Billions of people around the world are required to meet know your customer (KYC) norms to avail of services considerably important to their lives. Yet, widely prevalent archaic methods for KYC come in their way. e-KYC, a fully digital solution, leveraging resident Indians’ centrally stored demography details and biometrics (fingerprints and/or iris recognition) is changing how KYC has been done for ages. This blog examines how e-KYC is an established and proven solution and (together with the India Stack presents a compelling and transformative blueprint for a majority of the emerging markets to consider.
The payment system in any country needs to pass the litmus test of safety, security, soundness, efficiency, and accessibility. In order to address all these, payment systems have evolved from barter to currency, to digital systems. Read how India is witnessing enormous change in the payment systems, disrupting the monopoly of physical/paper-based system by electronic ones.
“Fintech” – an intersection of financial services and technology – is taking the traditional financial world by storm. Indonesia is no exception, with a fast-evolving ecosystem that includes a host of financial services offered by new generation fintechs.
Indonesia is the fourth largest mobile market in the world with 339.9 million connections – a SIM penetration of 131%! 43% of Indonesians already own a smartphone. Furthermore, Indonesia is going “mobile-first” with 64.1 million out of a total of 88.1 million users accessing Internet through mobile devices. This is fuelling social media usage by platforms such as WhatsApp, Facebook, Blackberry, Line, Path, etc. This trend is also leading to explosive growth in electronic and mobile commerce, with big names such as Alibaba, Softbank, Sequoia, Rocket Internet, and Temasek backing local ventures. In contrast, only 36% of 250 million Indonesians have access to formal financial services.
Keeping these technological advancements in context, the blog highlights how Indonesia is well placed to leverage “fintech” towards the cause of financial inclusion.
Globally, mobile money services are being offered primarily over the counter (OTC). This underlines the demand for readily available, quick and convenient fund transfer services. Even though OTC is a well-established concept, there are varying views on what actually constitutes an OTC transaction. Moreover, OTC in India differs in some respects from OTC services in other countries. The blog outlines OTC in India.
It is always dangerous to make predictions in an industry which is expanding and evolving rapidly, so it is with trepidation that I now do so. The blog presents predictions in Digital Financial Services based on market insights and observations from working many years within the mass retail financial sectors and in Digital Financial Services.
The Helix Institute of Digital Finance recently concluded the second wave of Agent Network Accelerator (ANA) study in Bangladesh which found signs of growth in the digital financial services landscape in Bangladesh on all the key performance metrics*. The number of providers, agents, and users –all have increased since the previous wave of the study was conducted in 2014 and the research indicates that the Bangladeshi market is poised for the next level of digital financial services. Service providers are likely to lead this wave of change, while the regulator – Bangladesh Bank, and agents will play their respective parts in contributing to it. You may call us victims of optimism bias, but study findings and interaction with various stakeholders clearly indicate that the market already has a good appetite for better digital financial services – or DFS 2.0, as we refer to it in this blog.
Providers will lead the change
The current DFS product offering in Bangladesh is limited to the basics – account opening, cash-in/cash-out transactions, bill payments and money transfers, although bill payments and merchant payments have a negligible presence in the product suite (Figure 1). Compared to other factors that contribute to successful DFS ecosystems – players, agent networks, technology, customers, and products, the Bangladesh market is still nascent, in terms of the range of products and services. The country shows positive growth trends and is comparable to other ANA countries in terms of the training and liquidity management of its agent network.
More Bangladeshis are embracing DFS and it is likely that providers may want to offer them more than the basic wallet and P2P services. We predict that providers will begin to focus on diversifying and offering more sophisticated products.
Figure 1: Products offered by by Agent in Bangladesh
Agents also noted that “individual clients’ demand for (DFS) service is not regular”. This perception could be largely due to the P2P nature of the market which is not predictable as it is governed by a degree of migration in the market. The demand might become regular and/or predictable if there are more use-cases in the form of sophisticated products by providers that motivate more usage and uptake of DFS offerings.
