Financial Inclusion is Hardcore Operations
As a product manager building FinTech solutions targeting the informal sector of the Nigerian market, the easiest part of my job is to stand in front of a whiteboard in some office thousands of miles away from my target users, drawing up go-to-market strategies telling fiction with excel.
For many, Financial inclusion is nothing but “statistics” and for others, especially technology solution providers, it is commissions, potential transaction revenue and a total addressable market of 46.1m adult Nigerians.
I spent exactly 10 days in the North, walking through both rural and urban centres trying to understand why Financial Inclusion was still so difficult, even with the advancement of Technology. My goal was to experience financial inclusion first hand to enable me to build better solutions that are a perfect balance of process and technology which will better serve the bottom of the pyramid. These are a few things I learnt;
Trust is Legal Tender:
Between witnessing an ecosystem of Agents, Merchants, and Aggregators profile, disburse and cash out 10,000 naira each to 5000 beneficiaries within 1 market in 4days without the involvement of a commercial bank on the Government Enterprise Entrepreneurship Project (GEEP — Tradermoni), to witnessing agents adoption of new software 20 minutes before they hit the market and BVN enrolment/Bank account opening of 7000 women in an IDP camp — everything done based on trust and word of mouth.
The entire ecosystem of agents disbursing cash, to merchants who provide the cash to be disbursed, and petty traders who walk up to the agent to cashout from cash points set up in 30 minutes all based on the trust and word of mouth of the aggregator managing cash liquidity.
For aggregators and super agents looking to dominate in specific geographic areas, establishing a brand that can be trusted is key. It is the sole purpose of the aggregator / super agent to keep their agents in check to prevent fraud and cash suppression ensuring that the brand is not soiled. Based on my experience on the field, this cannot be guaranteed from glass offices miles away. There have to be hands-on monitoring and control processes to guarantee this. The agent to customer relationship is an extension of this brand’s trust as the customers build a sense of community around the brand and truly believe that it has only their best interest at heart. Therefore, the recruitment and monitoring of agents is a fine art as the few aggregators / super agents with a low volume of active agents and high volume transactions will attest to this.
Money changes people and it takes a sixth sense and actual involvement to recognise people with strong moral backbones.
Branding and Driving Adoption:
I touched on branding earlier but another angle to this is embedding the brand of a company into the everyday lives of this target segment. From the testimony of other product managers building for this segment, embedding the brand in everyday household items such as soaps, umbrellas can go a long way in helping drive adoption. You may ask the question how does Bathing Soap have any direct correlation with Finance or FinTech but based on experience with this segment, meeting them at the point of their needs and creating a relatable brand is what they respond to the most.
Another PM shared her experience deploying products in Africa and Asia saying it is important to find cohorts of users and support them as groups. offering monthly support meetings for groups, in her experience was helpful as people reported their engagement in those groups to others which triggered offers to join them on their way to group meetings. This can serve as a form of viral marketing which is a very potent form, in turn, driving brand awareness and product adoption.
It is also important to understand and identify the stakeholders with the most influence in every community as they can make or break the adoption of a product or service. In my experience, by day 2 of cash disbursement, agents were being harassed by members of the community which threatened the entire operations of the project, but it took the involvement of the community and market leaders to restore a sense of calm to the location. Also, traditional forms of security — Vigilantes and Market thugs were more potent than official state securities.
The Federal government over the last 2 years have put in an effort to rival India in the disbursement of microcredit nationwide in a government enterprise entrepreneurship programme designed to disburse microcredit to MSMEs. This project has gone on to disburse over N55b to everyday Nigerians but the percentage of repayments are at a miserable 28%. The repayment numbers may not look exciting but when compared with the impact of men and women financially included for the first time in their lives then we have a true sense of hope.
My experience on this project showed me there is no one type of agent. Whenever an agent comes to mind, all we think about is Account opening and access to payment — Cash in and Cash out, but we all know that the mandate for financial inclusion is not limited to this. Although our focus has been to reduce the number of unbanked adult Nigerians from 46.3% to at least 20% and increase access to branchless banking through Agents from 21.6% to 70% by 2020. Let’s not forget that it is also important that we grow credit and insurance from an abysmal 2% and 1% respectively.
Agents when profiled properly serve different purposes. While others serve as agents dedicated to profiling, enrolling and onboarding beneficiaries and customers, some fit solely into credit profiles while only a few can be trusted with cash liquidity to become payment agents.
One of the biggest challenges of Agent Banking today is cash liquidity, as Agents do not have the type of capital to drive certain transaction values or volumes. Super Agents / Aggregators must step in to help solve this problem but then again, the risks of this are still very grave.
In my experience, recognising the different categories of agents backed up by historical data and trends of past transactions in line with the organizations’ goal or project objective can help profile agents into different categories. Agents are also incentivized beyond commissions on transactions to drive transaction volumes.
Finally, I will ask this question, “How important is Technology to the Informal Sector?”
My first experience banking with an agent in the North was humbling especially for someone who had prior only seen it from the software angle. Only a few agents and customers know or care about the technology that powers what they do. All they care about is “How to use ie If they can” and “the end result — Cash or Confirmation of money transfer”. On day 3 of disbursement, we had over 10m naira in cash and over 1000 people willing to cash out but technology failed and trust me this was difficult to explain. How do you tell somebody who travelled 15km to cash out that you have the cash but cannot pay them because their OTP is not delivering or that we are experiencing server downtime? They do not care about the in-between, all they care about is that they see the money and they want it now.
It does not take long for agents who are aware of the technology to stop caring because telling them about all the parties on the table involved in making the transactions possible and what the failure point is at different points in time gets stale especially since in this part of the world technology fails all the time, so after a while all they care about is that you just fix it.
Which leads to a final recommendation that Technology vendors need better collaboration and synergy. To the end users, the service is one but we know internally that between reconciliations, settlements, payment gateways and all other in-betweens are still a load of mess and we all need to do better.