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Chartbuster Fintech Blogs from our Library – 2017

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Readers and leaders! More than ever, the world is banking on fintech to accelerate the pace of financial inclusion at the base of the pyramid. Countries around the world have been working on aspects of digital identity, simplified user interfaces, and government–people partnerships to bring financial inclusion to the unbanked. In 2017, MicroSave published a number of blogs that highlight the progress and challenges that DFS faced in achieving financial inclusion for the neglected segments. Here is a roundup of our top 10 blogs for 2017.

Key New Year Resolutions for the Success of Digital Financial Services

We started 2017 with our Group Managing Director, Graham A.N. Wright, writing about the challenges for DFS in achieving full financial inclusion. Graham mentions digital credit and trust deficit as the major culprits that hinder the progress of DFS. He notes that ultimately we need an overarching strategy to address the two inter-related challenges of trust and digital credit. We need to encourage low-income people to maintain and use digital liquidity, which would deepen their digital footprints and allow digital credit providers to reduce their interest rates.

Payment Systems in India and Current Status: A Perspective

While we published this blog in 2016, our readers have referred and revisited it several times in 2017 to understand the progress and challenges of payments systems in India. The blog highlights how payment systems have evolved in the country. It lists some of the broad trends that will redefine fintech in the times to come.

Can Fintech Really Deliver On Its Promise For Financial Inclusion?

Graham received an invite for the MasterCard Foundation Symposium on Financial Inclusion in 2017. At the closing debate, the symposium requested him to support the proposition that “disruptive innovations in the financial sector can no longer respond to the daily challenges of poor people”. This resulted in this analysis of why fintech in its current form may be largely irrelevant to rural people – a segment that should actually be using fintech for financial inclusion.

Graham also went on to explain how fintechs can become relevant and valuable for this segment and thus access The Clear Blue Water on the Other Side of the Digital Divide.

How Smart are Smartphone Lending Apps in Kenya?

The mobile digital credit revolution in Kenya has attracted many fintechs that offer loans through smartphones. Industry experts have promoted smartphone-based products for their potential to improve the user experience for digital financial services, particularly among low-literacy customers. This blog summarises the usability challenges of four major smartphone lenders in Kenya – Branch, Tala, Saida, and Zidisha.

Leveraging Fintech to Achieve Financial Inclusion in Indonesia

Although we published this blog in 2016, we saw many readers return to the blog to revisit the progress of fintech in Indonesia. With 339.9 million connections, Indonesia is the fourth-largest mobile market in the world – a SIM penetration of 131%! Among Indonesians, 43% already own a smartphone. Indonesia has also been going ‘mobile-first’. Currently, it has 64.1 million out of a total of 88.1 million users who access the Internet through mobile devices. This blog examines the growing pace of fintech penetration in the Indonesian market.

Can Instant Messenger Disrupt the Digital Payments Market in India?

Instant messaging apps, such as WhatsApp, have a large daily active user base, especially among smartphone users. They, therefore, have massive potential to influence the digital behaviour of users irrespective of their age, groups, and affinity to other digital payments solutions. As India continues to leapfrog towards digital innovation, it will be interesting to observe how WhatsApp evolves from a messaging app to add features like a payments-plus app.

Open Application Programming Interfaces (API): Purpose and Possibilities

The blog discusses the Open Application Programming Interfaces (APIs) and examines their purpose and possibilities. It highlights how properly designed APIs can provide benefits to both providers and users, and have a positive impact on customers.

Have the Portfolio Diversification Strategies of Kenyan Microfinance Banks Failed?

Despite several initiatives, almost all performance indicators for Microfinance Banks (MFBs), such as profitability, non-performing loans (NPLs), and portfolio-at-risk (PAR) deteriorated in 2016. Microfinance Banks (MFBs) need to reverse these worrying trends, MFBs in the industry may have to focus on continuous institutional reinvention and capacity-building, from the level of the board to the client-facing staff. The blog discusses how MFBs should formulate a detailed strategy that focuses on growing healthy portfolios and outlining risk-mitigation procedures.