As DFS market continues to evolve, acquiring a large customer base that understands and uses digital financial services is critical (Davidson and McCarty). We believe that the Bangladeshi market has reached this critical juncture and providers have attained a customer base ready to use more sophisticated financial services.
Bangladeshi providers have much to learn from the success of African markets where digital financial services have successfully offered savings and credit services – KCB-MPESA, M-Shwari, Equity Bank, are all shining examples. There are also examples of agents offering savings, credit, and insurance products. These experiences, irrespective of whether they were successes or failures, provide immense literature and learning on customer behaviour towards a credit product or role of agents in offering insurance products. This will be hugely beneficial to the providers in Bangladesh in designing both products and strategies.
Fortunately, all DFS providers in Bangladesh are banks or their subsidiaries. Unlike non-banking providers who lack expertise in the area, banks, in general, are far more proficient in designing banking products. The changing landscape of new product development that involves big data and Behaviour Economics principles will further help banks to design products that are tailored to meet the critical financial needs of customers. All these factors add weight to our optimism about DFS 2.0 in the country.
Agent optimism will support the launch of more complex financial products
The ANA study found that Bangladeshi agents are the most optimistic ones among all the ANA markets – almost all agents see themselves continuing as agents for another year. About one-third (31%) of agents in Bangladesh are high performing, that is, they conduct more than 1.5 times the country median level of transactions. Agents are critical to the development of digital financial services, and a happy army of agents is one of the most useful assets for a provider. There is, therefore, a good probability that agents in Bangladesh would be willing to promote and service complex financial products. The road to agent management, however, is not without its own challenges, as with more sophisticated products, agents will be more prone to fraud. The data shows that fraud has risen three percentage points – from 19% in 2014 to 22% in 2016.
Support from the Regulators will be key
It is worth noting that the regulator in Bangladesh supports both – mobile financial services (mostly wallet based payments offered by the banks) as well as agent banking (to promote bank-branch like experience for customers). We reckon that the competition for market share between these two models will catalyse the development of more sophisticated products. The objectives of both models are largely the same – increasing the penetration of financial services and achieving financial inclusion. Although there is a slight variation in the basic modus operandi of the two models, agents appointed by the bank play a key role in both of them during customer interaction. The best practices of agent management have already been established for the market, therefore, the next phase will be about providers competing to get the customer value proposition right. It is time to wait and watch how providers who offer either MFS (for example bKash) or agent banking (for example, Bank Asia), try to win customers over; and how provider(s) who offer both type of services (for example, Dutch-Bangla Bank) consolidate their value propositions. We believe that these two guidelines (agent banking and revised mobile financial services), will create opportunities for developing more complex financial products. The push for DFS 2.0 will, therefore, be greatly determined by how regulation facilitates this while ensuring customer protection at the same time.
Markets evolve in terms of the products they offer; Kenya evolved from ‘send money home’ to ‘payments’ to ‘get credit on the phone’ and beyond. India evolved from no-frills accounts to Basic Savings Bank Deposit Accounts to Jan Dhan Yojna accounts. In Bangladesh, the stage is now set for the evolution of the DFS ecosystem to take place.
When it comes to fraud in digital financial services (DFS), stories from Uganda will surely arise: be it the infamous case of internal collusion within an MNO or the highest rates of agent-reported fraud across all countries where the Helix Institute has conducted research (Figure 1). The first blog in this series focused on who and what it would take to get DFS industry collaboration on fraud in Uganda off the ground. This blog proposes five avenues where DFS providers can step up the fight against fraud in DFS.
Figure 1. Agents reporting Fraud: ANA Research Countries
Source: ANA Uganda 2015, The Helix Institute of Digital Finance.
Five Ways to Tackle Fraud
Conduct periodic mass education campaigns. These are critical for creating and sustaining awareness about fraud among customers and agents alike. Ugandan providers should continue to invest in above-the-line communication on the variety of fraud risks, ideally in partnership with Bank of Uganda and the media. As the guardian of consumer protection, the Bank of Uganda has taken successful initiatives to educate the public on how an agent is expected to operate. Its continued involvement in such efforts would bolster their credibility.
