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Price wars and agent motivation in rural areas of Côte d’Ivoire

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It is barely 6:30 am when the first mobile money outlets start to open in Soubré, a cocoa-producing town southwest of Côte d’Ivoire. New blue signs with a penguin mascot from Wave, a Fintech created in 2011, and the latest market entrant tower above small kiosks lining the main roads, overtaking the incumbent telecom operator Orange’s black and orange signs.

In the current decade, mobile money and agent networks are positioned as a critical lever and a channel to promote economic, social, and financial inclusion in the last mile. Côte d’Ivoire has a banked population rate of 30.8% and a mobile money penetration rate of 73%. Mobile money, therefore, plays an increasingly important role in financial inclusion in the country.

According to the telecom regulator ARTCI’s quarterly report published in March, 2021, three leading mobile network operators (MNOs) currently control the mobile money offerings in Côte d’Ivoire. Orange CI has been the leader in offering mobile money services in Côte d’Ivoire. The market share of these MNOs—Orange, MTN, and Moov—is 48.3%, 41.1%, and 10.6%, respectively.

Competition in the market was weak until Wave arrived in April, 2021. Two months after Wave launched operations, Orange’s market shares fell by 8.7%, despite a 3.2% increase in mobile subscribers, while MTN lost 1.7% of its market share. The overall total decline of the three operators was 4.6%.

The current competition between new players like Wave and the existing MNOs in the West African market for mobile money services has not only affected market share. Mobile money service providers have started a price war that impacts transaction fees and agent commissions.

Wave, an innovative model but not very user-friendly for the rural population

Wave’s service model is innovative and addresses many of the longstanding pain points of agents. These issues include high transfer fees and double charges for any transaction—the sender pays a charge when sending, and the receiver pays a charge when receiving. Other problems include a restrictive account opening procedure and issues with liquidity.

The registration process for smartphone owners is more straightforward and faster as it is done through an app that provides a QR code. As the penetration of SIM cards is 152% in the country, Wave developed an alternative solution for feature phone owners. A potential client must register in person, where he receives a physical QR code card to bring to each transaction—an additional requirement compared to other MNOs. Notably, Wave customers struggle to check the balance on the Wave account with a feature phone. This is something only agents can do.

Yet Wave’s value proposition is its policy of eliminating dual pricing. To the delight of the Ivorian population, deposits and withdrawals are free for Wave customers. Only domestic transfer fees between operators are priced at 1% of the transaction, while the charge for transfers to neighboring countries is 1.5%—levels below the market average. Likewise, the other operators were compelled to compete with this price and lowered their tariffs to match this new competitor.

Some people are not surprised by these tariff adjustments that have been longstanding in the Ivorian mobile money market. “So these operators have been ripping us off all this time. If today they can lower their rates, they are not honest. They do not like us. Welcome to Wave,” muses Fabiola, an agent at the Soubré market. Wave considers the tariff reductions by competitors as a small victory, as stated by Coura Carine SENE, CEO of Wave Mobile Money: “…Wave is pleased with the alignment of mobile money players to a much-criticized business model.” While this battle benefited clients the most, this is not the case for some agents in the rural areas of Soubré.

Improved support but lower commissions

Some rural agents believe that Wave is the operator that finally understood their liquidity needs by offering a revolving fund and a phone to start operations. The player has created panic in the mobile money market. Decisions made by the competition have influenced the activities of agents in rural areas, such as blocking SIM cards, running investigative visits to ensure that agents do not offer Wave’s services when they are not exclusive agents, and reviewing commission rates.

“They blocked my transaction SIM cards from some agents (including mine) and not others for two weeks, which would require traveling to Abidjan (about 410km) to have access restored,” an agent confirmed. Except for Orange, all operators have modified their agent commissions, which will review their commissions after the cocoa trading period.