Designing User-Friendly USSD Interface for Digital Financial Services

A study in Malawi forms the basis of this blog. It highlights how simplified Unstructured Supplementary Service Data (USSD) interface and convenience to use mobile money services are the major factors that lead to higher uptake and regular use of mobile money. The blog examines the effect that USSD has on reduced dependence on agents for transactions and increased self-use of mobile money accounts by customers.

How Can Providers Make Digital Credit More Profitable?

The blog discusses the key drivers for high s rates for digital credit. It also highlights that there is a clear need to reduce the risk premium for borrowers of digital credit. While this may be difficult during the first couple of loan cycles, it should be feasible during later loans cycles once the borrower has established a credit history and wishes to borrow larger amounts. Doing so should encourage timely repayment and increase borrower loyalty and thus profitability of digital credit providers.

These were the 10 most-read blogs for 2017 from our library. Visit our website for other such engaging reads.

State of Play – Insights on the Evolution of Pakistan’s Mobile Money Agent Network

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The success of a branchless banking network is entirely dependent on the ability of its agents to deliver high-quality services to the target market, that are in line with providers’ objectives. Three years ago, the Helix Institute of Digital Finance’s team first set off to study Pakistan’s agent network and inform on its efficiency, providing insights for improvement, as well as highlighting the opportunities for the DFS community. What we found was a fractured, but highly competitivemobile money market. Opportunities for progress were abound, and the DFS community was excited for a future of innovation spurred by the competitive environment.

This year we went back to agents for a second wave of the Agent Network Accelerator study, funded by Karandaaz Pakistan to investigate how Pakistan’s mobile money market has evolved since the previous wave of the study in 2014. This blog highlights the key findings from the study.

Maturing Market

Pakistan has established a large agent network via franchises, where the majority (90%) of agents act as retailers under them. The latest figures from the State Bank of Pakistan (SBP)[1] indicate that providers have registered over 360,000 agent tills, although a significant number (approximately 30%) are inactive. New tills continue to be issued, albeit at a slower rate (2%)[2]  in the first quarter of 2017 than in the same period last year (13%)[3]. As a result, the network is maturing: in 2014, 40% of the agents were less than a year into operation, compared to just 7% this year.

Despite the evolving market dynamics in Pakistan, the larger providers supported by MNOs continue to dominate the DFS landscape despite offering similar products and models as other players. Telenor Easy Paisa, Mobilink Jazzcash and Ufone Upaisa account for three-quarters (76%) of the market presence, having a bigger share of the agent market presence than the pure bank led operators.

Having driven the mobile money revolution in Pakistan, Telenor Easypaisa maintains the largest presence of agents (32%), holding steady at 2014 levels. Meanwhile, Mobilink Jazzcash is catching up to their main competitor. It has expanded its market presence to 30%, with a 7% growth since 2014. Warid’s Mobile Paisa previously had a market presence of 5% in 2014, and so at least some of Mobilink Jazzcash’s growth may be attributable to its absorption of Warid’s mobile money business after the merger.

Commissions battles to win agents and thereby customers led to smaller providers being bled dry. Although their mobile money services are still operating and available, many agent tills for these providers are now dormant due to a lack of demand for their services. The DFS market is poised to become less competitive in the future unless the small providers can reinvigorate their mobile money businesses and reactivate their dormant agents.

Increasingly Shared but Efficient Network

Pakistan is a leader in shared agent networks: both in terms of non-exclusivity[4] and non-dedication,[5] the highest levels of any other market. Virtually all (96%) agents in Pakistan are running parallel businesses, and more than three-quarters (78%) are serving multiple providers, up from 66% in 2014. Only larger providers maintain some level of exclusivity within their networks, which isn’t surprising, as smaller providers recruited agents from the existing networks of bigger players. Agents can invest only a limited amount for float for their business, but high rates of non-exclusivity, mean agents are often serving a median of 3 providers, who must compete for their agents float investment. As a result, those providers facing a higher demand for their services win, especially since commission wars came to an end.

