In the mobile industry, operators are able to use tools like Wireless Intelligence to benchmark their performance in terms of customer adoption, but, until now, no such resources have existed for mobile money.

Paul Leishman wrote a blog post about what KPIs mobile money service providers should track. The Survey results revealed that there were eight fast-growing services among the 52 that participated in the Survey. Today, we are able to tell you how this group of fast-growing services performs on these key KPIs compared to the rest. So, ready to benchmark with the best?

Number of active customers relative to mobile base

These 8 services have in common the fact that they have been able to grow their number of active customers very quickly. 2.6% of their mobile base had become active mobile money users six months after launch, and 5.6% were active mobile money users twelve months after launch. The averages for other services were 0.2% and 0.3%, respectively.

Active rate for customers

The average active rate for customers (i.e., the ratio of the number of active accounts to registered accounts) of fast-growing services is somewhat higher than the average for other services surveyed: 23.2% compared to 13.6% in June 2011. However, we observe significant variations within that group with active rates ranging from 13.4% to 80.0%. In large part, this is because these services have employed different registration strategies. This demonstrates that different strategies can be equally successful and that the customer active rate is not in itself a good measure of success.

Customer engagement

Customers of fast-growing services are more engaged. On average, active customers of these fast-growing services perform 3.7 functional transactions (p2p transfers, bill payments, bulk payments and airtime top ups) per month, whereas the average for other services is 2.5. In particular, the number of P2P transfer per active customer per month is 1.2 for fast-growing services compared to 0.5 for other services.

Agent engagement

Agents of fast-growing mobile money services are far busier than those of other services. On average, they do 28.5 cash-ins and cash-outs per day whereas agents of other services perform only 3.8 transactions a day. There is actually a strong statistical relationship between the average number of transactions that agents of a given mobile money service perform each day and the performance of the service. This is not a tautology: in theory, successful services could spread a large number of agent transactions across many agents, while a service registering a relatively small number of transactions could have few, but busy, agents. But we find that, deliberately or not, the most successful services have calibrated the growth of their agent networks to ensure that agents, on average are able to perform a meaningful volume of transactions.

Customer and agent balance

We can draw the same conclusion if we look at the numbers of active customers per active agent: with a ratio of 161, fast-growing services are far from other services whose active agents serve on average 37 active customers.

Product mix

Finally on product mix, the percentage of functional transactions that are airtime top ups is smaller for fast-growing services (63%) than for other services (78%). For 4 of the 8 fast-growing services, airtime top ups represent less than 50% of the transactions performed by mobile money users.

Read the 2011 Global Mobile Money Adoption Survey

Three participants, Safaricom, SMART and Globe submitted incomplete surveys. As such, the averages that we present do not always include the full sample.

Robert’s clients are far from alone. In 2010 and 2011, Microfinance Opportunities conducted market research in India, Philippines, Zambia and Malawi with low-income consumers to identify the challenges they faced in adopting mobile money. The qualitative market research study consisted of 66 focus group discussions with active and non-active clients and 75 individual in-depth interviews with consumers, agents, merchants and bank staff.  Trust was the major common hurdle—consumers had limited trust in the technology to keep their money safe.  Asked to leapfrog into a new financial world, consumers also lacked the confidence to use this technology correctly having also a limited understanding on the full range of mobile money products on offer or their associated benefits.

Consumers’ apprehension with mobile money had much to do with the “paperless” nature of the technology.  Without a physical receipt for a mobile money transaction, customers worried about the safety of their money.  Moreover, without a clear understanding of the safeguards in place for mobile money, e.g. PIN and SMS confirmations, and who is accountable should problems arise, the perceived risks outweigh the benefits.

The second key challenge was customers’ limited understanding of how to conduct transactions themselves.  They worried that a simple error in transacting could be a costly one for them.  Clients who attempt a transaction and fail may stop using the service altogether.  Alternatively, clients who rely too heavily on agents to perform their transactions, in some cases, supplying the agents with their PINs, are vulnerable to theft.

Consumer education can play a role in bridging the gap between consumer trust and adoption of mobile money.  Education can help clients overcome the trust hurdle by teaching them how mobile money works and how to use it themselves.