Wave’s commission model is based on the volume of daily transactions compared to other operators who apply a per-transaction fee—a model agents prefer. The public’s preference for Wave has caused many transactions to be switched from other operators. The changes in commission levels and the choice for Wave transactions create uncertainty in the total commission package agents earn every month.

Wave’s entry into the market has also shifted other MNOs’ transactions to its platform. According to agents in rural areas, this shift hurts their commissions. With this perception, agents in rural areas face a dilemma between their preferred operator and the commissions offered by that operator. Wave has been taking over most transactions in the market. Yet it offers lower commissions to agents. The incumbent operators, who have dominated the market, offer higher commissions but are gradually losing market share.

From a perspective where the issues are a fair price and customer needs, all stakeholders in the agency banking model benefit from Wave’s entry into the market because they have no choice but to be partners. The impact-based profitability is essential. However, many people question the Wave model’s performance and sustainability.

Without a universal definition of a “successful” agent network, it is still early to comment on Wave’s model.

Our research on successful agent networks and the key elements that determine their success, such as a clearly defined value proposition and a good understanding of the competition, enable digital financial services providers to build an agent network that will help them achieve their goals.

MSC has supported several entities in improving their agent network strategies, operations, and processes. We have researched to understand the agent banking environment and their motivations. We have also trained professionals to manage an agent network and provided training and support to agents to increase transactions and efficiency significantly. This support is based on interviews with more than 40,000 agents worldwide to identify the factors responsible for the success or failure of agent networks, helping our clients to improve their agent network strategies, liquidity management systems, agent selection training, and recruitment approaches. Most importantly, in a highly competitive environment, it has helped the value proposition for agents more attractive and helped reduce inactivity and churn.

CICO Agent Lifecycle – Interactive Digital Flipbook

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Are you designing a behavior change communication message to encourage the use of agent banking among the LMI women in rural areas? Here is what you need to know.

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They are often illiterate. Only some have an active bank account or a mobile phone. They largely remain at home, engaged in household work. Most are risk-averse, and depend on each other’s experiences and male household members  to make financial decisions. They are women from the low- and moderate-income (LMI) segment in rural areas.

These specific factors make rural LMI women one of the most challenging segments for any financial services provider. Yet they make up almost half of the rural LMI populace and need customized financial products and services to suit their specific requirements. At the same time, they need to be reached and sufficiently enthused about the offering – so behavior change communication becomes critical.

Airtel Payments Bank, a leading scheduled payments bank in India, has tried to serve this segment with innovative product offerings, such as a feature-loaded Bharosa account. However, communicating product features is not easy with women mainly confined to their homes. MSC collaborated with Airtel Payments Bank and piloted an audio message to address this problem. The pilot results show that women who heard the audio clip saved 54 times more than women from similar geographies whom the message did not reach. You can see the entire pilot journey here.

Based on this work, it is clear that short, easy-to-absorb, and relatable messages disseminated in regional languages through a carefully matched channel result in powerful communication to the LMI women in rural areas.

Channel and content: Bridging the two pillars

A suitable response to the unique challenges faced by different target segments requires coordination between the message script and its dissemination medium. If these two do not operate in harmony, the communication will not affect the desired behavioral change in the target segment—no matter how strong they individually are.

Primary research in a few select geographies is needed to identify the channel and specific message content that syncs with it. A well-rounded primary research exercise provides context-sensitive insights to help design the message and deliver it. We used the same approach and gained important input for the message content and dissemination options suitable for rural women.

Resolving the channel challenge

When designing for the rural LMI segment, the message script depends heavily on its channel. The words in a wall painting, for example, will be very different from those used in an audio clip to convey the same message. Therefore, one must choose a channel first and then draft the message content. We found the following behavioral traits and life realities to be critical while communicating with the target segment of rural LMI women:

1. Low literacy levels: Most women in Indian villages cannot read. So we cannot use written material to communicate with them. And it is difficult to convey relatively complex ideas through picture- or icon-based, oral-friendly, communication materials.

