The Hon’ble Prime Minister of India launched ambitious Pradhan Mantri Jan Dhan Yojana (PMJDY) on August 28, 2014 with an objective to ensure at least one active bank account per family. MicroSave and the Bill & Melinda Gates Foundation designed a survey to track the progress of Pradhan Mantri Jan Dhan Yojana (PMJDY) with focus on the presence and performance on Bank Mitrs (BMs). Till now two rounds have been conducted. Situation with regards to availability of BMs on ground has definitely improved, however for how long they will remain active in absence of attractive remuneration and support from banks/BCNMs, is doubtful. We recommend steps such as development of standard training module for BMs, ensuring monitoring and capacity building support from banks/BCNMs, ensuring minimum commission of Rs. 5,000/month and roll out of additional products through BM network.
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The “I don’t have enough float” quandary!
Ugali is cornmeal porridge and a staple of the Kenyan diet; it is as Kenyan as M-PESA. Last time my mother was making it, she ran out of cooking gas and texted me frantically to send her money so she could buy gas and finish cooking dinner before it got soggy. I ran to the M-PESA agent near my office, but they did not have a float, and then ran frantically from agent to agent trying to buy float, until the ugali had long become non-edible. If you ask any Kenyan they can tell you their own harrowing tale (some much less funny) about trying to conduct a transaction with an agent that was unwilling to and recent research like the Intermedia Kenya Wave 1 FII Tracker Survey on the customer experience with digital finance agents and The Helix Institute’s Agent Network Accelerator Survey – Kenya Country Report (2013) highlight this as among the top three issues hindering transactions.
Agents without float are perennially frustrating for providers who are constantly making new partnerships and products to bring the amount of time needed and cost incurred in rebalancing down. The Helix Institute research from across East Africa shows that agents report that rebalancing is fairly quick and easy, so the question remains, what is prohibiting agents from carrying more optimal levels of float? Given my personal frustration and the mounting evidence of this as a systematic issue, I set out to interview 50 agents in Kenya as to what was causing this problem.
Some of the answers are quite surprising and necessitate using a behavioral science lens to better understand how agents are thinking about profit maximization with agents around them, over time, and by the customer. In fact, in some instances, the agent actually has a float and is refusing to do the transaction for other reasons. Understanding these mental frameworks will help providers to better address the quality of customer service their agent networks are providing.
Agent transactional revenue honing
Some M-PESA agents choose to target the maximum revenues per transaction instead of the more prudent strategy of maximizing profits over time. The amount of revenue earned is based on the value of the transaction conducted. Values are arranged in tiers so that all values in that tier yield the same amount of revenue. Hence, agents only agree to conduct deposit transactions closest to the tier’s lower limits, informing a customer that that is the maximum amount of e-float they have to transact. For instance, an agent speaking about the value tier from Ksh.3,501 to an upper limit of Ksh.5,000 explained:
“….to me, it doesn’t matter, whether the customer wants to deposit Ksh.3,501, Ksh.4,000 or Ksh.5,000. I will only deposit Ksh.3,550 because it is the least amount and which will earn me the same Ksh. 14 commission, as that which I would have earned; if I were to do the Ksh.5,000 deposit … so then I have to save some float for more transactions later….”
Most customers are then left to abide by the amounts quoted by the agents and not fully accessing deposit services that address their needs. Depending on the customer needs, some opt to search for other agents while others end up splitting their deposit transactions through multiple agents. Providers need to better communicate to agents the effects of focusing on revenue maximization per transaction as customers are inconvenienced by the resulting limitations on access to e-float, and makes them prone to completely losing their customers in the long run.
Agent default stickiness
There are other agents who opt not to increase the float they hold despite the growth in the demand for digital finance transactions over time. While it may seem simple to decide to invest more in a business that is noticeably growing, the truth is it is not. The proprietor must weigh increasing float vs. all the other investment opportunities they have in the other products in their store. Even if they did decide float was a prudent investment, how much more should they buy and how might that affect the risk of getting defrauded? These fundamental decisions can be complex enough to drive agents to just stick with their default amount – the original amount required by the provider to start their agency business. In which case, agents report rationing the float they have for their most loyal customers. Meaning they will reserve float for regular customers, and deny transactions even when they have the float to make them.