In order to do this, consumer education first needs to understand where the clients currently are in their knowledge and experience with using mobile money.  This may involve looking at what the clients’ level of experience is with formal financial services and even their experience with using mobile phones.

The next step is explaining how the service can benefit them.  This is more than just awareness raising.  It is about deepening people’s understanding about how mobile money can help solve concrete financial stress points in their lives and better manage their money.

Take for example in the Philippines where a worker receives his monthly salary through his mobile money account.  Indicative of his level of trust in the service, he withdraws his entire salary from his account every month. However, he ends up spending it all, with no money set aside in case of emergencies.  Consumer education can help him think about different ways the mobile money account could better serve him.  For example, he could leave the bulk of his salary in his mobile money account so that he doesn’t have a large sum of cash at hand and isn’t tempted to spend it all.  The worker could also transfer a set percentage of his salary each month directly from his mobile wallet into a savings account he opens at the affiliated bank where he can earn interest.  Teaching him about the built-in security features of his mobile money account could increase his trust in the system and encourage him to withdraw his salary as funds are needed.

Microfinance Opportunities is designing and testing consumer education strategies with partners in India, Philippines, Zambia and Malawi to address challenges to uptake and usage.  These strategies contain the following essential components:

• Embed consumer education into the operations of the organisation rather than a separate stand-alone intervention. Leverage existing resources by deploying the consumer education messages and tools to the key customer touch points that the organisation already has, such as agents, merchants, foot soldiers or bank staff.
• Develop clear, concise messages that talk to the low-income customer. Use research to identify their financial needs and craft messages so that they resonate with the reality of that customer and explain better how mobile money can address their financial pain points.

• Develop tools that can support the delivery of consistent and accurate messages throughout the organisation’s communication channels. Make it easier for the network of agents to deliver these messages by developing simple, quick, illustrated guides for agents to use with the target market and eliminate information gaps.
• Build connections between consumers’ current knowledge and experience to the new concepts of mobile money.  For example, the concept of a PIN can be explained using the concept of a lock and key.

Consumer education provides people with the means to evaluate their financial options and use products more effectively.  For the providers, this new found knowledge can translate to more transactions and use of a broader range of products by an expanded customer base.

For more information about Microfinance Opportunities’ work in consumer education on mobile money and how mobile money operators are incorporating it into their operations, please visit us at www.microfinanceopportunities.org or contact us at juliel@mfopps.org.

In this video interview from Microsave and the Microfinance Podcast, Evelyn Stark, Senior Programme Office at the Bill and Melinda Gates discusses the importance of marketing mobile money. She highlights the importance of building awareness & understanding of a mobile money product. At the beginning of a customer’s journey, a user becomes aware of a mobile money service, but it is clear that it’s not enough that consumers know the name of the mobile money service or even that they know what mobile money is. Rather, awareness campaigns must build understanding to help users see how this new service is both relevant and beneficial to them.  This lays the groundwork for behaviour change.

It is clear that the adoption of mobile financial services represents a significant behaviour change and to drive customer usage, operators must guide customers on a journey from their first encounter with mobile money to habitual use of the mobile money platform.   The video also touches upon the importance of sub-branding and customer service.

“Driving Customer Usage of Mobile Money for the Unbanked” considers the many nuances of marketing mobile money. A key theme of the article is that marketing mobile money is very different from marketing airtime. Indeed, the customer journey for mobile money from unawareness to regular use is long and requires a number of inputs: customers need to not only be informed that the service exists, but also convinced that it could solve a problem in their lives and educated about how it works. We discuss tactics that marketers can employ when customers get stuck along this journey, such as when they have registered but fail to transact, and we have included a diagnostic as a supplement to the article to help operators diagnose and rectify such issues among their potential customer base.

The article includes 27 mini-case studies about effective—and some less effective—mobile money marketing tactics, and we are grateful to the many mobile operators and other mobile money providers who agreed to share their experiences with the broader industry.

Yasmina McCarty, co-author of the article, and I hope you will find the article useful and tell us what you think in the comments section of this post.