Although most agents are generally small, they are earning reasonable profits (US$149[6]) and are largely satisfied and optimistic, with most agents continuing to see themselves remaining agents for another year. Although profits do seem to be declining since 2014, this could be largely the result of lower commissions from the providers. Another reason is relatively high operating expenses, which are the highest amongst the ANA markets. Liquidity management and delivery systems are also more efficient than previously reported, with the majority of agents now having their liquidity delivered and fewer agents travelling to rebalance their accounts. Most agents also receive regular visits from support staff; a few also access on-demand facilities.

Gradual Movement from OTC to Wallets

Product innovation and diversification are crucial for mass uptake and adoption of mobile money. Although providers seem to be complying with the regulator’s push for OTC to wallet transition, they have largely failed to propose valuable use cases for customers to propel registration and regular wallet account use. While agents are offering a broader array of services, OTC transfers remain the modus operandi for the market with 99% of agents performing these transactions, with bill payment coming in second.

More agents now offer wallet registration services, but they constitute only one-third (34%) of the network compared to nearly double that (62%) for MNO agents in Kenya.[7]  Agents do not appear to be concerned about the transition from OTC to wallet services, and an additional 46% of agents want to offer this service but have not yet been granted this capability by the providers, which may hinder Pakistan’s progress on financial inclusion strategy, focused mainly on digital account registration.[8] The product offering may be a reflection of the low levels of product awareness on the demand side as agents cite this as a hindrance to registering customers. Ideally, if providers want customers to transition to wallets fully, wallet cash in and out services should be offered universally by agents, compared to just 70% and 69% respectively, offered currently.

Sluggish Adoption of Biometric Verifications

As of June 2017, agents are required to have Biometric Verification System (BVS) machines to verify OTC transactions.[9] These regulations are part of the regulator’s initiatives on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), which has also been credited for lower reports of fraud experienced by agents: Pakistan has one of the lowest rates of agent-reported robbery and fraud among the ANA research countries. However, as mobile money uptake increases, providers will need to ensure their agents are prepared to prevent and mitigate fraud further.

Although providers have begun investing in the transition, they are still falling short, and the rollout appears to be slow and targeted due to the high costs of the BVS machines.[10] More than one-third (38%) of mobile money agents still lack the required BVS machines.Seemingly only better performing and more experienced agents are being equipped – those with average daily OTC volumes of $55USD for agents with BVS machines compared to $44USD for those without them. The absence of verification systems may lead to a downturn in OTC transactions in the short term.

What’s next?

Although the providers in Pakistan have shown some efforts to drive wallet registration and usage and the transition from OTC, they haven’t pushed the envelope far enough, leaving many agents unprepared to register customers. Having provided an overview of the evolution of the DFS agent network, the next blog in the series will explore opportunities and potential strategies to accelerate wallet adoption and thus deepen the mobile money ecosystem in Pakistan by combining insights from the ANA Pakistan study with demand-side research.

For background on the ANA Pakistan survey, data, and reports, please follow this link. The full 2017 Pakistan Report can be found here.

[1] State Bank of Pakistan – Branchless Banking Newsletter – January to March 2017

[2] State Bank of Pakistan – Branchless Banking Newsletter – January to March 2017

[3] State Bank of Pakistan – Branchless Banking Newsletter – January to March 2016

[4] Exclusivity refers to an agent’s choice of providers. If an agent chooses only one provider then that agent is referred to as “exclusive”. However when an agent chooses more than one providers then that agent is referred to as non-exclusive.