To address this, providers or master agents may push such agents to grow by automatically increasing the default. There could be percentage growth mandates for agents with clearly defined timelines for instance 20% growth every year, which would aid in determining the progressive defaults over time. Agents also need to be more knowledgeable about risk mitigation and risk reporting to reduce their concerns about facing risk or fraud.
Agent transaction pooling
While some agents opt to maximize revenue by the transaction, others try to limit volatility in their earnings by forming groups with other agents and pooling their risk. Group members help each other by lending each other small amounts of money to make change for customers, referring customers to each other, and where all the group members are under one master agent, the agents take turns going to the bank branch for rebalancing.
The group support also extends to slow days, when specific agents are not doing many transactions. They will communicate it to the group, and other members, even when they have a float, will turn away customers, directing them to the agent needing more transactions that day. This helps ensure that revenues are more reliable on a daily basis for everyone in the group. It also makes sense, since it will mean agents will be much more likely to have in sync needs for rebalancing, which they benefit from doing together as well. Providers must recognize this need for predictable revenue streams, and the gains agents experience from pooling the work of rebalancing, and provide superior solutions for them, or risk having this system persist.
Addressing agents’ mental frameworks
The above are just initial insights, and so while these trends were clearly observed, we are still unclear of the prevalence of them on a national scale. These practices indicate a clear disconnect between the mental frameworks of providers who are trying to facilitate rebalancing and agents who have a float and are still denying transactions. Probably the scariest realization here is providers cannot see these problems on their virtual dashboards, because the agents actually have a float, they are just not always willing to use it, and therefore customer service will continue to suffer. These issues highlight the importance of regular agent monitoring and research techniques like mystery shopping that will give better data on the prevalence of these issues, and cost-effective solutions to address them.
Helix FI2020 Webinar – Digital Financial Services: Opportunities for MFIs
Well, there are four basic paradigms MFIs can use to effectively go digital:
- Buy a platform and become a provider.
- Act as an agent / agent network manager for an e-money issuer (usually a bank or an MNO).
- Leverage an established digital financial system to deliver its own products and services.
- Limit its engagement to leveraging telecom networks for information sharing.
The Helix Institute hosted a webinar exploring the opportunities abound for microfinance institutions in digital finance during the FI2020 Week event. This event was part of a week of global conversation exploring the most important steps to achieving full financial inclusion which will include partners from around the world participating in order to advance financial inclusion.
Click the download button to read the report in full.
Embracing A Market-led Approach To Developing Product Concepts
According to the World Bank’s Global Financial Inclusion Database, more than 2.5 billion adults do not have an account at a financial institution. Among the many factors that are responsible for this high level of financial exclusion, poor design of financial products is key.
Why, then, is it so difficult to design financial services for the poor?
Unlike populations who receive predictable incomes into their bank accounts, poor people’s financial flows are far more complicated. There are multiple contextual elements – scarcity of income, lack of buffers (emergency funds), inadequacy of information, inaccessibility to financial services, and uncertain cash flows. Equally difficult to understand is the poor’s choice of financial services such as apparently extortionate Bombay 5-6s or in-kind savings, or village level ROSCAs. Then how does one approach financial product development for the poor?
MicroSave’s guidestar – market-led solutions for financial services – has helped us develop product concepts that are now used by millions of poor people across the globe. In this blog post, we reveal the secrets of how this mantra of a “market-led approach” actually works.
