Suraj is an illiterate migrant from Muzzafarpur (Bihar) who works at a construction site in Delhi. He has recently opened a mobile wallet with a leading mobile network operator (MNO) in India. When we met him, his primary concern was – “How would I use my (mobile money) account, when I don’t even know where to find the required service?”
Users like Suraj represent the target customer group for mobile wallet service providers. One of the common attributes of this user group is the inability to use mobile money services on their own. This necessitates mediation from a family member or an agent to conduct a transaction. The most quoted reason for facilitation is the difficulty faced in “locating” various service offerings.
The user interface (UI) plays a vital role in facilitating usability and enhancing user experience. Globally, mobile money service providers offer different access channels such as mobile application, internet, unstructured supplementary service data (USSD), interactive voice response (IVR) and SIM toolkit (STK). MicroSave came up with a comparative analysis of some of the commonly used access channels, please see the image below for details.
The choice of a particular access channel is dependent on various factors such as technology requirements, handset capabilities, cost of use, security concerns, ease of use etc.
USSD menus can be broadly categorised as bundled and unbundled. Generally, a bundled menu, with limited options in main menu, requires more navigation for exploring sub-menu options (see figure 2).
An unbundled menu, on the other hand, has a detailed/long list of options in the main menu itself. Here, the extent of navigation is reduced as there are limited sub-menu options. While navigating through the USSD user interface of various mobile money providers, it can be seen that both the types of menus (with varying degree) are prevalent in India.
MicroSave conducted the costing study with 4 BCNMs in India. This report discusses key findings related to the costs incurred per transaction by different stakeholders (including banks, BCNMs and BCAs) in facilitating branchless banking transactions. Findings from this study will help policy developers and other stakeholders devise a sustainable delivery model to offer financial services to the financially underserved population in India.
In our last blog we presented an analysis of the 11 players that have received the “in principle” approval from Reserve Bank of India to operate the payments banks. None of the Over the Counter (OTC) remittance players got the license which surprised many in the payments and financial inclusion arena. This blog talks about a major upheaval in the OTC market post the announcement of the payments bank licenses.
While conducting OTC transactions the sender does not need to have a wallet or a bank account as these transactions are agent initiated. The sender hands over the cash to the agent, the agent debits his account/wallet and credits the receiver’s bank account. MicroSave has debated about OTC being a traphere, here and here. But, the fact is that the remittance business in India is huge and largely dominated by OTC service providers who either have a Pre-paid Instrument (PPI) license or are a business correspondent (BC) of a bank.
In the OTC business the end customer is normally oblivious (unless the agent is exclusive) to the service provider used to remit his/her money and the actual transaction fee. It is the agent who gets to choose the service provider to remit customer’s money. This autonomy of the agent stems from the fact that the service providers always find it difficult to own the customers hence they focus on agents to service the customers. In the current state of remittance business where exclusivity of the agent is becoming extinct and one agent is being acquired by 5-6 service providers, it is not an exaggeration to say that, “The Agent is the King”.
So what factors trigger the agents’ decision to choose a particular provider? The recent field studies conducted by MicroSave in the immensely competitive remittance market of Indian metro cities suggest that agent commission is the main trigger. The agents have access to multiple service providers and for obvious reasons, prefer the highest paying service providers. There are a few exceptions wherein service and operational support are placed ahead of pricing as triggers. But, all this has changed with the midnight stroke of clock on August 31st 2015. We can now see a new paradigm of strategic co-opetition (co-operation with competition) in which all the major PPI players, that collectively control a majority market share of remittance business, have joined hands and reached to an agreement to extend universal pricing for OTC transactions.
This agreement essentially means that all the service providers charge the agent with a standard rate as agreed. So agent commission is not a decision trigger anymore.
With this change in place few areas that the service providers will have to delve deeper and with more seriousness than ever before are:
Technology: The service providers will have to rework their front end and back end technologies to make it flawless. Service uptime needs to come at an acceptable level, applications need to scale up to avoid any time out, the user interface of the portals will have to be simplified, and the processes for mandatory fields need to be more intuitive with minimum information for faster and effortless flow. As agents say, ROTI (Return on Time Invested) must go up.