A good example is Safaricom’s campaigns. Safaricom used multiple channels – from SMS blasts, newspaper ads, to skits and radio spots in local dialects – for targeted communication about fraud. Furthermore, its ‘PIN Yako Siri Yako’ (Your PIN Your Secret) campaign has increased user awareness on keeping their PIN number secure.
Revamp internal systems and processes to ensure adherence to clear protocols.
Providers may need to clarify their operational protocols for fraud identification, management and reporting and relay this to all of their stakeholders—from agents and aggregators/master agents to sales and distribution managers, to ensure a shared understanding of the protocols.
Essential within these protocols are effective complaints and redressal mechanisms accessible 24/7 in local languages, with dedicated customer- and agent- hotlines. In Kenya, some providers accept customer complaints via social media, which given their open nature, can result in faster turn-around and keep other customers informed about the lastest fraudster tricks.
Regardless of the medium, these mechanisms should adhere to clear procedures for transaction repudiation, complaint escalation, and logging customer- and agent-reported fraud incidents. Aggregate statistics on fraud should be regularly transmitted to internal and external sensitisation channels to ensure that the latest information is integrated into consumer education as well as agent and internal staff training.
b. According to a study by Deloitte, the primary root causes of mobile money fraud are internal control failures related to governance, IT, and continuous monitoring. Providers should strive to implement preventative and detective safeguards. Some examples of these measures, among others, include:
Disabling incoming SMS/calls from unauthorised numbers on transaction SIM cards;
Allowing access to web terminals from secure terminals only;
c. Robust analytics are the backbone of fraud monitoring and management. However, Ugandan providers have not yet fully developed their capacity in this area. Data systems and analytics should include at a minimum: transaction pattern tracking with time/location stamps and reference numbers (with automatic blocks applied to customer and agent accounts flagged for suspicious activity), float and cash balance monitoring, as well as periodic commissions’ analysis to detect agent-perpetrated fraud.
One example is recent collaboration among leading Ugandan providers to claw back commissions for direct deposits by analysing transactions’ locations and time stamps. This was done using BTS/Booster detection – deposits withdrawn from the same account in a different location within several minutes were not remunerated.
d. Automation can significantly reduce opportunities for fraudulent meddling by agents and employees. Providers should prioritise automating transaction reconciliation (B2B, C2B), tariff collection, and aggregator/agent commission pay-outs. Enabling customer cancellations, modelled after M-PESA’s Hakikisha, could help curb customer-facing fraud. To further protect customers, systems could auto-generate SMS warnings to those using common PINs like 0000 or 1234.
Improve staff and agent network management through enhanced training and monitoring, as well as stricter recruitment and contracting.
Training. It’s encouraging that Ugandan providers are already training their agents and staff on fraud. Providers are formalising training curricula through Training-of-Trainer manuals. As these are compiled, they may want to ensure that manuals include a comprehensive fraud typology. This can include practical prevention tips such as:
Complying with customer KYC;
Keeping agent materials secure;
Picking difficult to guess passwords;
Identifying counterfeit currency identification;
Adhering to customer privacy standards;
Handling customer complaints; and
Regularly updating the agents and staff on the latest types of fraud and prevention strategies.
b. Monitoring. Providers have already started using agent support and monitoring visits as an opportunity to address the issues of fraud and operational compliance. Such visits are a convenient, periodic opportunity to check the level of agent awareness and compliance to KYC procedure, inspect mandatory tariff disclosure, ensure password security, and check for counterfeit currency. They can also be used to inform agents of emerging fraud trends and best practices in fraud mitigation elicited through internal redress channels, feedback at conventions, or experience-sharing provider fora. Of course, staff conducting such visits must also carry proper identification, given cases where agents have been defrauded by fraudsters posing as provider support staff in the past.