Secret 1: Significance of understanding the “market”
A key differentiator of our approach is the premise that the market involves both financial service providers and their customers. A product will succeed only when a provider’s strategic vision and institutional capacity are aligned with the product ideas emerging from market research. Although this may sound obvious and basic, this fact differentiates success from failure. A provider may conceive a fantastic, ‘out of the box’ product idea, but whether it will be developed and/or implemented successfully depends on the provider’s intent and capabilities as well as business environment. CGAPs’ Insight into Action, which documents their experiences in using Human Centred Design to develop product concepts, reports that many product ideas could not actually be implemented either because of lack of buy-in from departments of providers – Bancomer in Mexico, or for other pressing needs of provider – MTN Uganda. The No-Frills-Accounts offered by multiple banks in India are a similar story. The Government focussed on addressing only one challenge faced by the financially excluded population – an extremely complicated account opening process. They overlooked many aspirations of these people from a bank account, that is – quicker services at branches, access to information on banking services, respect associated with a bank account, etc. The product design also ignored the capacities of the banks and the aspect of motivation of the staff who were to offer this product.
Of course, the starting point for a product concept is the basic understanding of existing behaviour. While talking to customers of a leading bank in Kenya on a savings product concept, a key insight was that a ‘lock-in feature for a fixed period’ was actually desirable and could encourage their discipline to save.
Understanding market insights does not always lead to ‘successful’ product design unless service providers strategically align themselves to the product concept and are thus ready, willing and capable to deliver the product. In Nepal, many practitioners embraced digital financial products and created agent networks. Agents began to offer banking products but there were not many adopters. The providers had assumed that customers wanted to use formal financial services and that agents would solve the problem of inaccessibility to these services. This was a correct supposition, but there was more to it. People did indeed want access to formal financial services, but not at the cost of convenience. Opening an account required at least four visits to agent outlets – as a result, very few people transitioned from village level cooperatives and most agents remained unused. In this case, the service providers did not have the capabilities to develop and support a network of agents robust enough to service targeted customers. (See also Lessons from emerging markets, Why robust agent network is crucial, How agent networks fuel M-PESA’s success).
While developing product concepts with a dozen banks in east and southern Africa (2001-2006), MicroSave documented the importance of strategic planning and the need to ensure buy-in from all departments. Strategic planning helps to manage the growth process and build systems so that a product concept does not face any unnecessary challenges. For example when Teba Bank upgraded their banking system, they found that customisation took longer than anticipated. Worse still, as banking systems fill to capacity, they slow down – each transaction takes longer. Ensuring buy-in from all departments helps to avoid problems with legal, regulatory, audit and IT systems; as well as to reduce the risk of “product orphans” by ensuring that the departments that must roll the product out are involved from the beginning. (More lessons from MicroSave’s Action Research Programme – 2002, 2003, and 2006).
Secret 2: Participatory creation and refinement of concepts through testing
Understanding the market gives researchers multiple ideas for product concepts. While some of these ideas evolve in the field, some are discovered in participative concept distillation workshops.
In the example from Kenya above, we knew that we needed to build in a contextual factor that would curb the temptation to spend. We took the market insight to the concept distillation workshop. We encouraged bank staff to think about how the bank could induce self-disciplinary saving behaviour amongst its clients. In the light of this understanding of the market, various ideas generated in the workshop suggested a savings product that committed the customer to a goal, a specific amount of regular savings to achieve it, and a lock-in period to avoid premature encashment. However, this was just the starting point. We needed to understand what clients actually thought about it.
In a market-led product development process, understanding customer need is not a one-off activity. It is a continuous process where product concepts are developed, tested and modified through a series of iterations. The objective and scale of each iteration may vary. While the first phase essentially focuses on understanding the behaviour of existing and prospective customers, in the later phases we evaluate whether the product concept will be able to bring about the behaviour change that the service provider expects from the new/modified product. This process helps optimise the product’s value proposition for users. The result of this exercise is a product concept that works – M-PESA provides an excellent example of this. The initial idea (developed without market research) was wrong – for both the clients as well as the microfinance institution. However, the process of concept-testing made way for the re-invention of the product – right down to the processes and marketing/communication around it. Testing continues throughout the journey of product development. It starts at a conceptual level and continues until the development of systems and processes.