[5] Dedication refers to an agent’s choice of business. If an agent choses to only focus on mobile money then that agent is referred to a as a dedicated agent. However, when an agent chooses other businesses e.g. mobile accessories, grocery store, medical store etc then the agent is referred to as non-dedicated.

[6] Median monthly profits – PPP adjusted for 2015

[7] Agent Network Accelerator Study Kenya – 2014 – http://www.helix-institute.com/data-and-insights/agent-network-accelerat…

[8] Pakistan’s Financial Inclusion Strategy – SBP –http://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakist…

The Unrealised Potential of Mobile Wallets in Pakistan

Posted on by MSC

Currently, Over the Counter (OTC) transactions in Pakistan account for just over half (52%) of Branchless Banking Transactions[1] by value and less (42%) by volume. The vibrancy of OTC transactions could provide a stepping stone to mobile wallets. This, in turn, would enable the deepening of the digital financial ecosystem through advanced service offerings for saving, borrowing, and risk mitigation. Pakistan’s Financial Inclusion Strategy[2] makes this bet, relying on growth of digital transactions accounts (DTA), that is, wallet accounts, as one of the four main ‘drivers’[3] for financial inclusion, by enabling ‘access and use a range of quality payments, savings, credit, and insurance services which meet their needs with dignity and fairness’.[4] This blog seeks to provide an overview of the progress (or lack thereof) that mobile money providers in Pakistan are making towards driving mobile wallet ownership and promoting advanced usage

Strong Potential for Wallets – The Business Case

The recent introduction of regulations related to biometric verified OTC transactions[5] has had both positive and negative impacts. Yet for service providers, the increased cost of providing OTC services presents an additional pain-point, among other existing challenges. Because of the large investment required[6], providers are yet to provide BVS systems to over a third (38%) of agents. The rising costs of OTC also strengthen the business case for mobile wallets through cost savings on airtime distribution, greater customer loyalty, and lower commissions that result from increasingly self-initiated transactions.[7] Of course, to generate substantial savings, providers must encourage their customers to register, either independently or through agents and entice significantly more wallet customers.

The Challenges

Remarkably low wallet penetration

To date, however, mobile money account ownership among Pakistanis remains very poor (0.6%), compared to wallet markets in East Africa (67% in Kenya, 53% in Tanzania, and 38% in Uganda). This is in spite of growing number of agents who offer wallet registrations (34% in 2017, up from 21% in 2014). Although opportunities to register for a wallet account have been expanding, the ability or willingness of customers to sign up still lags. As a result, the proportion of Pakistani adults with a registered mobile wallet account grew just marginally over the past three years, from 0.4% in 2013 to 0.6% in 2016. [8]

Agent Capabilities

Only one-third[9] of agents currently offer wallet registration. While 46% of those who do not yet have this capacity want to offer this service, many lack the necessary permissions, whereas others are yet to receive the requisite training/education from the providers. In addition to a minority of agents who offer wallet signups, customer awareness and understanding of providers’ wallet service offerings hinder wallet uptake.

Customer Understanding

Of the 60%[10] of Pakistanis with at least some awareness of the different features of the wallet, only 0.11% go on to register and use the wallet services. The top reason for not using mobile money was not seeing a need to use the service, followed by a lack of understanding of what the service is or how it can be used.

Even many existing OTC users who already use the services for person to person (P2P) transfers and/or utility bill payments gave contradictory reasons for not registering for wallet accounts. A third of OTC users (33%) felt that they have no need for a wallet account and 14%  said they did not have enough funds for wallet accounts. In other words, a significant proportion of current OTC users believe that they do not need mobile wallets because they cannot identify any valuable use-cases for wallets. This is an especially serious concern for providers that seek to transition OTC users to wallets.

Agents also concur that the main reason[11] for the slow growth in mobile wallet uptake and usage seems to be a lack of awareness among customers, who either do not see or know about the use-cases and value propositions of wallets. This also explains why a significant proportion of registered accounts, about 52%[12], are still inactive.