Visits by a provider or third-party personnel could be supplemented with mystery shopping exercises by the regulator to check compliance. Providers may further consider enabling aggregators/master agents to access their agent transactions via a specialised portal. This could boost their ability to track sub-agent performance and identify unusual activity.
c. Agent Recruitment and Contracting. The Bank of Uganda’s Mobile Money Guidelines already dictates minimum agent KYC credentials. However, given the prevalence of fraud in the country, providers would greatly benefit from expanding these criteria and revisiting their due diligence process to include background checks. These revised criteria and due diligence should not be limited to agents alone but should be extended to all employees, including aggregators/master agents. For example, Safaricom requires agent applicants to submit a certificate of good conduct from the Criminal Investigations Department of the Kenya Police.
Additionally, employee, aggregator and agent contracts must be reviewed to explicitly state the obligation of adherence to operational standards – in particular, those pertaining to fraud (e.g. customer KYC, transaction logging, tariff display requirements) – as well as grounds for dismissal.
Factor fraud into product design. This will become increasingly important as more complex bundled products, such as digital credit, savings, and insurance products are introduced.
Greater product sophistication, delivered via partnerships between different financial service providers, could increase the opportunities for committing fraud. It will be crucial that all business partners involved are trained in fraud mitigation and have compatible fraud mitigation systems.
Prior to the roll-out of these products, provisions for complaints and redressal mechanisms – including division of roles and responsibilities, as well as communication channels must be clarified with the relevant staff receiving corresponding, specialised training. For example, in Tanzania, Commercial Bank of Africa (CBA) and its MNO partner, Vodacom, have agreed that all complaints regarding CBA’s product, M-Pawa, will be handled by Vodacom call centre staff, who receive specialised training from the bank.
Enhance regulatory enforcement and the prosecutionof offenders. While this recommendation does not pertain only to DFS providers, ensuring compliance to KYC is a crucial preventative step to fraud. Only 2% of Ugandan customers show identification when conducting a transaction, even though 84% have the requisite ID. Combating non-compliance on this particular issue must be done in collaboration with the regulator and the National Identification and Registration Authority.
Closer collaboration with the Uganda Police Force will ensure timely investigation and prosecution of fraud perpetrators. Ugandan providers have called for a common database of blacklisted agent employees to track fraudster handlers. Such an endeavour could be spearheaded by the regulator in partnership with law enforcement and National Identification and Registration Authority. The State Bank of Pakistan’s online database, AgentChex, enables the regulator to track agent transactions and flag those implicated in the fraud. It would be essential that such information is shared among all DFS stakeholders.
Fraud is an ever-evolving phenomenon and concern in Uganda. We hope the analysis of ANA data and our qualitative research offers some practical advice as to where providers may enhance their efforts to combat fraud effectively. The Helix Institute is vigilantly watching this space and equips the DFS community with preventative and mitigation strategies to address fraud in its Risk and Fraud Management Training Course.
The Helix Institute of Digital Finance would like to thankFSD Ugandafor funding and supporting the 2015 ANA research in Uganda.
Fraud is one of the major threats to the emergence and sustainability of the DFS ecosystem. Uganda’s DFS market has long been plagued by fraud. The Helix 2015 ANA Uganda Report revealed that 53% of Uganda’s mobile money agents have experienced fraud within the last year – either personally or through one of their employees.
At the recent launch of the report, stakeholders in the Ugandan DFS industry called for collaboration to combat fraud. But what would such collaboration entail? This blog discusses whom and what it would take to establish effective collaboration among industry players, provided they are willing and committed.
What does collaboration mean?
It is often said that strength lies in collaboration, teamwork and unity and the DFS industry is no exception, particularly when it comes to fighting fraud. Collaboration involves different stakeholders working together on identified priorities, towards a shared goal – in this case, reduction in DFS fraud in Uganda; and preferably with clear targets to achieve.
To set priorities for combatting fraud, the industry first needs to develop a baseline understanding of the various facets of this phenomenon, existing fraud mitigation mechanisms, and the gaps. This would inform a first round of initiatives. Fraud trends in the market would then need to be jointly monitored to identify further actions required from each stakeholder (Figure 1). Ideally, this cyclical collaborative effort would be overseen (in a non-punitive manner) by a coordinating body.