In Kenya, we tested the idea of commitment savings at various levels (customers and staff) and stages of development – from on-paper concept to soft launch. During all the testing, we focussed on assessing clients’ attitudes, perceptions and behaviour towards the adoption of these products, identifying the key risks involved, and testing the processes, technology and operational activities. The result of this exercise led to the development of a successful savings product that we now know as Jijenge product offered by Equity Bank.
Secret 3: Focus on 8Ps
Product design, pricing, people, process, place, physical evidence, promotion, positioning – collectively the “8Ps of marketing” is all about focusing on the details and can be used in various contexts – 8Ps for DFS, 8Ps for savings, 8Ps for marketing. At any stage of product concept development, attention to the 8Ps keeps product design experts focused on all of the elements they need to elucidate and develop. If these details are not well thought through, recorded, and shared with the team, there are high chances that many crucial aspects might be missed or overlooked while a product is tested. In our journey to develop the refined version of Jijenge in 2012, formulation of 8Ps indicated that the product would also be launched on the digital Eazy 247 platform. The product development team knew this and subsequently modified the Eazy247 platform to incorporate Jijenge. The market research also provided insights into the optimal channel and messaging for the promotion of the product. Adoption of the 8Ps-based approach ensures that product development team members will also initiate activities to market/communicate the product. The 8Ps framework implies that all aspects of the product are examined in an integrated manner and everybody in the team is on the same page.
MicroSave has developed more than 200 products for a wide range of banking, digital financial service provider, MSME, microfinance and third party aggregator clients for nearly 20 years. We can confidently say that there are no magic formulae for designing financial products for poor people. Success lies in following a careful and systematic product development process. This process starts with market insights through rigorous market research (remember market = customers and providers); a participative approach to concept development and iterative testing of the concepts to final rollout; and attention to all the 8Ps.
The Bricks and Mortar of Agent Networks: Training and Support in India
While the first blog in this series explained how Indian Government mandates have determined the current character of the digital finance services (DFS) market in India, this blog is more forward looking, focusing on addressing issues of agent training and support. The 2015 ANA India data shows that these are areas where providers are struggling, and are therefore also opportunities for creating competitive advantages as new players enter the market.
The government has recently licensed payment banks, which will hopefully bring more aggressive competition to the DFS space in India, driving usage for customers and profitability for agents. However, payment banks must ensure they build their offerings on a solid foundation and that means focusing on the bricks and mortar of the agent network from the beginning. This blog provides advice for where these payment banks and existing providers should focus, so they can ensure a solid foundation for scaling their roll-out in the future.
Agent Training
Support metrics are among the lowest in India compared with other ANA research countries. For instance, only 59% of agents received training in India compared to 92% in Kenya and 68% in Bangladesh (Figure 1). Training is important so that agents can provide a consistent, high quality customer experience, and in certain cases also help with sales of accounts and new products, as explained in this video interview “Why Is Agent Training So Important?”
The Helix Institute in partnership with the Harvard Business School conducted econometric analysis, and found that agents who are more knowledgeable about mobile money policies experience a significantly higher transaction demand than their less knowledgeable peers. Knowledgeable agents are a product of careful selection, followed-up by high quality, targeted, and repetitive training. The study also found that these well informed agents experience an even greater increase in demand when there are competing agents nearby. The findings suggest that expertise is a dimension upon which mobile money agents compete and indicate that service quality is critical to a healthy agency.
Monitoring and Support Visits
Regardless of how good the training is, issues will still arise in the field and providers need to support agents through regular visits and a call centre. Support visits are important to ensure agents are well informed, can provide a high quality of service, and help build agent loyalty to the brand. Support visits can also be used to collect important business intelligence from the field.
However, only slightly more than half of Indian agents (58%) reported receiving regular support visits –again lower than other ANA countries like Kenya (86%) and Bangladesh (69%), as demonstrated in Figure 2. This means that providers are blind to many aspects of how their agents appear and operate, as well as what competitors are doing in the area. Extending regular visits to a higher proportion of agents will give providers higher quality of service, happier agents, and the ability to adapt strategy faster than their competition.