Further education on wallets and other value-added services such as utility and insurance payments is therefore required to improve customers’ understanding of the advantages that using a wallet offers, which would, in turn, lead to increased uptake and usage. Other pull-factors will also play a critical role in attracting new customers and driving the uptake of wallet accounts. These include services like Government to Person Pauyments (G2P), such as the Benazir Income Support Payments (BISP) and Business to Person (B2P) transfers by organisations like microfinance institutions (MFIs) and other bulk payments.

Driving Uptake and Usage

Proactive Agents

Only about 40% of agents educate their customers about wallets, of which only half (21%) offer wallet registration. However, the ANA Pakistan study showed that mobile money agents who do educate customers about wallet accounts conduct 18% more wallet registration transactions and significantly more wallet cash-in (31%) and more wallet cash-out transactions (22%), than those agents who do not educate. This has the effect of boosting their own business and customer wallet take-up.

Moreover, agents who receive induction training within the first three months of joining are significantly more likely to educate customers about wallets than those who did not receive training (45% as opposed to 36%, respectively). Providers should induct agents consistently, and highlight the value and business opportunities unlocked by educating current and potential customers on wallets and wallet-based services as part of the curriculum. They may also consider introducing incentives to encourage agents to acquire new customers.

Agents Support and Better Marketing

Providers should consider rewarding agents, especially the top performers, for their education and marketing efforts related to wallet accounts and customer acquisition. Providers could offer additional training to graduate the agents into more aggressive ‘sales agents’, with additional compensation for specific wallet opening and activity targets, so that agents receive remuneration only for active wallets. Cost reductions that result from more intensive wallet adoption and use, referenced above, could offset such remunerative efforts. Moreover, providers’ should review their Above the Line (ATL) promotional and marketing materials to ensure that they enhance mobile money awareness and build an understanding of the relevance of wallet services in daily life beyond what is available via OTC.

The Next Frontier

In order to drive the National Financial Inclusion Strategy forward, encouraging the uptake of wallets through rigorous education, promotion, and registration efforts are key to creating a sustainable ecosystem with ‘a range of quality payments, savings, credit, and insurance services’ which meet the needs of all Pakistanis. The emergence and diversification of such services may also work conversely to encourage wallet uptake further.

Beyond the current offer of merchant payments, Government to Person (G2P) such as the Benazir Income Support Payments (BISP) and Business to Person (B2P) transfers, bulk payments, meaningful savings, and the eagerly anticipated credit and insurance products would facilitate both wallet adoption and meaningful financial inclusion in the country.

[1] State Bank of Pakistan – Branchless Banking Newsletter – April to June 2017 – http://www.sbp.org.pk/publications/acd/2017/BranchlessBanking-Apr-Jun-2017.pdf

[2] Pakistan Financial Inclusion Strategy http://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakistan.pdf

[3] As per Pakistan’s financial inclusion strategy, the four main drivers are: 1- Digital Transaction Accounts 2- Access Points, 3- Financial service providers 4- Financial Capability.

[4] https://www.afi-global.org/sites/default/files/publications/2017-07/FIS_GN_28_AW_digital.pdf

[5] State Bank of Pakistan – Branchless Banking Regulations – July, 2016 – http://www.sbp.org.pk/bprd/2016/C9-Annx-A.pdf

[6] A BVS Enabled Machine for OTC Transfers costs between PKR 10,000 – 15,000 (USD$ 95–142)

[7] Mobile money profitability: A digital ecosystem to drive healthy margins – https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/11/2014_Mobile-money-profitability-A-digital-ecosystem-to-drive-healthy-margins.pdf

[8] Financial Inclusion Insights – Pakistan report 2016 – http://finclusion.org/uploads/file/Pakistan%20Wave%204%20Report%2019-July-2017(1).pdf