Figure 1. Cyclical Collaborative Effort
Who should be involved?
DFS providers and trade associations. These entities are ideally positioned to help combat fraud as they can collaboratively develop guidance on fraud mitigation, prevention, and recourse. Such guidance would correspond to minimal regulatory requirements and champion best practices on internal controls, complaints/redress systems, contingency plans, and agent network management. Additionally, it could propose partnership modalities, say between insurers and MNOs, and blended products design. These associations are also well-positioned to maintain relationships with Criminal Investigations Directorate (CID) of the Uganda Police Force in order to identify, promptly sanction and track fraudsters.
In Uganda, associations in mind are Ugandan Bankers’ Association and Uganda Insurer’s Association. Though MNOs in Uganda do not have an apex body, leading MNOs can be expected to collaborate to fight fraud just as they did to crack down on OTC.
Regulatory Bodies should be at the table to vamp up and harmonise rules and standards necessary to address fraud. They must also undertake supervisory activities to ensure that providers comply with regulations and adhere to consumer protection measures. Regulators of the DFS space in Uganda include Bank of Uganda, Uganda Communications Commission, and Insurance Regulatory Authority of Uganda.
Donor agencies and technical partners, like FSD Uganda, UNCDFMM4P, CGAP, and GSMA who promote the development of the financial sector as well as efforts to financially include the mass market, can offer technical and financial support to collaborative initiatives that address the issue of fraud, since it is one of the major threats to the emergence and sustainability of DFS ecosystems.
Next Steps
With these diverse players identified, we now consider how to get collaboration going, given the current landscape and barriers in Uganda. Below we provide a few recommendations on what it would entail for the industry to take the bold steps necessary.
Timely, reliable market data on evolving fraud patterns. Providers’ levels of sophistication in tracking and analysing fraud vary, as do the capabilities and controls within their systems. This hinders any concerted effort to monitor and analyse fraud trends in the market. Although the Bank of Uganda requires providers to submit monthly reports on fraud and suspicious transactions, the information received is often incomplete and any clarifications that are solicited lead to delays, making it difficult to provide timely information on fraud trends.
It seems that the lack of effective market monitoring mechanisms is the biggest challenge facing most DFS regulators. Due to the absence of a rigorous and timely data collection mechanism, general understanding on fraud is derived from qualitative studies and one-off quantitative surveys like the Helix’s Agent Network Accelerator research. Generating timely market data on evolving fraud patterns through a combination of reporting and mystery shopping is a necessary first step for addressing fraud in a targeted and systematic fashion.
Capable and motivated coordinator body. This body is needed to coordinate monitoring of fraud trends to enable decision making regarding priority actions for each stakeholder group and follow up on their implementation. There are several options for who might be suited to play the coordinator’s role, depending on varying competences:
The Regulator. Central Bank of Kenya convenes stakeholder forums to discuss market trends and issues, like measures to address fraud and agent noncompliance. Formal industry dialogue and coordination processes also exist in Tanzania. This may not be feasible in Uganda, given the absence of a dedicated national payment systems legislation, disabling the Bank of Uganda’s supervisory authority over MNO e-money issuers.
Adapt existing initiatives. The Fraud and Forgeries Subcommittee within the Ugandan Bankers’ Association already convenes consultative meetings on fraud within the banking industry, with participation of Bank of Uganda. With the rollout of agency banking, this may be the starting point for coordinating anti-fraud efforts in DFS.
Another option would be to build on GSMA’s efforts in holding consultative workshops. In 2012, GSMA convened a series of consultative meetings between MNO providers and the regulator on the issue of fraud. However, these have run into challenges on account of limited capacity of the regulator as well as delays in decision making. Reviving this forum with the support from technical partners could be a low-hanging opportunity
A specialized body. This body would need to have strong backing and oversight from the regulator as well as credibility within the industry. Examples of such bodies include the USAID funded mobile money coordinating group in Malawi and Bangladesh.