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Support can also come in the form of immediate assistance via a call centre. At present, the evidence indicates low awareness and usage of this facility—only 59% of agents are aware that there is a call center, and those that do know, only call it a median of two times a month. Again, these metrics are significantly lower than other countries. Agents further report that, “dealing with customer service when something goes wrong” is the biggest challenge they face as an agent. The first step will be to increase agent awareness of this support option, and the second will be to encourage them to call in, by giving them immediate answers to the problems they face. This is also an opportunity for collecting business intelligence, which will help improve the service offering, given the system developed is sophisticated enough to detect trends in the issues agents are having.
Marketing and Communications
On the customer side, data from the Indian Government (PMJDY) and Intermedia (2014) shows that up to half of the bank accounts opened by Indian agents are not active, meaning that the extension of access that the government drove has still not translated into efficient usage of these systems. Further, InterMedia (2014) also shows only 0.03% of adults are using a mobile wallet, and only 13% are aware of mobile money. This is consistent with the agent perspective as they rank the lack of customer awareness around DFS products as the numberone barrier to conducting more transactions. A little over half of agents (52%) also don’t think their providers’ marketing has helped generate awareness of DFS products among consumers.
Research conducted by MicroSave indicated that marketing support from providers was often limited and only amounted to giving agents some marketing collateral. Above the line (ATL) and below the line (BTL) marketing is expensive, but unless providers invest in it, customers will not use the systems and agents will be left without the business they need to drive profits for their business. Scaling agent networks must be sequenced to carefully balance new customers with new agents, so a sustainable ratio between the two is kept, as explained in this HelixInstitute video.
Agents are the bricks and mortar of a DFS business. With payment banks designing their strategies for building their agent networks, they must also ensure they get the operations right of putting high quality agents in the market, supporting them effectively, and playing their part in seeding the demand they need to earn a decent revenue. Providers who focus on these factors will be able to create a competitive advantage with those currently in operation, and help create a better paradigm for moving the country forward into digital finance.
Making Digital Financial Services Relevant – Part 3
Some Design Ideas and Principles to Make Digital Financial Services Relevant
Across the globe, there is an exponential growth in the adoption of technology and digital tools. Technology enabled advancements including smartphones, social media adoption and data usage are increasingly penetrating the mass market, in India as elsewhere. This is further accentuated by the ever-declining costs of smartphones and data prices. Given the limited bank infrastructure available in developing countries, embracing digital provides a huge opportunity to improve financial access for the mass market.
We believe that increase in smartphone penetration will be a significant game changer in the financial inclusion landscape. Smartphones offer flexible, user-friendly interfaces with graphical icons, touch screens and soft keys which facilitate intuitive usage; provide extensibility through NFC/Bluetooth to link up smartphones to scanners, printers, card readers, POS etc.; and offer low incremental communication cost through data plans. For service providers, it offers an opportunity to be independent of telecom organizations and enable more efficient ways of data capture, providing for richer, more frequent customer interactions.
There are lessons from the digital world and the explosion of broader Internet trends which we think largely apply to the financial services industry as well.
- Digital market places and match-making applications are increasingly substituting intermediaries (e.g.: Uber). For example, financial institutions can think beyond promoting the institution’s own products and services to evolving into digital marketplaces where products and services from a variety of service providers are available and peer-to peer-transactions are facilitated.
- Social networks are increasingly digitized and service providers are beginning to tap into these digital networks to promote adoption and usage of their products and services. For instance, social networks could be used to understand a person’s financial capabilities and to enable social guarantees for access to credit.
- User-generated content is increasing the interactivity of people with products and services they use (e.g.: liking). People need products and services that can be customised to their needs by themselves to suit their context.
While there seems to be a sizeable opportunity to leverage these new developments to further the goal of increasing financial access, not many service providers have started exploring this yet. Most service providers have focussed on developing solutions catering to the low hanging fruit (e.g.: domestic remittances, bill payments, online purchases) which largely focus on the higher-middle income customers. Service providers have focussed on specific anchor products like domestic remittances or airtime top-ups which are not necessarily central to, or sufficiently transformative to the daily financial lives of people.
