doing digital finance right
TRANSCRIPT
Doing Digital Finance Right:
The Case for Stronger Mitigation
of Customer Risks
3
Kate McKee
Michelle Kaffenberger
Jamie Zimmerman
29 June 2015
Which of the following were NOT reported by
DFS customers in our research?
1. A customer reports falling asleep while waiting so long on hold with customer service
2. An agent refuses to complete a customer's transaction unless they buy something from their store
3. In one village, every mobile money customer has the exact same PIN
4. Customer receives a call saying they won the lottery and requesting a money transfer to “access” their winnings
5. Agent lies to a customer about liquidity in order to maximize revenue
A cust
omer
repo
rts f
alli.
.An
agen
t ref
uses
to co
...In
one
vill
age,
eve
ry m
o...
Cust
omer
rece
ives
a ca
l...
Agent
lies
to a
cust
ome.
..
25%
19%
13%
8%
35%
The state of DFS
250 offerings serving 300 million customers
However…
2/3 inactive
globally
OTC
dominates
many markets
6
Risk perceptions & experiences
Lower uptake
Higher inactivity
Preference for OTC over mobile wallets
Examples
Uganda: network unreliability = limited uptake
Tanzania: poor recourse = inactivity
Bangladesh: confusing interface = OTC
Evidence of Customer Risks
7
Russia
Pakistan
India
Bangladesh
The Philippines
IndonesiaHaiti Uganda
Colombia Côte d’Ivoire Kenya
Peru Ghana Rwanda
Nigeria Tanzania
Countries with evidence from consumer research
7 Customer Risk Areas
8
1. Inability to transact due to network downtime
2. Insufficient agent liquidity or float
3. User interfaces that many find complex and
confusing
4. Poor customer recourse
5. Nontransparent fees and other terms
6. Fraud that targets customers
7. Inadequate data privacy and protection
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1. Inability to transact due to network downtime
% of users who have experienced network downtime
39%
52%
36% 38%
59%
Ghana Kenya Rwanda Tanzania Uganda
“What you do is you leave the agent with the
money and they send it when the network is back
so all you have to do is just call them to confirm
that it has been sent.” Rural woman, Uganda
InterMedia 2015
10
2. Insufficient agent liquidity or float
% of users unable to transact because of insufficient agent liquidity
InterMedia 2015
22%
55%
23%32%
37%
Ghana Kenya Rwanda Tanzania Uganda
14% transactions
denied per day in
Tanzania
10% transactions
denied per day in
Uganda
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3. Complex and confusing user interface
Difficulties operating services
Keystroke errors
Assisted transactions
“My sister always withdraws and brings the
money for me… She tries to teach me, but I’m
scared with all those buttons of messing up and
losing money.” Woman, Colombia
Source: CGAP
4. Inadequate provider recourse
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Unclear, costly, and time-consuming procedures
Often turn to agents
Particularly problematic for G2P recipients
“…I waited for three days for them to answer my
complaint but I [never got it resolved]. This
experience led me to worry: what if it happens
when I’m paying my bills?” Male, Colombia
Source: CGAP
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5. Nontransparency of fees and other terms
Incomplete understanding of prices, terms and conditions
More vulnerable to agent misconduct and price fraud
Start Balance: 21,471
Bill Pay Amount: 7,644
Expected New Balance: 13,827
Actual New Balance: 13,810
Implicit Transaction Cost: 17
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6. Fraud perpetrated on the customer
Employee fraud
External fraudsters
Agents
Fraud is “the intentional and deliberate
action undertaken by players in the DFS
ecosystem aimed at deriving gain (cash or
e-money) and/or denying other players
revenue and/or damaging the reputation of
other stakeholders.” (Mudiri 2012)
Source: CGAP
15
7. Data privacy and protection
Inadequate data protection
Poor understanding of new data uses
Unforeseen outcomes
Source: CGAP
16
Which of the following would have the biggest
impact on mitigating customer risks in DFS?
1. Conduct regular network system testing and monitoring
2. Redesign interfaces to reduce keystroke errors
3. Strengthen agent management and oversight
4. Make customers aware of phishing, fraudulent calls and messages, and ID spoofing
5. Create systemized and monitored complaint resolution management
Conduct re
gular netw
ork...
Redesign in
terfa
ces t
o re...
Strength
en agent mana...
Make cu
stom
ers aware
o...
Create
syste
mize
d and m...
8%
18%
36%
4%
34%
How strong is the provider business case to invest in this
solution?
1. No way they’ll do it
2. They’ll do it …if the
regulator makes them
3. I think they’ll see the
value in this
4. They’d be crazy not to
5. I need to see the cost-
benefit analysis before
I can answer this
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No way t
hey’ll do it
They’ll d
o it …
if th
e regul..
.
I thin
k they’ll
see th
e valu...
They’d be cr
azy not t
o
I need to
see th
e cost-
ben...
4%
40%
29%
6%
20%
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Provider Solutions
Haiti Chad Uganda
Colombia Côte d’Ivoire Kenya
Ghana
Nigeria Tanzania
Zimbabwe
South Africa
China
Pakistan
India
Bangladesh
Countries with exemplary provider solutionsCountries with evidence
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5 Priorities for Industry to Identify, Test, and
Scale Solutions
1. Improve service reliability and robustness
2. Make the customer interface more user-
friendly
3. Strengthen agent quality, management,
and liquidity
4. Combat customer-affecting fraud
5. Improve handling of complaints, queries,
and redress
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1. Improve service reliability and robustness
Regular network system testing and monitoring
Reliable platform that integrates smoothly with other ecosystem players
Ensure adequate bandwidth allocation and more practical USSD session time-outs
Source: CGAP
22
2. Make the customer interface more user-friendly
Source: CGAP
Offer the menu in local languages
Reduce USSD timeouts by extending sessions
Add ”check digits” that prevent sending money to a wrong number
Redesign interfaces, make them more intuitive and navigable, to reduce keystroke errors
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3. Strengthen agent quality, management and liquidity
Improve quality and cost-effectiveness of training
Strengthen float and liquidity management model
Strengthen agent management and oversight
Introduce and enforce graduated agent sanctions for compliance violations
Source: CGAP
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4. Combat customer-affecting fraud
Make customers aware of phishing, fraudulent calls and messages or ID spoofing
Prevent SIM-swap related scam
Improve data handling for prevention and data analytics for detection of fraud
Ensure agents are incentivized for ethical conduct and high service quality
Source: Fraud-Vigilance Kenya
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5. Improve handling of complaints, queries & redress
Equip and train agents to help address problems
Provide a call center and ensure designated and specialized staff
Ensure systemized and monitored complaint resolution management
Source: CGAP
What is the Financial Times headline that you
most fear?
1. Failure of PaymenTopia leaves millions of Freedonia pensioners in limbo.
2. Massive All-In-Pay data breach results in $15 billion loss and government query.
3. Cleaned-out ReadiBank accounts traced to malware on App.
4. 98% of Diwanese m-insurance clients unaware of their policy & terms.
5. Insta-credit borrowers demonstrate in streets as 580,000 defaults reported.
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Failu
re o
f Paym
enTopia l...
Mass
ive A
ll-In-P
ay data b
...
Cleaned-out R
eadiBank .
..
98% of Diw
anese m
-insu
...
Insta
-credit
borrowers
...
25%
37%
16%
5%
18%
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Kate McKee [email protected]
Michelle Kaffenberger [email protected]
Jamie Zimmerman [email protected]
Thank you for your attention
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Advancing financial inclusion to improve the lives of the poor
www.cgap.org