Working Together
Making industry collaboration against fraud in Uganda requires concerted effort on the part of all stakeholders to appoint a coordinator, understand the nuances of the problem and implement collectively envisioned solutions. Nevertheless, the discussion during the 2015 ANA Uganda launch and our private consultations with key stakeholders show a growing and encouraging recognition of the urgent need to collaborate. We hope that this blog can help orient efforts to get the collaboration going. In our next blog “Fighting DFS Fraud from Five Fronts”, we focus on key steps Ugandan DFS providers can take to tackle the issue of fraud.
Six years into the launch of digital finance in Benin, the market is expanding. The two main mobile network operators (MNOs), MTN and Moov, have paved the way by leveraging their large GSM customer base and airtime distribution channel to scale up quickly. They have capitalized on their positive brand image and reputation amongst customers to communicate about their digital financial services (DFS) use cases. In fact, over half of Beninese adults (54%) are aware of a mobile money provider. However, the relatively high levels of awareness have not translated into high customer registration and usage – only 9% of Beninese have a registered mobile money account (Intermedia, 2016).
The Helix Institute of Digital Finance recently conducted qualitative research in Benin in partnership with the UNCDF Mobile Money for the Poor (MM4P) programme. The study findings indicate that because DFS providers entered the market quickly and focused primarily on scale—i.e. reaching high volumes of low-value transactions – some fundamental building blocks have not been cemented. It would be judicious that Beninese providers take a step back and ensure that they have put in place a solid foundation to support their efforts to grow.
Defining the Three Stages of Success for DFS Deployment
There is no universal definition of what a ‘successful’ digital finance deployment is – for there are various players with different objectives who often offer diverse value propositions to different customer segments. However, there are some fundamentals that will ensure that providers can deliver optimally on their respective objectives and value propositions. Providers should ideally undergo three growth stages in order to reach their full potential (Figure 1).
The ‘Launchpad Stage’ is the developmental phase which concentrates on getting strategic foundations right, such as defining clear strategic objectives and management structure, before rolling out a DFS deployment. Once these tasks have been completed, the focus then shifts to expanding operations. The ‘Lift-off Stage’ involves increasing transaction volumes on the tailored product suite to target customers and expanding delivery touchpoints at strategically chosen places. Years into deployment, when the market reaches maturity, providers must concentrate on building a digital ecosystem. It is worth noting that no provider has reached the ‘Orbit Stage’ yet; even the most advanced East African markets are still struggling to overcome operational challenges.
Figure 1. The Three Growth Stages of DFS Deployment
The Beninese Market is Propelling towards Lift-Off
In Nigeria, Benin’s neighbour, providers seem to have skipped the ‘Launchpad Stage’, whereas in the Beninese market, providers have attempted to put most of its foundations in place. The two major providers have carefully thought through their value proposition to customers: domestic and cross-border person-to-person transfer (P2P) services, to address Beninese demand for safe, affordable and convenient payment solutions. By targeting key remittance corridors – particularly Ivory Coast and Togo, Beninese providers participate in boasting a pioneering cross-border remittance model in the West African Economic and Monetary Union (WAEMU).
To successfully deliver their value proposition to target customers, MTN and Moov have designed an extensive agent network spread across the country (over 8,300 active agents as of October 2016), creating customer touch points in both sending and receiving corridors. On the technology front, MNOs have an advantage because they control the network bandwidth; thus both providers have managed to maintain service downtime at low levels. MTN has recently upgraded its technological platform, demonstrating its commitment to delivering reliable service to customers and build their trust and usage of DFS services.
Despite these achievements in a relatively nascent market, our research demonstrates that there are some gaps in Beninese providers’ strategies that may hurt them in the near future if action isn’t taken now. We recommend the following for current providers in the market as well as for those who are considering (or planning) to launch their deployment:
1. Position Mobile Money as a Priority
For new players, one of the major challenges is to define clear objectives regarding DFS and build consensus around them. Various departments within a company may want to pursue conflicting objectives – from envisioning DFS as an additional source of revenue to support the existing business to positioning DFS as a core business for the company’s future.