None of the current wallet issuers have yet developed solutions which appeal to the mass market. A good example is mobile money accounts in India. Intermedia, in its report on financial inclusion in India dated July 2015, estimates that only 0.2% of Indians use a mobile money account. This is despite heavy marketing and promotion efforts by service providers.
Key Principles to Follow While Catering to the Mass Market
People think about money in an instinctive, story-based manner and transact in the physical world primarily using informal systems. Financial inclusion is normally believed to imply a double shift: towards a more deliberate and quantifiable way of thinking about money as well as to the execution of transactions through digital channels using formal mechanisms.
Too often, the approach is to seek to move people on both fronts at the same time – to seek to adjust their mental models that guide how they think about money and to influence the tools they use by providing direct access to digital channels and formal systems. Often, providers seek to nudge changes in behaviour first through financial education campaigns, with the hope that this will then drive adoption of formal services and digital channels. However, teaching people to do something new, especially when they are not well educated and are hard to reach, is not always feasible or ideal. A better approach might be to support current behaviour and practices and let the new tool take them to new behaviours and practices.
An interesting alternative approach is to let people continue with their behaviour and practices in essence and let them apply their mental models digitally. Various aspects on this have been covered in Part 1 and Part 2 of our earlier blogs in this series. The focus is not on customer education. Intuition and customer perspective will be stepping stones in enabling financial inclusion.
Key shifts are needed in the way we think about financial access.
- Intuitive, not simple: Providers should not be setting out to do simple things. The aim should be to do things that are intuitive and cater to ways in which people already think about money.
- No moral stances: There should be no moral positions on whether people should save or not save or on how much they should save. The objective is not to help people save, but to help people to be more deliberate about how they go about preparing for future payments and purchases. Savings, in the minds of poor people, often stands for money which is not spoken of and therefore is vulnerable to being spent. Helping them with future purchases or payments resonates much better with their thought process than helping them save.
- Managing money gaps, not money: The objective should not be about helping people manage money which they already have. The objective should be about helping them manage income gaps.
- Organising money, not budgeting: Budgets and goals do not resonate well for the low income groups since a budget presupposes a regularity of income, which does not exist in the mass market. The classifications need to be fuzzier for people to be able to relate.
- Supporting full transaction cycles: More than facilitating instant action and views, the objective should be to be able to support full transaction cycles. For example, the priority should be to offer a person tools that can help him accumulate balances to pay school fees, not just the action of paying the school fee. The focus is not on e-payments (for e.g.: remittances, bill payments) but on e-money and providing people the means to manage it.
- Marketing tools, not products: The objective is not to provide digital products. The aim is to help provide poor people tools which they can use themselves to better manage their money. The tools should have a minimum number of functionalities and they should help facilitate the largest number of use cases. The focus is on co-creation of use cases.
- A continuum between informal and formal financial services: The tools should act as a bridge between informal practices which they already employ and formal financial services. The objective should be about enhancing the experience of current practices and not dropping what people already do.
Service providers should try to support the ways in which people deal with money in their daily lives in order to facilitate management of money through digital channels and technology. They should consider developing tools which will help people organise their money in their own way, which may not be numerical, concrete or complete. However, a person using these tools should be able to replicate his own ways of thinking about money on a digital platform. Tools should give a sense of control to the users – of empowerment, even if using them doesn’t give better financial outcomes.
Digitising information as well as money should be a key goal. The objective is to constructively use the available information on social behaviour and transaction behaviour to optimise the financial status of people. People ought to feel that they can make decisions on their own or by utilising their social relationships, instead of highly structured products and services. They should be able to assign attributes and characteristics on their own to their financial transactions.
Tools should consider ways in which people separate money, recognise that people worry as much about income as expenditures, and incorporate social aspects of regular money management. Tools should be relevant for more people. The desired result should be to get more people to do more things, more often through digital channels.
Building Relevance of the Stored Value Functionality
While nearly all Digital Financial Services (DFS) deployments (except for OTC services) have a default stored value function in their wallets, the usage of these as stored value instruments are minimal, the evidence for which is the negligibly low value of balances maintained in them.
