOs overestimate the capabilities and short-term benefits of blockchain technology to help them meet business objectives which creates unrealistic expectations when it comes to assessing offerings from blockchain platform vendors and service providers.
Companies such as IBM were early adopters of blockchain. “We have used it now to solve issues with the management of our supplier ecosystem and, most recently, we are working to use the technology to improve the way in which we onboard and manage the suppliers we work with (known as the Trust Your Supplier),” said Anthony Butler, IBM’s leader and CTO for blockchain services in Africa and Middle East.
Aligning blockchain projects to fit the overall business strategy of an organisation is key for companies looking to pursue blockchain-based implementations. “We are led by the market and we will build whatever capabilities we need in order to address market demand. We see a lot of companies now wanting to implement blockchain networks at scale so helping them with this, as well as the associated business challenges, is a core part of our strategy. “We are seeing customers who look to us, the general contractor, for convening blockchain networks across different countries, industries, and technologies,” said Butler.
There are also increasing opportunities to create even more value by applying AI and IoT to blockchain networks. This is also an area of focus for companies like IBM. For example, integrating sensors with a blockchain network to gather real time and immutable data on the temperature and conditions under which a product has been transported through a cold chain; or using AI to make predictions based on the data that is sourced via the blockchain network. “There are many emerging cases now and our research organisation is focused on what comes next so we are looking at the implication of quantum or how technologies such as crypto-anchors can be used to further strengthen supply chains with blockchain for example,” Butler explained.
The role of Cloud in implementations of blockchain solutions for African enterprises
African based companies are making blockchain technological implementations. “We completed the Cranberry Cognitive Operational Management Engine which provides the most relevant real-time business service and operational data to the relevant individuals and business units across all service levels of client organisations through interactive dashboards,” said Stin Mulunda, CIO at Cranberry AB. The company has delivered a future-proof business management system which will run optimally 24/7 by leveraging all aspects and elements of data and the environment to ensure an accurate understanding of current realities and how to enhance the future. “We are now able to provide businesses with:
- A single version of the truth through the implementation of smart contracts and the Business Node Consensus Ledger (BNCL);
- Real-time and predictive SLA compliance with bottleneck and business node identification;
- Customer, human resource, provider and operational trend analysis.
The scalability and reduction of total cost of ownership as energy consumption, system upgrades, hardware and software updates as well as infrastructure expert remuneration costs are axed from business expenses upon migration to cloud. The other benefit associated with cloud-based infrastructure is the myriad of software solutions which are compatible with an environment with the option to deploy remotely.
“Agility and service optimisation have become an essential trait for survival for businesses in every sphere of the economy, this has led to the mass adoption of enabling technologies such as artificial intelligence, blockchain and IoT which are all fundamentally cloud-based (distributed infrastructure),” said Mulunda. Cloud platforms such Microsoft Azure, Google Cloud and AWS offer businesses the ability to leverage world-class infrastructure, artificial intelligence capabilities as well as blockchain and IoT solutions.
Cloud, automation, AI, machine learning, blockchain and advanced analytics are just some of the innovations being speedily implemented worldwide to combat business disruption. “The Cranberry Operational Engines’s machine learning and natural language processing algorithms provide organisational correlative analytics on all events, transactions and interactions across all business units and their underlying internal and external resources,” said Mulunda. “The business interaction module harnesses node data to calculate the business proficiency of all business units, individual human resources, and client interactions to provide business leaders a full view of the organization’s performance against set objectives, SLAs and targets at any given time.
This brings the unprecedented possibility to observe and predict current and future organisational efficiency, achievements, profitability, client sentiment, and customer experience by creating a seamless flow of information across internal and external business environments as is the case with a client such as Afrocentric, thereby future-proofing of every aspect of an organisation’s operations.”
“We’re currently in the final phase of the development of our neural analytic dashboards which will harness the Engine’s machine learning capabilities to provide executives with accurate real-time organizational correlative analytics,” Mulunda explained. These dashboards are programmed to analyse the most important/relevant metrics and KPIs to provide summarized intelligence on all events (i.e new customer vs returning customers, human resource punctuality vs revenue vs expenditure per province, store type, etc).
