Barney de Jongh, of Digital Frontiers Institute, talks to us about leveraging the value of agents and data and driving meaningful usage of mobile money products.

When a new entrant is scoping the market, where does the best intelligence usually come from and which data sources or types of data are most useful?

It depends on the stage of the market and what sort of traction we have seen from a mobile money transaction volume perspective in that market. In a market where there has been fair traction, lots of data would be available from agents, aggregators (super agents), customers and other ecosystem players (bill payment companies, merchants, banks, etc.).

Agents and aggregators (of mobile money operators already in the market) can provide valuable insights into viability of agent business cases, validation of pricing, transaction volumes, and popular transaction types and amounts. Ideally you would identify the “sweet spots” in terms of common transaction amounts and transact within this range.

This is in addition to obvious data sources like mobile money operators’ (MMO) websites, annual reports and pricing/tariff sheets in the public domain. Furthermore, the GSMA provides very useful data on MMOs on an annual basis in its reports.

In a relatively new market, financial diaries of the target market followed by focused quantitative research work best. Unfortunately, too many new entrants tend to “copy and paste” an existing offering, but a closer look at a month in the life of an unbanked customer – paying attention to the traditional wallet rather than potential mobile money wallet – is valuable. This information is available in financial diaries. Here, an MMO wants to establish the:

  • Transaction types 
  • Frequency 
  • Average amounts 
  • Current way of conducting the transaction 
  • Cost of transaction including opportunity costs

How can mobile money operators incentivise agents to collect and record useful data on, and feedback from, customers?

Agents interact with customers during registration and transactions, but registration provides for the best opportunity to get the bulk of customer data. There is already a registration commission available to agents, and this could be increased slightly to motivate agents to collect additional details. 

Data collection is a time-consuming activity that does not necessarily fit snugly into the agent value proposition, and the MMO should provide an illustration of how the agent’s business case can be enriched – more customers, transactions and revenue through the acquisition of data and feedback from customers.

MMOs could build a standard fee on top of commissions for capturing certain data from customers. Agents could also be offered some form of annuity income or founder’s fee for the data or feedback they obtain from customers and which enables the MMO to cross-sell products to these customers. 

According to GSMA research, mobile money services in sub-Saharan Africa could gain 118 million 90-day accounts if they managed to increase activity rates to 40%. What are the most significant drivers of usage?

An activity rate of 40% is optimistic. Usage rates of 20% to 30% are regarded as good rates in most markets, and it usually takes three to four years for a successful mobile money deployment to get to this rate. 

If we want to have a discussion around usage, we need to first determine whether there is relevance to the consumer. Cash-in, airtime purchase and cash-out, for example, may make up a mere 10% of an unbanked consumer’s traditional wallet. How important are these use cases in terms of priority to the consumer? Priority use cases can be determined through financial diaries of consumers, and this exercise should form the basis of the design of the functionality or services available to consumers.
Usage is mostly a factor of the:

  • Quality of the registration
  • Relevant use cases available to the customer
  • Ability to get customers to perform meaningful financial transactions within the first month of registration (a sign of “stickiness”)

It is better to have a slower uptake in actual number of customers, spend more time on quality registrations and get customers to do transactions in the first month than it is to go for mass registrations in an effort to obtain quick uptake. Clever incentive schemes and initiatives can be designed for both agent and customer to help attain this. 

What can be done to encourage uptake of mobile money services in rural areas where people are less likely to be formally financially served?

Incentivising of agents needs to take the cost of money into account, as most agents in rural areas will be net cash-out agents. Invest in agents by providing them with loans or longer pay-back time so they can see the viability of the business. Zoona has done this successfully.
There should be an enablement of the ecosystem in rural areas so that consumers can use their wallets to pay at merchants or pay for basic services – particularly in cases where the agent is the merchant. Likewise, the merchant’s supplier can be paid in electronic money.

Another option is making data solutions available where the business case for telco expansion doesn’t make sense. Even if this means a data solution that is available on a temporary basis for transaction purposes only (think of solar entrepreneurs in Ghana, for example).
What advice can you offer to MMOs whose commitment to financial inclusion may be constrained by the associated costs, particularly the extent to which people rely on human interaction/assistance from agents when using a product?

It should be less about trying to teach or convince individuals about something they really don’t have a need for and more about showing them that a certain functionality or service has far-reaching impact in their lives.

Take the example of a solar energy provider in a small village. If a small farmer in that village realises that the only way to pay the solar energy provider is via mobile money and that, by doing so, the farmer’s productivity is significantly increased for that day, this translates into almost immediately visible benefits for that farmer. The process of gaining trust in financial products would probably be more efficient than trying to convince the same farmer to do a cash-in merely to convert his cash into electronic money. Once the benefits are obvious, people will make a concerted effort to learn from others in the community about how to use products. But I’m not seeing much of that, I’m seeing operators pushing products onto communities.
Which player is doing innovative things in the market?

I’m watching FINTQ in the Philippines. They are doing interesting things around a sachet purchase for microsavings (similar to the idea of selling cigarettes individually rather than by the pack). The company has been successful in getting traction from all levels or segments of society. 

Barney de Jongh is a mobile money practitioner who has worked for the largest money transfer operator, three mobile network operators, a mobile financial services platform provider and a pan-African bank. He developed a course on operationalising mobile money for the Digital Frontiers Institute (DFI). In addition to teaching that course, he focuses on building communities of practice for DFI.