In any market, two key regulatory elements impact the efficiency and effectiveness of the registration process. The first is whether non-bank agents are permitted to register customers for mobile money (and subsequently perform cash-in/cash-out). Enabling non-bank agents (i.e. airtime agents, supermarkets, etc.) to register customers for mobile money expands the reach of the service and supports efforts to scale. This has been the case in Kenya, where there are 6,000+ M-PESA agents that can be leveraged for registration, compared to 876 bank branches. The second element is whether customers are able to register with information that is proportionate to their level of risk. Markets like South Africa have introduced Proportionate Know-Your-Customer regulation that makes it easier for customers who will transact low volumes to proceed through a registration process that reflects the low risk that they present.

Mobile money deployments themselves also play a key role in designing effective registration processes. Beyond creating a network of registration points that are easily accessible to both rural and urban customers and designing a process that make it easy to register, successful deployments also think proactively about the ‘ready to use’ element. It’s one thing to register a customer, but another to ensure they become an active user. One approach used by a deployment in South Africa is to tie agent compensation to actual use. This has been done by providing roughly half the commission for simply registering a customer and only releasing the other half once a set number of transactions have been completed. This incentive structure helps shape agent behaviour and ensures that they provide support to their customers.

The full details of the adoption framework will be available next week in the 2009 Mobile Money for the Unbanked Annual Report.

If the unbanked are to adopt mobile money, they must first believe that it is a service for ‘people like me’. Four focus groups were held in the Philippines with mobile money users and non-users during the CGAP-GSMA Mobile Money Market Sizing Study. An attitude expressed during these sessions by some prospective customers was that mobile money seemed interesting, but that they didn’t believe it was ‘a service for people like me.’ When asked to expand on this attitude, participants cited the fact that they’d seen advertisements outside fancy shopping malls, and that the service was endorsed by celebrities. This made it difficult for unbanked customers to identify with the mobile money offering.

Deployments in the Philippines and Kenya have achieved impressive scale to date by targeting different types of customers. As operators in all markets increasingly target the unbanked, it will be important to ensure that the visuals and messaging used in marketing materials are designed in a way that resonate with this segment. Doing so can ensure operators achieve scale by accessing the largest possible target market. Consider the awareness, understanding, and identification figures in the Philippines – 64% of the unbanked mobiled are aware of mobile money, 54% understand that it can be used for money transfer, and less than 40% believe that it’s a ‘service for people like me’. Interestingly, the extent to which survey respondents identify with mobile money varies depending on whether they know someone else who uses the service.

In Kenya, Safaricom has proactively addressed this issue. Advertisements for M-PESA feature simple visuals of an urban worker sending money to a rural family member, presumably his mother. This reflects the primary use of M-PESA (regular support for family members) and to a large extent, the main demographic.

The final adoption driver will be posted Friday.

In the Philippines, 64% of unbanked individuals who own mobile phones are aware of the concept of mobile money. This awareness level is quite high relative to Telco and bank awareness amongst the unbanked, which are roughly 78% and 51% respectively.

Beyond driving basic awareness, mobile operators also focus on driving service understanding. The distinction between awareness and understanding is important – whereas prospective customers may be aware of the general concept of mobile money, they may not understand what the service can be used to do. This is especially true for sophisticated formal financial services which are often not widely used by the unbanked, like savings, insurance or credit. The CGAP-GSMA survey in the Philippines reveals that 54% of unbanked mobile phone users understand that mobile money can be used to ‘send a money transfer within the Philippines’. Fewer people understand that mobile money can also be used for other services like ‘overseas money transfer’ or ‘salary payments’. This may be a reflection of the priorities of these respondents (i.e. not having an overseas relative may make someone less likely to be aware of available offerings), but it certainly validates the importance of a topic that will be explored further in the upcoming MMU working group – the use of messaging in marketing materials.

Media has played a key role in driving both awareness and understanding of mobile money in Kenya as well as the Philippines, where 55% of people cite TV advertisements as a source of learning about the service. Given the importance of this medium, it’s important to get the messaging right. In Kenya, Safaricom used simple messaging and visuals to convey the primary function of M-PESA – the phrase ‘send pesa by phone’ features prominently in their advertisements. Combined with extensive point-of-sale branding and investments in marketing, this has driven both awareness and understanding of M-PESA in Kenya.

The next adoption driver will be posted tomorrow.