[9] Agent Network Accelerator 2017 – MicroSave-Helix – http://www.helix-institute.com/data-and-insights/agent-network-accelerator-research-pakistan-country-report

[10] Financial Inclusion Insights – Pakistan report 2016 – http://finclusion.org/uploads/file/Pakistan%20Wave%204%20Report%2019-July-2017(1).pdf

[11] In terms of a Relative ranking of supply side reasons for low wallet registration (as perceived by all mobile money agents) – Agent Network Accelerator 2017 – MicroSave-Helix – http://www.helix-institute.com/data-and-insights/agent-network-accelerator-research-pakistan-country-report

[12] State Bank of Pakistan – Branchless Banking Newsletter – April to June 2017 – http://www.sbp.org.pk/publications/acd/2017/BranchlessBanking-Apr-Jun-2017.pdf

Land record digitization-Exploring new horizon in digital financial services for farmers

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In the previous India Focus Note -#145, we highlighted some of the latest reforms in the land registration process and best practices being followed in states across the country. This IFN discusses a few potential opportunities and related usecases of digital land records. The Note emphasises how digital land records and its integration with DigiLocker can make the system more transparent and efficient. Moreover, it also delineates the prerequisites to enable such changes.

The Clear Blue Water on the other side of the digital divide

Posted on by MSC

In the recent MasterCard Foundation Symposium on Financial Inclusion in Accra, I was asked to participate in a debate, arguing for the proposition that “disruptive innovation is no longer relevant to the needs of the poor.” Not easy for someone who has been deeply involved with optimising the delivery of digital financial services (or electronic banking as we called it then) since 2004, and in the M-PESA beta and pilot-tests in 2005. However, in preparing for the debate, several of my growing concerns were clarified. It became clear to me that we really do risk setting up a digital divide – and that we need to be thinking about this now, both as a development issue and as a commercial opportunity.

Six Drivers of the Digital Drive 

To remind readers who have not read my original blog on this, here are the six key drivers of digital exclusion in emerging markets:

  1. In most rural villages there is inadequate infrastructure (electricity, mobile towers, etc.) to support fintech.
  2. Among poor households (including urban ones), there are few smartphones, and even the feature phones are largely owned by men.
  3. More than 1 billion people globally (spread across rural and urban areas) cannot read, write or understand the long number strings necessary to transact on mobile phones.
  4. Fintech providers have made little effort to tailor interfaces or use-cases for the low-income market.
  5. Furthermore, villagers value personal relationships – particularly when it comes to money. They will not trust technology that they do not understand for anything except very basic payments.
  6. Finally, it is quite clear that to date, the regulatory environment and consumer protection provisions remain too weak to provide security to the poor (and indeed many of the not-so-poor).

The 7th Overriding, Commercial Driver 

There is, of course, a seventh driver of digital exclusion: the commercial perspective. Financial service providers and fintechs – entirely appropriately, given their responsibility to shareholders – must focus on the easier-to-reach and more profitable market segments first. And because of the widespread problem of financial exclusion (even amongst relatively affluent people), there are many opportunities for them to do this. Indeed, it is possible to profitably serve under/unbanked customers in geographies and markets that do not present the six challenges outlined above – or at least not the first four. So we can expect the commercial players on which we depend to deliver scale to focus on these easier-to-reach market segments – doing so makes commercial sense

The Clear Blue Water Oppportunity

However, this focus away from the more rural and poor urban communities means that any providers that do make efforts to reach these market segments will be swimming in the clear blue water on the other side of the digital divide. These markets will sometimes (but by no means always, given the omnipresence of the oral segment) be more difficult to reach and serve profitably – but digital financial services are, in many ways, a volume game. So carefully managed scaling into these communities has the potential to allow deep-pocketed and patient providers to generate good returns in territory that is largely not competed. If providers develop products and channels that meet the needs of these people they will be repaid with fierce customer loyalty. This has been well-demonstrated in Kenya by the rise of Equity Bank from a client base of 109,000 to over 11 million over the past 16 years – despite its crowded banking halls and occasional system outages. And this could be very important as a plethora of providers compete in the red shark-pool of the easy-to-reach, literate markets. But it will require a longer-term vision than most providers seem willing to entertain.