The stored value functionality should be rehabilitated for ‘financial inclusion’ to be truly achieved. It is also a vital component to ensure business viability for financial inclusion. A well-functioning stored value functionality would encourage more savings and wallets being used for short term financial management by customers. These, in turn will drive more insights for expanding the value proposition as well as credit scoring and help drive merchant payments. Usage of digital value for merchant payments will also reduce the need for an intensive presence of cash-in/cash-out agent networks. Utilising customer insights for expanding value propositions, credit scoring, merchant payments, and better operational efficiency entailed by reducing the dependence on cash-in/cash-out networks will in turn drive the business case for service providers. Stored value functionality will be the critical gear to enable bigger payments being driven through digital money, besides facilitating credit through digital channels by generating enough history on which various algorithms can be built.
For the stored value functionality to make sense for the mass market, it is essential to revisit the concept of discipline discussed in part-2 of the blog series. It needs to facilitate discipline-in, discipline-out, as well as flexibility – all at the same time.
In a digital environment, discipline-in can be enabled by prods like reminders, prompts, and rules. These can be applied at several points, for example, at the time of receipt of income, or when there is idle money. Pre-defined rules can also facilitate assignment of money to specific buckets defined by the customers themselves.
Discipline-out can be reinforced with locks such as a waiting period, indivisibility, peer pressure, etc. Another way to ensure discipline-out is through labelling, based on parameters such as origin of the money, purpose, etc. Labels can be applied on several dimensions, including time, social relationships and networks, location, or the task/purpose of money.
Along with discipline-in/out, there also needs to be flexibility to break discipline, or provide outs, if there is an emergency requirement. One of the ways this can be achieved is by replicating mechanisms like money guards where customers can keep money with a trusted and respected member of their social circle, so that they can ask the member for the money in case of an emergency, but not for routine or unnecessary spending.
The stored value functionality needs to provide tools which are intuitively suggestive of purpose, even if the purpose is fuzzy or changing. The terms of use also need to be intuitively clear to the user; i.e. how do the prods, locks and outs work.
Catering to People’s Coping Mechanisms
For digital solutions to be useful for the mass market, they should be a digital extension of the real life coping mechanisms that people use. In effect, this would entail creation of a hyper reality using digital tools.
Animating money can be replicated through gaming dynamics, liquidity farming can be replicated by leveraging social networks, and income shaping can be facilitated by tasking and calendaring. The figure provides some ideas on what digitising some of these coping mechanisms might look like.
The attempt should be to provide access to tools which help people implement these coping mechanisms on their own terms. This can be enabled through purpose buckets, time locks or indivisibility (limiting the ability to move a part of the money assigned to a particular money class) locks. Meaning can be attached to money through a variety of audio-visual cues, class of money (based on the purpose and/or the source of income), and through liquidity restrictions.
Concluding Thoughts
The ideas presented here are indicative, not prescriptive. We need to be cognizant of the fact that money organisation in people’s minds is not always explicit in their mind, it is fuzzy, abstract and changing. People organise their money matters in a way that helps them make small, daily decisions easily.
We feel that the key organising parameters in the visual expression of the solution relate directly with the basic Internet functionalities; they are:
- Gaps (Tasks)
- Geography (Maps)
- Time (Calendar)
- Relationships (Contacts, Social networking)
But maybe they shouldn’t exist in such an explicitly structured way. May be a scrapbook approach, where one has to find particular pockets of money, may work better. This may make it easier for people to maintain fuzziness, when they are not ready to concretise their goal.
It might be nice to help the visualisation with basic smartphone capabilities like, motions, music, image, colours, etc.
Before we wind up, let us reiterate that in designing a solution, you may not want to jump directly to the products (RD, FD, Instant loans, etc.). Think first of the coping mechanisms (Animate Money, Liquidity Farming, and Income Shaping) that your customers will apply mentally, and then think of the tools through which they will act on those coping mechanisms to devise their own suite of products.