We already posted impressions from two of Tuesday’s animated breakout sessions (#1 and #2). We wanted to share some notes from two more (#3 and #5) that got us discussing ingredients for DFS to go rural.
- Session #1: Working with agriculture/farmers with John Magnay of Opportunity International
- Session #2: Linking with savings groups with Sybil Chidiac of CARE International
- Session #3: Working with aggregators with Anne Craib of Vital Wave, an aggregator in Uganda
- Session #4: Making bank/mobile network operator partnerships work with Jennifer McDonald of Women’s World Banking
- Session #5: Lessons learned across Africa with Mike McCaffrey of The Helix Institute of Digital Finance - MicroSave
- Session #6: Financial education for rural expansion and digital financial services with Jessica Massie of Reach Global, Aly Ouédraogo of Freedom from Hunger and Marie Pascaline of Réseau des Caisses Populaires du Burkina
For brief descriptions of each session, click here
Working with aggregators
Right off the bat we learned that, though there are different kinds of aggregators, we’d be focused on payment aggregators in this session. Anne (a Senior Strategy and Management Consultant with the aggregator Vital Wave) further defined them as “...a value-added service provider, those who make software when implementing bulk payments or merchant payments. They act as a go-between between MNOs and banks.”
Anne went on to describe Vital Wave’s six-month pilot project on bulk payments in Uganda. Here are just some of the fascinating details... With 50% phone ownership amongst participants, 1 of 5 of those having a bank account, many living in poverty and most dealing in cash, Vital Wave helped modernize systems. Through mobile wallets and training, they saw a 10%−15% drop in costs through mobile payments and increased employee satisfaction (less cash meant more safety). Experience also showed that an aggregator can help a bank negotiate with an MNO quicker than working with the MNO directly.
After we were all on the same page about what aggregators are and do and how they’re useful, Anne followed up with some helpful Dos and Don’ts for engaging with them. Here are a few:
When working with an aggregator,
- Do make sure you’re ready for a change in mindset—both yours and your customers’ (centralizing customer service will be a shift for them).
- Do look at business requirements and complete a thorough selection process, including due diligence.
- Do recognize there’ll be setup and configurations needed in backend connections and operations.
- Don’t expect the aggregator will help you with fraud or liquidity issues or help you manage your agent network—but they can help in other ways like perhaps transferring delays by floating money for up to a week.
- Don’t be surprised that, on a per transaction basis, an aggregator can be more expensive than going directly to an MNO but costs will go down with scale and, as Anne pointed out, it’s still cheaper than dealing with cash.
Lessons learned across Africa
This session delivered details on current rural agent models, from across the continent. Mike (a Principal Consultant on Strategic Operations for Digital Finance with MicroSave) kicked it off by talking about the Agent Network Accelerator programme.
The programme is in the process of completing detailed assessments of more than 25 agent networks in eight countries (20,000 of a planned 40,000 client interviews conducted so far—wow!). It also launched The Helix Institute of Digital Finance (the Gates Foundation, IFC and UNCDF are partners) to provide training to digital financial service providers.
From the research, Mike said they’re still seeing cash-in/cash-out dominate the game at the agent level. Three value propositions—person-to-person payments, airtime top-ups and bill payments—add up to 90% of transactions. Next, Mike turned to new paradigms in value propositions: savings, credit, insurance, financial management tools, etc. To get us thinking, he asked us which formal financial product can do better than a chicken in terms of meeting a client’s short-term liquidity needs. That got us talking...too much to cover here!
From there, Mike turned the conversation to ‘next generation’ frontier agents (what the research is telling us about who they are and what motivates them), how they should be selected (their attributes like security, accessibility, footfall, trust, transaction patterns and sales/marketing abilities) and finally liquidity management. For all these topics, we ‘traveled’ across Africa to Asia and back again, hearing real-world examples and research results from Mike and fellow participants.
Come back soon for more ‘fly-on-the-wall’ reports from DFSgoRURAL.