Agents are Key

To address rural and poor urban communities, providers must focus on leveraging the agent networks that serve so many digital finance users. Agents are widely trusted members of the community (indeed they should be recruited on this basis or they will probably fail) and often important opinion leaders and sources of guidance. By way of example, and possibly as a result: In Kenya, even after a decade of M-PESA, about half of users (66 percent of women and 34 percent of men) still seek agent assistance with transactions. Furthermore, in more mature markets at least, the majority of agents operate out of markets and towns where there is both electricity and 3G coverage. For the urban oral and poor segments, access to agents is not a constraint, and rural people often go into these markets to trade, meet, pay bills and seek a range of services. Many of these services can be delivered by the agent, particularly if next-generation agents bundle a range of agricultural, heath, bill pay, e-government and other services.

Ultimately we do, of course, need to encourage “cash-lite” and maximum user-initiated transactions to keep money digital. But in the short/medium term, the oral segment (and many others) will continue to use agents to assist them, so the lack of 3G coverage in rural villages may, for now at least, be an irrelevant barrier. And by the time the oral segment can eventually afford smartphones and data, coverage may well have been extended, either by the MNOs or by the Silicon Valley giants such as Facebook or Google.

Tailored Tools and Services

In the interim, agents are uniquely well-positioned to deliver money management tools and services that are tailored to the oral and poor segments. This can be done through smartphones or (better still) tablets at agent outlets running apps that provide user interfaces that are intuitive for the oral segment and reflect the mental models they use to manage their money. Fintechs can play an important role in developing tools and services that work for this target market. But fintechs will, in our experience, need assistance to understand and respond to the needs, aspirations, perceptions and behaviour of the poor, as they typically lack the capacity or resources to do so. As a result, most fintechs tend to create solutions and then look for problems that these might solve. Transaction via agents will allow customers to use, and get used to, these interfaces so that when they can eventually afford mobile phones, they will be conversant with how to use the apps – and thus be more likely to conduct the user-initiated transactions that are so key to providers making money from providing digital financial services.

The Commercial Potential in the Clear Blue Water

To achieve penetration and a critical mass of transactions for the agents will be easier than we have previously assumed, assuming that agents are not “dedicated” and thus dependent solely on agency business for their livelihoods. However, to achieve this, providers will need to develop products that respond to the needs, aspirations, perceptions and behaviour of the target market, and then market them through agents and other opinion influencers and social marketing. The poor have more resources and propensity to save than might be expected: For example, the PMJDY accounts opened for the unbanked masses of (primarily) rural India, after about two years now have an average balance of Rs.2,237 ($34), and these relatively stable balances are growing over time. Furthermore, they also seem willing to adopt market-priced life and accident insurance policies, when these are adequately marketed. And, of course, the demand for credit can be taken as a given … the question will be how to modify existing products to tailor them to the rural poor, and enhance consumer protection. We at MicroSave remain convinced that modifying the current suite of products would be relatively easy to do – and that doing so would enhance digital credit provider profitability. And CGAP has already demonstrated that improving key elements of consumer protection, such as transparent terms and conditions, increases trust, uptake and repayment rates.

The blue water on the other side of the digital divide is a clear, deep and wide opportunity for providers with the proper strategy – and the courage and foresight to dive in.

The blog was originally published on Next Billion

Land record digitization-Exploring new horizon in digital financial services for farmers.Part 1

Posted on by MSC

The Government of India (GOI) launched the(Digital India Land Records ModernisationProgramme (DILRMP) in August 2008. DILRMP aimed to develop a modern, comprehensive, and transparent land records management system, which would provide conclusive title guarantee to landowners.