2. Low mobile phone ownership: Only a few rural women of the LMI segment own mobile phones. The few who owned one mostly had a basic handset. The lack of mobile phones leaves no chance to use social networking platforms like WhatsApp or Facebook; or even communicate with them through Interactive Voice Response System (IVRS) or bulk voice messages.

3. Low mobility outside the household: Women in villages do not move out too often or do so for short intervals. So, if you want to connect with them outside their houses, you will have to contact them during those limited opportunities and design a communication strategy accordingly.

4. Low reachability, even within the household: Social norms in rural areas imply that women interact primarily with other women in their community. They are neither encouraged nor feel comfortable talking to people they do not know well. This norm limits the chances of connecting with them inside their homes and virtually eliminates the possibility of deploying any male agents to establish this connection.

A typical public announcement system used by Airtel Payments Bank team

We chose a portable loudspeaker for our work with Airtel Payments Bank. It would play an audio clip designed around the communication theme at various places in the village.

Resolving the content challenge

Once you have zeroed in on how to disseminate the message, the next immediate task is to develop a script. The behavioral research can provide inputs like the duration, language, tone, and script flow to design the message script. We used a rapid prototyping tool for the Airtel Payments Bank project. As part of this exercise, we read out some prototype messages to the women. Their verbal and nonverbal responses helped us understand their preferences regarding various message attributes.

This stage revealed the following critical features essential to the communication message:

  1. Short: The message must be brief and focus on three or four critical features without getting into details. A brief message is essential due to the limited exposure of rural LMI women to any formal financial services and their narrow attention span. Often, complexities of the design process are visible in the final output. For example, this message is simple, but the sheer length and the resultant information overload put off an LMI customer.
  2. Easy to understand: The message should be straightforward for the audience to assimilate. Since we intend to talk about financial services, this feature will not be easy to incorporate. A message like this can quickly fail if we use complex terms.
  3. Relatable: The situations used in the message must strike a chord with the audience. We discovered during our research that the script should talk about the near-term benefits of visiting Airtel Payments Bank agents that make sense to rural LMI women.
  4. Use a familiar tone and language: No prizes for guessing that the message needs to be in regional languages. Moreover, we found that a female voiceover better suits messages that target rural women simply because they sound familiar.

An ideal communication message will have all the features listed above simultaneously. They all work together, not in silos. The absence of one can considerably weaken the communication.

Results

Based on our research, we designed an audio clip for Airtel Payments Bank and piloted it at a few agent locations. As a result, women in these locations opened more accounts and saved more money, thereby enhancing agent income.

Enthused by the pilot results, Airtel Payments Bank has added the audio clip to its existing communication campaign and is currently expanding its outreach to about 1,000 new cash in/cash out agent locations each month. The bank believes this initiative will allow them to offer a range of financial services to rural women, and also open new doors for connecting with other difficult-to-reach client segments.

Where to from here?

Women play a pivotal role in running our economies. However, many of them remain financially excluded for various reasons, such as the lack of access to products and services tailored to their needs. Airtel Payments Bank and MSC have shown that we can design and deploy behavioral communication to nudge rural LMI women to use financial services through agent points. With its deep understanding of gender and expertise in behavioral research and design, MSC remains committed to supporting organizations like Airtel Payments Bank in making their services penetrate deeper into this challenging segment.

The authors thank Nitish Narain and Zeeshan Ali for contributing to this blog.

Course for Business Correspondents (BC) in the Indian banking scenario

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The Government of India and the Reserve Bank of India have taken several initiatives to enhance financial inclusion over the years. Approximately 100,000 agents attempt the IIBF BC/BF exams annually—many of them fail. In 2019-20 and 2020-21, out of the 97,169 agents that gave the exam, around 32,949 (34%) failed the exam, even after several attempts. We have designed a course for Business correspondents in the Indian banking scenario. This course is designed for those business correspondents who will appear for the IIBF examination or seek to start their journey as a BC to bridge the gap in financial inclusion in India. Click here to know more about our training course.