Making Digital Financial Services Work
E-money is moving, but financial incapability is undermining mobile wallets in Myanmar
- Myanmar isn’t using mobile wallets.
- Consumers use mobile money to send remittances through agents. Money is cashed in to send, and immediately cashed out upon receipt.
- Few e-wallet providers are investing in improving financial capability.
- The future digital financial service reality looks like a fragmented marketplace and little reason for people to ever cash in.
- Investing in financial capabilities creatively can build trust, increase signups, and reduce account dormancy.
As mobile money providers seem to explode, e-wallets are failing
Myanmar’s mobile money providers are in a sprint to dominate a potentially lucrative market. Wave. OKDollar. M-Pitesan. Ongo. True. KBZ Pay. MPT Money. Grab Money. Alipay. And more I’ve missed and more to come.
Most of these providers now offer an app for users. With the historic march of smart phone adoption in Myanmar, providers would be crazy not to offer mobile wallet technology. And according to Visa’s Arturo Planell in the MMTimes, Myanmar “consumers are eager to try and adopt new forms of payments.”
But unfortunately, few people are using apps in Myanmar. Few trust or understand the concept of putting physical cash into a digital system. And few use cases even exist for what to do with the cash if you did put it into the system.
Investing in the financial capabilities of Myanmar’s people would help normalize the strange concept of a non-cash economy. At ONOW we do this in three steps:
- Edutainment to increase understanding and trust,
- Friendly customer acquisition channels to increase signups and streamline user on-boarding,
- Smart messaging to reduce dormancy.
Myanmar’s primary challenge to completely embracing digital financial services comes down to one word: trust. Take this quote from this Frontier Magazine article, interviewing economist Sean Turnell,
“These services are … built on faith in data held on servers rather than anything real. ‘In the end, it all comes down to psychology; it all comes down to trust and perceptions,’ Turnell said.”
Myanmar people simply haven’t trusted formal systems for years. And market fragmentation is reducing the potential impact of trust-building efforts.
Of all the mobile money companies, Wave seems to be in the news more than any other. For years now, they’ve been the most exciting player in this nascent market. With the considerable backing of telecom Telenor and Yoma Bank, they have a long runway to show the impact of their service, and to prove the sustainability of their business model.
Mobile money marketing language has shifted over the years, reflecting the challenge of digital and financial capability.
Early on, much of Wave’s messaging included language about the role of Human Centered Design in building their smart phone app-based mobile money, and its benefits over the USSD-based e-money system of M-Pesa. But use of the term “mobile money” with Wave doesn’t seem to mean what it meant in the past. Instead, Wave has focused messaging on the expansion of their massive agent network. (36,000 as of Dec 2018!) In Wave’s own infographic recently released, most emphasis is on the physical network.
Wave’s rapid advance is an important development for Myanmar— it is a massive increase in everyday access to the formal system, in a country where there are only 8 ATMS for every 100,000 adults (compared to 52 per 100,000 in rest of ASEAN). And this is probably technically classified as mobile money (all those agents are using a mobile phone and digital cash flow management, after all!).
But unfortunately, we haven’t yet come close to realizing the benefits of smart phone wallets over the basic USSD system used by providers like M-Pesa.
Wave’s shift in marketing language reflects a disconcerting reality: Myanmar people aren’t using mobile money in the way it has been celebrated so far.
- People don’t really cash in.
- People don’t really use it for payments.
- People don’t really send e-money peer to peer.
- People don’t really maintain a wallet.
- People don’t really use an app at all.
This means that Wave Money (and every other mobile money operator) is essentially formalizing remittance channels, undercutting Myanmar’s hundi system.
That may be good news for millions of Myanmar coming into the formal financial system for the first time through formal remittance channels. It shows that trust in formal financial systems is being built, but only so far as the digital has been stripped away from the customer’s perspective. It falls far short of the lofty goal of Digital Financial Services.
So far, the e-money economy isn’t bringing the level of freedom and access that a fuller shift away from the cash economy could.
Does Over-the-Counter build trust in Mobile Wallet Use?
Mobile money providers in Myanmar hope that accelerating use of Over-the-Counter remittance will help people get comfortable with the idea of an e-wallet. But this is unlikely to happen because the distributed network of agents doesn’t spend much time promoting a mobile wallet. And why would an agent promote a wallet anyway? It undercuts their OTC income stream, and isn’t close to their core business.
It seems that without heavy investment in below-the-line marketing strategies and expensive call centers to help users become comfortable with mobile wallet use, e-wallet adoption at-scale will be a difficult hill to climb. Those strategies are exactly the effort we see around the country, with road shows and sign-up drives, and thousands of young people outside shopping centers and in markets pleading with people to sign up with promises of a new hat, or an umbrella.
But signing up is only the first step. If the app doesn’t prove useful, it gets deleted and the account falls dormant.
And unfortunately for Myanmar, instead of the smart phone becoming an unprecedented gateway to information in a flourishing democracy, and a essential tool of a free economic system that facilitates financial inclusion, the historic rise in smart phone use is limited to Facebook, pictures and games.
36,000 agents may be using their phones to transfer the cash on behalf of millions, but an education failure is limiting the truly ground-breaking financial inclusion that is within reach.
In the absence of a single player’s dominance in the mobile wallet space, many other mobile money providers have jumped in. Microfinance institutions want to offer mobile money apps. Myanmar’s traditional banks are realizing the opportunity in mobile phone-based wallets. The payment platforms that usually form the infrastructure of the digital money system are launching wallets. Even ride share platforms are pivoting to e-wallets.
But unfortunately, unless Myanmar invests in building financial capability, wallet apps will be used by few. The result will be a fragmented market where no provider talks to another, no interoperability takes hold, and cash continues to win. Indeed, some of the biggest players seem open to letting their e-wallet strategy take a back seat.
Check out Accion’s recent insights docs called the Tech Touch Balance, which speaks to the points at which connecting with the customer would build trust and financial capability. Resultant capability campaigns should especially respond to:
- low digital savviness (which doesn’t mean abandoning digital)
- limited product understanding (demonstrate valuable use cases)
- lack of trust in FSPs (bad experiences and misunderstandings hit the rumor mill).
Financial capability campaigns should be designed to build trust. This requires more than a lecture disguised in colorful moving images. Instead, tell stories. Stories build interest, confidence, and trust.
ONOW is a social enterprise based in Yangon, Myanmar, that is operating a base-of-the-pyramid incubator and development lab. The team at ONOW loves using stories and creative messaging to build financial capability, and created Maung Sa Yin Kaing to connect Myanmar’s young people with digital financial services. #LectureMustDie
