Watch Out Unicorns: Centaurs Are the Future of Financial Inclusion

Insights from new CFI Fellows research on integrating human touch in Kenya's digital financial services landscape.

Mbugua, owner of a restaurant, a butchery, and a dry goods store in Nairobi, Kenya has actively used financial services to grow his businesses from the meager beginnings of a small stall selling boiled cow heads. He is currently juggling four digital loans and two microfinance loans. Whenever possible, Mbugua prefers to interact with his financers digitally to save time. Yet, like most of the Kenyans my research associate and I spoke with as part of our CFI Fellows research project, Mbugua considers in-person interaction to be critical at certain stages. “Face-to-face is tiresome. There’s a time factor,” he said. “But it’s 100 percent perfect. Your questions will be exhausted. And you can’t negotiate with the phone.”

Our research seeks to understand when and why customers prefer human over digital interfaces across their financial services customer journeys – and vice versa. We focused on value-added financial services, including loans, savings, and insurance, and we chose Kenya because of the country’s deep penetration and market maturity of mobile phone-based financial services. We conducted in-depth qualitative interviews with 104 respondents.

We discovered that a “centaur” solution—one that unites the strengths of both tech and human touch—offers the most promise for both customers and financial service providers (FSPs) targeting the base of the pyramid.

Digital interfaces outperform human interaction in a number of areas: digital services are often more convenient (once you learn how to use them), more predictable and consistent (with the exception of loan approvals and rejections, which are often opaque), and less stressful for customers during collections. However, most Kenyans – even those who already use low-touch digital products – prefer to interact with a person face-to-face at key stages in their customer journey. We found that while Kenyans are very comfortable conducting transactions digitally, other key aspects of the financial service customer journey are not adequately handled by digital means alone.

Like most of our respondents, Mbugua wants to interact directly with a person to accomplish three critical tasks:

1. To verify the legitimacy of the provider

Eunice, who owns a clothing boutique in Nairobi, explained, “When it comes to smaller amounts, the smartphone has taken it all. But for larger amounts I will not trust [the phone]. Money is sensitive. There is a lot of personal detail. If it is not done face-to-face, there will somehow be fear.”

2. To fully understand the product

Nearly everyone (90 percent) who uses a feature phone preferred to get product information from a person. Perhaps this is no surprise, but so did 60 percent of smartphone users. William, a farmer and produce seller in rural Western Province explained, “I would go [in person] to receive hard information first. It has a thinner margin of error. And I could ask questions about the hidden specifics of the product.”

3. To resolve problems or complaints

Nine out of 10 rural dwellers preferred to resolve problems face-to-face and so did nearly as many urbanites. “When it comes to money matters, be there,” advised Leah, an owner of a plumbing part retailer in Nairobi. When asked which interface she preferred when needing to solve a problem, Leah said, “I’d rather be there and then follow up with a phone call. There are things you just don’t do over the phone. You can forget about a phone call. But you can’t forget face-to-face.” When asked the same question, Emmanuel, a private school founder and principal in rural Kiambu County, said, “With the bank people I visit face-to-face, you can read the feelings. On the phone I can’t see. Face-to-face it’s easier to build trust.”

Through face-to-face interaction, FSP staff can explain products in a way that puts customers at ease, encourage them to ask all their questions, and enable them to leave the encounter confident in their ability to use the product. FSP staff can not only offer assurance and empathy, but also ascertain with greater clarity the financial context of the customer—determining, for instance, whether or not a repeat loan is a result of a growing business or overindebtedness. In this way, human interaction can also reduce risk for the FSP.

However, at the same time, human interaction can also be significantly flawed. Six out of 104 respondents had lost savings due to fraud, and several others had experienced or witnessed harsh in-person collections efforts. Here, digital interfaces could be advantageous: minimizing opportunities for unethical or inappropriate staff behavior, informing customers of account status, communicating about consumer rights and redressal mechanisms, and soliciting feedback. And by digitizing contextual customer data, FSPs gain not only better control of their business but also a valuable resource through which to differentiate themselves from competitors.

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Using these insights, FSPs can build “centaur” products that offer a savvy fusion of human and tech-based interaction, to attract and retain more customers and better serve their financial needs.

For more insights, read the new report, Uniting Tech and Touch: Why Centaur Products Are Better for Consumers and Providers, Evidence from Kenya.

Have you read?

What Does Effective Human Touch Look Like in Kenya’s Digital Age?

Kopo Kopo: Building on the Rails of Mobile Money in Kenya

How Mobile Money Is Closing the Agricultural Finance Gap for Women in Kenya



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