Written by: Heath Muchena, founder of Proudly Associated. Heath works with international companies looking to launch products and services in African markets. He is also the brains behind Block Patrol – a technology adoption and business development startup that pushes the value of advanced tech upstream. He is also the author of 15 books ranging from tech, political economy, business and finance.
Women In Big Data South Africa set to exhibit at AI Expo Africa 2020, amplify women in AI, Data Science
The Women in Big Data South Africa chapter, a forum which seeks to strengthen diversity in analytics and big data, is set to exhibit at AI Expo Africa 2020 Online with chairperson and strategic sourcing and research specialist Naomi Molefe also giving a talk on talent sourcing in artificial intelligence (AI) and Data Science at the show.
The expo which will this year be held as an online event on 3 and 4 September, is the continent’s largest trade-focused AI, Robotic Process Automation (RPA) and Data Science business conference.
Nick Bradshaw, co-founder of AI Media Group organisers of AI Expo Africa, stated “We’ve invited Women in Big Data South Africa to exhibit at this year’s show as part of our drive to make the AI and Data Science community more inclusive and diverse. AI will have direct social, economic and political impacts on our societies as we move into the Fourth Industrial Revolution, as such it is imperative that women be included in this field to avoid gender bias and to come to come up with technologies that progress digital equality”.
“As we celebrate women’s month in South Africa this August, we should have more conversations, not only now — but all year round — on how to attract, encourage and support more women in AI and machine learning research, as well as in the big data and analytics field,” added Bradshaw.
The Women in Big Data Forum’s mission is to inspire and attract more female talent to big data roles and to help them connect, engage and grow. The organisation does this through networking events, professional development and by sharing industry related content with members.
Delegates to AI Expo Africa 2020 ONLINE who are passionate about the meaningful inclusion of women in AI should also visit Fliptin’s virtual booth at the show. The Johannesburg-based venture builder runs the AI in Africa social impact initiative — in partnership with the Kgalema Motlanthe Foundation — which through a series of bootcamps exposes 15-18 year old female learners to AI concepts and ethics, as well as the design thinking process, pitching techniques and building chambers and image classifiers.AI Expo Africa 2020 ONLINE will also feature talks by prominent women working in the field. These include:
- Kay Firth-Butterfield, Head of AI and ML, World Economic Forum
- Renee Cummings, Criminologist and AI Ethicist, Columbia University
- Alison B Lowndes, AI Devrel EMEA, NVIDIA
- Ati Ngubevana, Group Executive HOD: Digital Process Engineering, Vodacom
- Kathryn Malherbe, CEO and founder, MedSol AI Solutions
- Kimara Naicker, PhD Researcher, UKZN Quantum Research Group
- Lebogang Martins, Senior Project Manager, IoT.nxt
- Lenore Kerrigan, Country Director SA, UiPath
- Nella Oluoch, CEO and founder, Keypetbooks
- Phumza Dyani, Chief Marketing and Sales Officer, Broadband Infraco; Chief Innovation Officer, Pan African Chamber of Commerce
- Celina Lee, CEO, Zindi
- Nazareen Ebrahim, AI Researcher, Socially Acceptable
- Minda Marshall, Director, LectorSA
- Vicki – 100% synthetic AI-powered host
Roy Bannister, Director Show Production at AI Expo Africa, stated “Not only do we have a superb line-up of regional and global female thought leaders, we uniquely also have a brand new addition to the show – Vicki.
Vicki is the first 100% synthetic AI-powered host of AI Expo Africa 2020. She is working at the show to introduce the main keynote speaker during the opening sessions of Day 1 and Day 2 of the show.
This technology has come a long way and will be showcased at the event. It’s becoming harder to tell the difference between real humans and synthetic actor, which is both an amazing innovation but also provokes interesting reactions, especially in the era of fake news and deep fakes. She is a testimony to how far this technology has come and we can assure our audience everything she says is true!”