Across multiple markets, MNOs often experience a disconnect between their traditional voice business and mobile money business, which can result in barriers to building the latter. As for financial institutions, the digitization of their operations often means changing their traditional paradigm and laying off the middlemen – cashiers, back-office staff – which can lead to resistance towards adopting the DFS business case.
Providers must ensure that they obtain the commitment to pursue the target DFS objectives from all of their stakeholders across various streams of the organisation, from executive management to operations’ staff, right from the beginning. Rushing to launch a DFS offering without strategic clarity and an organisation-wide commitment can result in slow progress and may eventually set up a deployment for failure. Therefore, Beninese providers will want to ensure that all departments are on board and embrace their objectives for DFS.
2. Understand Your Target Customer’s Preferences
Although Beninese providers’ offerings are designed to be self-initiated transactions over a handset, research indicates that agents play a critical role in assisting customers to conduct transactions. Agents do this by either helping customers perform the given transaction on customers’ phones or using agents’ own devices.
This is not surprising in a market characterized by low readiness for DFS – only a third of Beninese are literate and 44% have had SMS exposure (Intermedia, 2016). Interviews with Beninese agents indicate that they understand the need for human interaction in a nascent DFS market, and many have created trust relationships with their customers by walking them through what is, for many customers, their first digital experience.
In light of this, providers may need to evaluate the transaction methodology in which they are offering their value proposition, as well as their marketing strategies to adjust to those customers not yet comfortable with using mobile wallets. A first step is to conduct market research to understand what product and accompanying user interface will drive the uptake of services, and augment its reach by providing consumer education. Agents are often the first touch points for most end-users, so providers may want to focus on promoting agents as their brand ambassadors, simultaneously equipping and incentivizing them to play this role.
3. Focus on Agent Network Quality Rather than Quantity
While quickly onboarding agents across Benin has ensured ubiquity of the service, providers may not have necessarily ensured whether their agents have the right profile to sell the service, and are sufficiently trained or monitored to deliver top-notch customer experience. Our research shows that some agents start the business with just a table and a parasol, with as little as 20,000 FCFA (34 USD) – resulting in high volumes of denied transactions – and with limited knowledge of operational aspects of their own DFS business.
Quite interestingly, Beninese providers report that their branded shops (MTN and Moov shops) account for a majority of the conducted transactions as opposed to their retail agents, whom providers still invest in. This actually indicates that end-users choose to transact where they are assured of finding liquid and secure outlets – leaving the vast majority of retail outlets with low traffic, and thus low profitability. This may hurt providers in the long-run, as customers who have a negative experience at an outlet are unlikely to try and use the service again. Therefore, they should focus on designing and implementing a structured approach to agent selection, striving for quality over quantity, and ensure that the agent profile is best-fit with the provider’s value proposition.
Recommendations for New Players
The Beninese digital space is growing and different players are on the horizon: ASMAB is the first microfinance institution in the entire WAEMU to have received its Electronic Money Establishment license in 2013. The Helix Institute will be keenly observing Benin’s developments, and we hope that the challenges we have highlighted will encourage new and old players to think about their strategic considerations in the market. Though the challenges may not be similar for financial institutions, which have different competitive advantages than MNOs, the rule of thumb is to devote sufficient time and effort to build a solid strategic foundation right in the beginning during the ‘Launchpad Stage’ before propelling into the ‘Lift-Off’ stage.
Women agents provide great customer service. They are more attentive, helpful, diligent, and effective at building trust. They are also better at on-boarding women and other underserved populations than their male counterparts. These are often cited conclusions from a series of qualitative studies in India, Zambia, and other markets across Asia and Africa. At the same time, we still lack the hard data to inform the business case for women agents and implement any adjustments to agent network management strategies for this segment.
The Helix Institute of Digital Finance has conducted nationally representative Agent Network Accelerator (ANA) surveys of mobile money agents in eight leading DFS markets. This blog draws on this rich source of data to answer the following questions: How well are women represented in agent networks? How do they compare to male agents? What specific constraints do they face? How can providers ensure that women agents succeed, as the qualitative research would suggest?
