Innocent Ephraim: On Mobile Money Innovation to Catalyze Inclusion

Innocent Ephraim, M-PESA Product Manager, Vodacom, discusses some of the main concerns shared on the FI2020 Global Forum’s panel ‘Building Infrastructure & Spurring Innovation’, along with an overview of the challenges faced in rolling-out M-PESA’s product success in Kenya to Tanzania and South Africa. 

Financial inclusion and technology innovation

The main concern of the forum panel was making sure that we bring in financial inclusion, and technology innovation is one of the key things for this. What I strongly believe in is the mobile money product itself. And mobile money products are being held up with a pillar, which is the agent distribution. Just like any other product that is mass distributed – Coca Cola and similar products – mobile money products need to be visible, available, and trusted. So once all of that is achieved, then innovation can chip in.

Listening to the customer

It’s important to listen to the customer because customers are the reason why we do this. We want to make sure that we don’t complicate their lives because the minute that we do that we already risk excluding them with our complicated innovation that we put in the mix. And we’ve got it wrong many times, we’ve learnt from our mistakes, and as a Product Manager, I know that it’s critical to listen to our customers.

Learning from mistakes

I’ll give you an example of a mistake we made with a product that we learnt from. We launched a life insurance product in Tanzania, and we expected millions to adopt it. We were actually shocked with the cultural behavior in Tanzania. Every customer that we communicated with to pick up the product kept saying: ‘You guys want me to die! Why do you want me to die?’ Here, we learnt that it’s not all about what we think is good for the customer. So we went back to the drawing board. Nevertheless, the product is used by hundreds of thousands in the country.

Now the team in Tanzania has done a study to see what type of insurance our customers need, and then reposition it. And one of the key findings from that study is that customers need a product they directly benefit from, health insurance was seen as ideal because then they feel they benefit out of it. They don’t want to buy an insurance cover that benefits somebody else – for example, the life insurance product where the customers felt it was just bad luck for them and that we just wanted them to pass away!

Kenya: the archetype of mobile payment

Kenya is a very good place to go and look at how mobile payments and technology has worked out. But you need to enter into different markets in different ways. If you look at Kenya, the population is dense and one agent would service hundreds of customers. When you go to Tanzania, where the population is much sparser, an agent would service fewer customers, and that makes it less attractive to an agent. Consequently, agents choose to invest in some other type of business instead of mobile money. (That’s only one of the differences between the two markets. A study has been done to highlight the differences of these two neighboring countries.) What we learnt in Tanzania is that we need to make sure that different products and services are integrated into the agent point-of-sale. So when you give an agent a tool to conduct mobile money services, allow them to do utility payment or airtime as well, so they actually aggregate from transactions from the same customer. That creates more incentive and profitability to the agent.

Rolling out, but not replicating: M-PESA in South Africa

This is what I’m seeing in South Africa as well because the potential agents have already got a point of sale in the store, so adding in another point of sale is bringing complexity for them – it’s critical for us to look at a way to integrate these systems. This is quite different from Kenya because in East Africa a basic phone is used as an agent tool of trade. This has been highly adopted, however I don’t see that happening in South Africa. I see it as a challenge in some countries and a way to solve that problem is to make sure that we’ve put more services on the device other than simply cash in cash out.

Regulation: a key pillar

Regulation is another key pillar that has actually helped East Africa to pick up. The engagement of the regulators to support this scheme is critical. I’m pretty much sure that we will reach financial inclusion by the year 2020. And even now, some of the countries in East Africa have already achieved that at some level, because if you ask me what financial inclusion is I’d say it’s not only money transfer, but it’s doing your finance like you haven’t before – being able to send money, being able to buy utilities, being able to get your insurance, being able to get your loans and do your savings. When you’re able to do all of those, then you’re financially included. And all of those services already exist in East Africa. They’re offered and accessible to customers who didn’t have access before mobile money came. For us to fully achieve that with everybody, everywhere, we really need to work together – the mobile networks, banks, and other players.

Accessing merchants

So companies like Kopo Kopo in Kenya, for example, who were represented on the panel, are playing a huge role in making sure that merchants are using the M-PESA service, which is a role that has been a challenge for the telecommunications companies to achieve for years. Once a customer gets a reason to use electronic/mobile money through going to a shop to buy stuff and paying through M-PESA, we can then build the ecosystem toward a cashless society. There are a number of companies that exist in East African market to fill this gap, Selcomwireless, Maxcom Africa pesapal, Zoop, Vastech just to mention a few. These companies are dedicated to seeing that we penetrate the payment space as we concentrate on distribution, stability of the systems, and customer awareness.

Women’s access to mobile financial services

In Tanzania, we’ve undertaken several programs that include women, with collaboration between Vodafone Global with Vodacom Tanzania. MWEI program – M-PESA Women’s Empowerment Initiatives – this is a micro-lending scheme whereby women request loans in groups. The women can access a loan through M-PESA and repay it through M-PESA. Thousands of women’s lives have been changed because of these programs in rural areas where women support their families financially. You look at the trend of this program and the loan adoption, repayment, and impact to society is just phenomenal. Service is piloted in the Lake region and now they’re rolling it out all over the country.

Mobile money and improving access to healthcare

The other initiative that we’ve implemented works towards eradicating the disease fistula, where women in rural areas live in the belief that they cannot get rid of this condition. In collaboration with CCBRT – a health institution – we use M-PESA to send money for transport to women in rural areas in order to come to the health center and receive treatment. This is one of the CSR projects that is tied up very well with mobile money and it has been really successful. M-PESA was able to access rural areas that CCBRT couldn’t, and by reaching them and giving them access to mobile money, these women could then reach the healthcare that they need. The women are also left with greater trust in mobile money, which can be built upon.

Overarching challenge to overcome to achieve financial inclusion by 2020

The key challenge is to make sure that the customers trust and accept the product. And one of the things that nobody is really talking about is the fact that frauds and scams are and have always been a stumbling block for quick adoption. This needs to be looked at and addressed for customer protection. Early adopters of the service who actually get to know the services can learn how to fraud the system and that scares customers. So customer protection is key, as well as educating our customers.

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