Providing access to assets for independent workers
Our learnings on prototype testing and exploring how we can leverage the community to build trust
If I have gone the savings route, maybe access to financing is not the best incentive, give me other options — Vick, 29, Photographer
Our learnings on the benefits and social safety nets started with exploration and took a focused route settling on assets. As we discovered, assets are anything that moves a gig worker’s business forward. In the first sprint, we learned that 1) there is little or no separation between a gig worker and their business, 2) anything that stops the business (or gig) becomes a top priority, and that 3) an asset is anything that grows their business, whether tangible or intangible.
In the second sprint, we took a more focused approach, learning from a subset of independent workers, primarily digital creatives in tech, content creation, and photography, on how they select, acquire and invest in assets. We also sought to identify how we might effectively guide them in accessing suitable assets thus making better decisions for their (micro) business.
It was clear that assets needed differ based on the stage of work (or business if you like) the gig worker is at. What is useful to their business (or gig) at one stage may not be as relevant in a subsequent stage. The idea of investing in assets that focus on continuous growth and improvement was common and especially as a way to remain competitive in an always-changing digital space. We quickly learned that success as a gig worker is pegged on several things, including one’s credibility in the community, assets owned and skills gained. While access to assets was mostly limited by financial challenges, most gig workers were loan averse. They mentioned they would only take up financed options for asset acquisition when it made business sense and not just because the financing is readily available. The aspect of community was also highlighted as a means of collaboration, with guarantors or references sought when seeking assets (either purchased or rented).
To understand more about what assets mean to our target users, we created and tested a prototype, guided by what we had learned in previous sprints. This test helped us define further what goes to the MVP that we will later be building out closely with them. We also focused on understanding how we can leverage community trust as we build the perks platform, through a secondary research study done parallel to the prototype tests.
Key takeaways from prototype testing
From our initial research, we learned that many independent workers are risk-averse especially when it comes to debts. This is fueled by witnessing friends or family members sink into bad debts. With this, we explored more alternatives when it comes to easing access to assets required to get the business moving. Financing was the main challenge, creating an intention — action gap between what gig workers want (intention) and what they get (action).
The prototype explored varying approaches to providing access to assets including bundling products with discounts, goal-oriented saving options, and financing based on a commitment of an initial deposit to acquire an asset. The prototype focused on guiding their asset acquisition and providing more flexible terms and collaterals in asset financing.
We conducted a moderated remote usability study with the goal of 1) testing the platform onboarding 2) understand product uptake of bundled-up assets on the perks platform 3) get feedback on what works, what doesn’t work in bundling, saving, getting financing, and added services like insurance.
1. When selecting an asset, guidance, and options is key
Most users prefer having guided options to pick from through easy filters and categories based on their interests. While one might know what exactly they want, reviews and ratings help in decision making and trusting the asset to deliver the expected value.
When it comes to bundling up related assets, discounts are an added advantage and so is the convenience with an already bundled up package. This minimizes decision fatigue and acts as a guide to know what product would easily complement the other.
We learned that as we build the marketplace, we will need to define what we want to highlight between being an e-commerce shop and a goal-oriented savings platform or both.
2. Committed savings with incentives might have a positive behavioral impact
Saving for assets is considered a great commitment, a form of investment with possible good returns to the business. This is better compared to just keeping money aside as when the money is tied to a goal, there is minimal temptation to withdraw before the goal is met. That friction is good as a form of long-term commitment and creating a good savings habit. The simplicity of setting a specific goal, tracking it, and working to achieve it is of value to the user.
While interest rates are a great incentive for savings, users were happy to consider other incentives especially those that complement their savings goal or their business.
As we continue building, we will be thinking about how best can we encourage users to keep at it and make frequent deposits into these goals? This will involve more actions beyond the usual financial literacy, text message reminders could be one way to achieve this goal.
3. On financing, users want transparency on what they are getting
My biggest fear with financing is being triggered happy, so if access is easy, I might jump into it then struggle making payment because sometimes I didn’t really need it — Nelly, 28, Software developer
When it comes to financing options where the user gets the asset and can make the payments later, most demanded increased transparency through clear and upfront terms and conditions. Having an initial deposit commitment is a great way to make sure one evaluates their decision before they can jump into the financing option.
To create a trust system between the service provider and the independent worker, symmetric communication and credit risk assessments before getting before the financing agreement will be very key.
Can we leverage community trust on the platform for viability?