Women are Severely Underrepresented in South Asia
The contrast between female representation in Africa and South Asia is striking (Figure 1). The absence of women from agent networks in South Asia stems from cultural barriers and socio-economic constraints. Women have limited access to public spaces, identification documents, bank accounts, mobile phones, and economic activity more generally.
While women in Africa also face socio-economic barriers, they are better represented in agent networks in Kenya, Uganda, Tanzania, Zambia and Senegal. They are just as educated as their male peers and are similarly distributed across rural and urban areas. They also largely serve the same providers and run similar parallel businesses, such as general stores and airtime retails. However, women have fewer years of experience as agents, indicating that they entered the DFS markets later than men. Moreover, a much lower proportion of women agents own the mobile money business (Figure 2).
Why do Few Women Own Mobile Money Businesses in Africa?
Institutionalised gender constraints help explain low female ownership rates of DFS businesses. Women across markets are less likely to have an account at a formal financial institution. They constitute a mere 24% of formal SMEs owners in Sub-Saharan Africa. Meanwhile, providers’ agent selection criteria often include having a bank account, a registered business as well as a minimum capital requirement. For this reason, operating largely in the informal sector, with low start-up capital, little collateral, and limited access to finance makes it difficult for women to fit providers’ desired agent profile. As a result, few women-owned businesses are recruited as agents.
Figure 2. Percentage of Agents Who Own the DFS Business
Women’s Constraints in East African Wallet Markets
ANA data shows that in Senegal and Zambia, agents conduct similar business volumes, regardless of gender. However, in East African wallet-based markets (EAC), women perform on average four to five (9-17%) less daily transactions than men, irrespective of whether they own or operate the DFS business. This translates into lower revenues for their businesses. While further research is needed to better understand all the factors that explain women’s lower business volumes, our data can offer a few explanations:
Although women manage their liquidity needs (e-float/cash) just as well*, if not better than men do, they have less working capital to conduct transactions. On any given day, women report holding 10-30% less cash and e-float across three EAC markets.
Women generally work fewer hours compared to men, though this gap varies between 3 and 7 hours per week across markets (4-9% of men’s operating hours). Shorter operating hours mean foregone business.
Although they are just as likely to receive initial training as men, a greater proportion of women are trained by their employers or master agents. This may have implications for the quality and depth of the material covered and the resulting agent performance.
Women are less likely to offer account opening/activation services, which affects the overall transaction volume and may hinder their ability to build a customer base.
Building the Business Case: What are the Opportunities?
Our analysis reveals that in Africa, women agents face serious structural constraints, hindering their success in the DFS business. If women are indeed better at customer interactions – particularly with late adopters and female customers, who are the next frontier of mobile money adoption, – then providers should consider proactively investing in the female segment of their network.
Experience shows that when providers pay attention and adoptprogressive and innovative agent models tailored to women, female agentssucceed. In Tanzania, where women owners report working with similar (91%) capital as men, they conduct just as many daily transactions. Similarly, in Zambia, where the front runner Zoona has focused on agents as their primary customers, providing credit facilities and high quality training, women agents also perform on par with men (39 and 35 daily transactions, respectively).
We recommend that first and foremost, providers invest in better understanding this segment of their agent network as it will become increasingly crucial for further business expansion. Challenges discussed in this blog – lack of capital, lower quality training and customer enrolment rates – could serve as a starting point.
In South Asia, providers will also need to think of creative ways that are culturally appropriate to integrate women into their networks, if they are to grow their female customer base. A follow up blog will delve deeper into these issues and constraints for the benefit of South Asia.
*Based on both the reported number and percentage of transactions denied every day due to lack of float.
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When it comes to fraud in digital financial services (DFS), stories from Uganda will surely arise: be it the infamous case of 
Fraud is one of the major threats to the emergence and sustainability of the DFS ecosystem. Uganda’s DFS market has long been 
Who should be involved?
Women agents provide great customer service. They are more attentive, helpful, diligent, and effective at building trust. They are also better at on-boarding women and other underserved populations than their male counterparts. These are often cited conclusions from a series of qualitative studies in 
