Mobile Money Product Innovation: Driving Financial Inclusion through Product Development

Mobile Money Product InnovationDriving financial inclusion through product development

Lisa KienzleOperations & Strategy Manager

Mobile Financial Services, Grameen Foundation’s AppLab

November 10, 2011

There is incredible untapped potential in mobile money

“Fewer than 1 in 10 mobile phone banking

customers are poor, new to banking, and doing anything more than

payments and transfers.”

-Consultative Group Assisting the Poor (CGAP)

…yet outside Kenya, few

services have realized the same customer uptake

Safaricom’s M-PESA has proven that the mobile channel can reach poor consumers…M-PESA in Kenya is a “resounding technological innovation.”

-IMF, regional economic outlook for Sub-Saharan Africa

Traditional Payments

(Transfer, Bill Pay, and/or Airtime)

Other Payment

s

Bank Linkag

e

Credit Insurance

4%offer

insurance

11%facilitate

loans

29%enable interaction

with financialinstitutions

~100%offer standard

payments

38%provide other payment types

# o

pera

tors

off

eri

ng

the p

rod

uct

type

Source: GSMA deployment tracker.

When it comes to product, the industry is facing a crisis of innovation

Few providers have moved beyond

payments in their product offering

Payments Beyond Payments

0

20

40

60

80

100

120

So why aren’t we seeing more innovation?

TimeNot a sudden “stroke of genius” – but the result of significant time and

effort

ResourcesRequires an institutional

investment – both financial and human

capital

Appetite for Risk

Must be prepared to celebrate failure

R&D ProcessMust have capacity for research, development

and design that involves a deep engagement with

the consumer

How do we drive innovation?

Successful ideas are derived from an analysis of consumers’ current practices

• Must fit into existing behaviors rather than changing or displacing them

• Requires an understanding unmet needs, which yields key insights that drive product ideas

Insights arise from close studies of the end-user

“I save in a box, I want it locked away.”

QUESTION INSIGHT

“I’m paid when I

sell crops – a few times

a year.”

“When I’m not working, I like

to play [games] with friends.”

“I make a little money each day –

but not enough to

save.”

“If I have money in my

pocket I spend.”

Q1: How do you use informal financial services today?

Q2: What are your cash inflows/outflows?

Q3: What do you do in your free time?

Example 1: Culling insights from current practices - savings

1

2

3

4

5

6

Example 1: Informal practices yield product ideas

PRODUCT: Savings “Goal”

Accounts

Need an illiquid device

Want to partition money to save for different

goals

INSIGHTS:

You have deposited 2,000 UGX in your “School Fees” account Your balance is 78,000 UGX.

Set up multiple sub-wallets

Each named for a goal (“School;”

“Emergency,” etc.)

Deposit to or withdraw from a

specific e-wallet as

desired

Example 2: Following the money

Example 2: Cash flow patterns can drive product ideas

PRODUCT: Automatic Savings

Sub-Wallet

Small increments

– barely noticeable

An already embedded cash flow behavior

You have saved 34,000 UGX this month with AutoSave. Your savings balance is 64,000 UGX.

Create a primary wallet and a sub-

wallet

At each transaction (e.g., airtime top-up) cash diverted to

sub-wallet

Small amounts saved, almost

without knowing

INSIGHTS:

Example 3: Building on what people want with what they need

People love gaming…

…but they need protection from

“shocks”

Example 3: Juxtaposition of wants/needs yields new ideas

PRODUCT: Lottery Health Insurance

Want the sensation

of gambling

Need protection

from shocks

You have enrolled into MM lottery insurance and are covered for 2 million UGX for illness and eligible for the 100M UGX grand prize.

INSIGHTS:

Each month, small amount deducted from

wallet as premium

Insurance protects against

health issues

Lottery pays cash prizes via mobile money

Conclusion

Successful innovation requires a deep understanding of the consumer

New product ideas tailored to specific needs can increase financial inclusion

These new products will help operators identify the next “resounding technological innovation”

Thank You.