The idea of social or community-based trust systems is not new across both formal (e.g. a registered savings or self-help group, or registered association of online workers) and informal (such as a savings circle). As we work on creating the perks platform, we have been thinking and conducting secondary research to understand how the idea of community has been leveraged in products as well as a means of providing a social safety net. Some of the highlights we came across include:
1. Build on top of existing trust networks
Many communities across the continent have the idea of savings groups and circles, there are chamas in Kenya, tontines in Senegal, ‘Ajo’, ‘Esusu’ or ‘Adaji’ in Nigeria (depending on the local dialect). Demonstrating the power and importance of community and the social cohesion present in such savings groups/circles, there is value in building on top of existing (formal and informal) communities to offer solutions as illustrated in this 2018 CNN article:
“The value of tontines in Senegal we estimate to be about $200 million per year,” says Bernie Akporiaye, co-founder of MaTontine.
2. Guarantees and referrals as a (dis)incentive
Savings and Credit Cooperative Societies (SACCOs) as an important source of capital for individuals and small businesses seeking to grow their businesses, as well as a source of emergency funds. Central to the SACCO is the idea of consolidating and mobilizing individual members’ funds towards a goal of collectively growing individual wealth and livelihoods. Individual members are required to make regular deposit contributions and can in turn obtain loans for various purposes. These loans are obtained against individual members’ deposits, and other members acting as guarantors. These guarantees are a form of social incentive to repay loans. Guarantors are held responsible for ensuring that the loans are paid.
However, most SACCOs have traditionally been for or by salaried employees (for instance Teachers, Police, Bankers, Accountants, and others). Some independent workers might be able to become members but what about the rest?
We learned from the initial research that referrals play a role in determining who gets what work, as well as a means to reduce the risk associated with getting assets especially among photographers who regularly hire out tools of work. These referrals act as access to work, gig work is referral based within the communities they are part of, they also collaborate on projects both to learn, share skill sets, and for faster delivery.
3. (Digital) social trust and reputational systems
In the aftermath of the global financial crisis, there has been an emergence of new lending institutions that have surfaced on the internet. Sometimes people refer to it as peer-to-peer lending or social lending. Some of the renowned in this space are Zopa, Lending Club, Prosper, and the famous crowdfunding platform, Kickstarter. These new forms of financing are becoming popular because they eliminate the middleman and the high fixed costs by traditional finance institutions that are passed down in the form of higher interest rates to the consumer.
4. Embed social in the platform
Social trust has been the bedrock of existing monetary systems for ages. We accept payment in currency because we trust that the currency will be accepted for trade by a third party. In the sharing economy, social trust has been used as an ad-hoc reputation ranking for getting access to assets by gig workers. Unlike conventional credit systems that rank one’s creditworthiness based on past loans and pay, reputation ranking systems are designed to rank one’s social capital in a sharing economy. For instance, Trust cloud is a startup that seeks to provide reputation services for the sharing economy by leveraging big social data. Trustcloud “measures your virtuous behavior online to build a portable and contextual trust score that you can use anywhere.”
5. Trustless platforms using blockchain
SACCOs typically require one to save first (deposit contributions) before one can borrow funds for a specific use. One can observe some parallels with some DeFi products. The term DeFi, short for decentralized finance, is used to describe a variety of blockchain-powered applications aimed at creating peer-to-peer alternatives to traditional financial services and institutions. DeFi products leverage the characteristics of blockchain technology to eliminate the need for intermediaries who perform verification of transactions and using the nature of blockchains: cryptographically signed transactions shared across all those involved, transparency, immutability, and interoperability. Peer to Peer Lending platforms is one of the popular use cases for blockchain. The trustless (the parties don’t need to know each other) nature means that scale is possible, for as long as one can participate on the platform. DeFi lending platforms operate in a manner not dissimilar to SACCOs: one needs to have funds on the platform to borrow.
Building our Community Framework
As we continue building perks and consider the idea of community and the ways that other platforms and products have leveraged community, these are some questions we are tackling:
- Might this concept of community and leveraging it make our product more (or less) user-centric?
- How much more inclusive and impactful might leveraging the community make our product?
- How might leveraging trust, social and community contribute to the commercial sustainability of perks?
Next step
- Taking the MVP to market first through a closed beta to get more feedback and iterate.
- Engage in more conversations to partner with service providers, policymakers, small businesses, and independent workers to make this a reality.