Operational support: Agents would gravitate towards service providers that provide excellent operational support by proactive communication. Reactive approach towards grievance handling will fall way behind the proactive approach in the race of winning agent’s trust. Service providers will have to define aggressive TAT (turn-around-time) for grievance redressal and will have to ensure that the timelines are strictly adhered too. Similarly, marketing and promotional support will be of more importance than ever.
All these factors were equally important for building a sustainable business but the market perhaps favoured better pricing. Now with universal pricing, these factors will drive the business and differentiate one service from another.
The revised universal pricing, as it stands today, would translate into increased margin for most of the service providers. The service providers may also like to invest this surplus to create better experience for their partners and achieve competitive edge. The service providers will need to continuously innovate to sustain the edge.
Some of the players who are party to the mutual agreement of having universal pricing will surely have business implications in the shorter run. This is because, with a uniform pricing structure in place, their agents will now earn substantially less (20-50%) per transaction. It will be interesting to see how these service providers handle the uproar from the agents.
The feelers from the market tell us that the agents are already anticipating other incentive schemes to keep them motivated despite the universal pricing. The other implication could be higher prices for the customers till competition comes in.
Two facts force us to think that this agreement is a ripple effect of the payments bank licenses. First- almost all of the service providers who have agreed to have a universal pricing structure, failed to get payments bank license. Second is the timing of this agreement which comes in only days after the payments bank licences were announced. Only time will tell whether is it really the effect of payments bank licences or not, but for sure the way of working of service providers is up for an overhaul.
The other open question is whether it is a step in price discovery for remittance business in India? Or it is beyond this wherein we can see co-opetition from various players in payment industry.
Keep reading, we will bring more insights into the rapidly changing payment market in India with a variety of players.
Alalay sa Kaunlaran, Inc. (ASKI), a Philippine microfinance institution (MFI) and staunch advocate of Social Performance Management, embarked on a project ‘Towards SPM Excellence’ with Opportunity International Australia and MicroSave to strengthen its capacity to use social performance information in decision making and thereby intensify its accountability to the mission. In 2014, ASKI received technical assistance and embarked on translating its mission and social goals into social objectives with a set of SP indicators and targets.
The tireless efforts of ASKI in bring in mission driven Social Performance Management within the organization, culminated into receipt of Smart Campaign Client Protection Certification in July this year (2015). This is a result of intense collaboration between different departments at ASKI which was further fortified by the technical assistance which it received from MicroSave and OIA.
This case study traces ASKI’s one-year journey to strengthen its capacity to track and report on its progress to attain its mission. In particular, it documents the capacity-building process and highlights initial lessons from concerted efforts at making relevant SP data available and widely used in decision-making within the organisation.
Based on over 2,600 mobile money agent interviews carried out in 2015, the survey report highlights findings on the mobile money agent landscape in India covering agent profitability, transaction volumes, liquidity management and other important strategic considerations. The report highlights that agent networks in India are still at a nascent stage and differ from most other ANA studied countries in that their proliferation has been driven primarily by government policy (as opposed to business considerations). This has led to an extremely high proportion of agents in rural areas, many of whom conduct transactions for government programs like Pradhan Mantri Jan Dhan Yojana (PMJDY)– a government program with the goal to provide all households in the country with banking facilities by January 26, 2015.
In the month of May 2015, Government of India launched its flagship Jansuraksha insurance schemes which in its first 3.5 months, reached an impressive scale of 109million policies. While the government is celebrating the largest global success (in terms of outreach) of a contribution driven insurance programme, there is criticism around uniqueness and continuity policy for the schemes. In this Policy Brief, we analyse the performance trends of the three Jansuraksha insurance products (Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojana). We trace the similarities and uniqueness of the schemes with their social insurance predecessors and comment on how the schemes are a departure from the hitherto subsidy driven social insurance / social security schemes. In the second section, we have analysed the current and potential challenges for Jansuraksha schemes regards to targeting of clients, managing claims and ensuring continuity. The Policy Brief concludes with key policy level suggestions that can ensure the policies are delivered to the intended target clientele, banks and insurers are adequately incentivised for their effort in effective delivery and that the Jansuraksha schemes are continued over a long term horizon.
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requires more navigation for exploring sub-menu options (see figure 2).
