From Banker to Service Designer

We believe that the key barrier to financial inclusion for the poor is one of design—of how financial products are created and positioned in the market, which consumers are targeted and how delivery channels are utilized. As a channel alone, mobile banking offers significant opportunities for banks and mobile operators to reach down-market. But the poor will only benefit from this channel if they can access appropriate and affordable products. This can only happen if providers in this sector approach the problem of financial inclusion like service designers, and look at the current experience of banking in poor communities.

In a country like Uganda, the typical experience for a villager of going to the bank usually starts with a long and often expensive journey to the nearest town center. Upon arrival, the villager will likely be made to wait in a long queue. Upon reaching the teller, he may be surprised to hear that his balance is lower than usual, and the teller is usually too busy to explain that a slew of fees have wiped out his balance. The villager would then withdraw the remainder of his cash, and he will not inform the teller that he has no plans to come back. He knows that the closing fee would eat up the remainder of his balance. He leaves frustrated and wonders why he decided to open an account in the first place. Like customers everywhere, he advises his peers not to make the same mistake.

Imagine if a banker approached the problem of financial inclusion from the perspective of a service designer. For starters, the banker would leave his comfortable air-conditioned office and drop his assumptions about the poor. He would spend time in the villages, travelling by overcrowded shared taxis, to learn about the lives of this segment. He would look at the drivers of financial behaviors, and build a richer understanding of why particular financial habits exist. He would also quickly recognize that “the poor” are not a homogeneous group, and that ample opportunities exist for creating segments, such as traders, cash-crop farmers, mechanics and shopkeepers.

On the bumpy elbow-to-elbow journey back to town, the banker/service designer would realize that the problem of financial inclusion demands a cultural and systemic change within his organization. His team would begin to spend time identifying opportunity areas, and developing and testing prototypes with actual target customers.

Imagine if that banker further decided to create a service that leveraged the mobile money channel for delivery. The result could look something like this – the customer would reach into her pocket and pull out her mobile phone to initiate the banking transaction, scrolling through a simple menu that would allow her to check her balance. There would be no surprises because the system would send frequent text messages with her balance. She could also transact from her home, at any time of the day or night.

Through a village banking agent, the customer would have recently opened up a special account designed to support her financial goals – perhaps the payment of school fees, which happens three times a year. Such accounts help savers build up a balance by automatically freezing 20% of cash each time it hits the bank – just as a defined-contribution retirement plan in the US sets aside some of an employee’s earnings – making it easier to save. Her relatives and friends from Kampala could also contribute by sending money directly from their phones into her account. When August comes around and the fees are due, the customer would head to the local agent (which is open late hours) to make a withdrawal or even send the payment directly to the school. By preparing herself, the customer would ensure that she does not have to sell her favorite cow, or take out high interest loans from the bank, to send her children to school.

Back in the city, the banker would be pleased with the outcome of this new process. After working tirelessly with his team to identify the right solutions and testing them in the field, he would begin to see success. Like any good banker/designer, he knows that this is just the beginning. As long as he remains aware of the evolving needs of his customer base, and designs solutions tailored to different segments within that base, he can not only win the hearts and minds of his customers but also create substantial value for his business.