Smarter Wallets, Engaged Customers
With increasing competition in the branchless banking OTC (over the counter) business, this segment has become highly commission intensive, leading to diminishing margins for MFS (mobile financial services) providers. This reality has pushed mobile money providers to focus on mobile wallets as an alternate service delivery channel. Mobile wallets help providers move away from troublesome agent commission wars and allows them to offer customers a relatively more convenient service at a substantially lower cost. A major hindrance to this strategic shift is that demand for and uptake of mobile wallets remains low in Pakistan.
In the aftermath of the recent SIM reverification drive, providers requested the State Bank of Pakistan (SBP) to grant permission for remote mobile wallet account opening via biometric verification. This was approved, and mobile wallet opening in Pakistan now takes less than 5 seconds in comparison to the old process which took over 15 minutes thus dramatically increasing account opening efficiency. The positive impact of this new account opening process is clearly reflected in recent industry data; the market witnessed a 44% growth in total number of mobile wallets registered in Q2 of 2015. What remains problematic is that typically, 70% of all new accounts become inactive within 90 days of account opening.
To increase the mobile wallet activity ratio, a few players in the market are seeking out new ways to incentivize mobile wallet subscribers. For the last year providers have been offering free P2P (person to person) transactions on their mobile wallets, and also tested bundling free P2P with free GSM airtime, text and data on the basis of customers’ mobile wallet activity. These campaigns have had limited success and have not addressed one of the core issues of the mobile wallet: the fact that it is a cumbersome device that is difficult to use, particularly in a low literacy environment. To change this, providers should consider focusing their efforts on developing a more user-friendly mobile wallet interface.
MFS providers in Pakistan have based their mobile financial services on the Unstructured Supplementary Service Data (USSD) menu which has worked superbly for the OTC model, where an agent is trained to use a cell phone to conduct MFS transactions. However, it is very hard for customers to carry out similar transactions on their phones. The USSD menu has multiple layers, and is hard to operate, prone to human errors and time consuming. In order to extend mobile wallet uptake to presently unserved markets, it is important to offer an interface which is more understandable and thus potentially more useable. If we map out the global scenario, we see that in addition to USSD and Interactive Voice Response (IVR), a growing numbers of mobile money providers are making their services available through apps. According to GSMA, 62% of services are now available via an application, a percentage that is likely to increase as smartphone penetration rises.
With increasing smartphone penetration in Pakistan, currently at 31%, we see a great opportunity for mobile wallets to become the primary MFS delivery channel. Smartphones offer substantially more screen space and technology capacity which lends these devices to greater user friendliness. Smartphone apps for mobile wallets can potentially address some of the user experience limitations of USSD, including session time-outs and user error. Beyond improved user interface and experience, smartphones offer other benefits that enable customer retention. Providers for example, can make necessary periodic updates to their mobile wallets at a relatively lower cost thereby enabling continual improvements. Moreover, smartphones can help providers resolve some of the problems customers face within the OTC model such as frustration associated with a lack of proximate and liquid agents. An agent locator feature could be particularly useful for new customers, along with features that enable customers to rate agents on customer service and liquidity metrics.
When it comes to designing smartphone apps, it is important for providers and designers to take a customer-centric approach. For this, app design firms need to integrate strong research elements within the design process. Human-centered design is a technique that has proven successful in incorporating customer insights into smartphone user interface design. Once design firms have successfully identified the need of each of the targeted market segments, providers can brainstorm different ways that the final app can address those needs. Ideas being implemented in other markets include:
- The introduction of local languages in the MFS application interface.
- An interface that offers different symbolic imageries and voice assistance for low literacy markets like Pakistan.
In effect, the feature-rich interface and flexible functionality of smartphones can offer a better customer experience that the old USSD menu, and potentially ease the adoption and usage of mobile wallets.