Posts Tagged ‘urban’

The importance of the agent/customer relationship for successful financial inclusion

The role of agent networks in East Africa’s mobile money and mobile banking roll-outs is widely documented; as an intermediary, a kiosk exchange point – accepting deposits for e-money/ withdrawals for cash and usajili (registration).

“. . .as the first point of contact, human agents help bridge the gap between a high-tech service and low-literacy clients.” – CGAP

But, most research falls short of exploring the subject in its entirety, specifically, the relationship between customers and human agents  – a recent example is the just released Agent Network Accelerator Survey – Kenya Country Report 2014 by Helix Institute of Digital Finance. To sum it up, I would say it was a numbers driven top-down approach to the subject (most likely focusing on what is best for the service provider), that failed to explore the human touch-points that make mobile money relatable.

“A lot these findings, I’m noticing, do indeed do all the research, but leave their underlying assumptions on people unquestioned [. . .] researchers go in & see behaviour – the What & How – but assume a lot on the Why”@prepaid africa

As I see it, there is a subtly rich layer to the mobile money agent and client relationship that is readily observable in close knit communities; frequent micro-transactions lead to conversations beyond basic transactions, off-the-cuff inquiries, and thus reinforce continued trust. For people not well acquainted with the intricacies of mobile money, or tech for that matter, these human intermediaries – the agents, most of whom happen to be women – are your trusted guides to the technology and face of the service providers.

Which is why, this assumption in a post by Mondato, hit a nerve.

“In the long run, as more fully developed digital payments ecosystems develop, there will be less need for agents . . .”

When talking about Africa’s markets, in mobile financial services or whatever context, research reports which disregard the qualitative nuance of local, social and communal interaction, lead easily to such assumptions. The  Helix report for example, grouped agents into 2 categories: rural and urban. On the ground however, these are polar extremes on a scale. If we go by strict definitions, this frame of reference doesn’t translate on the ground ; more common is a mix of both, or peri-urban or even rural folk who commute to their place of work in peri-urban. Perhaps a measure of cash intensity or ‘unbanked-ness’ in immediate contexts makes for a better framing?

My point is, the agent – customer relationship on Moi Avenue in Nairobi’s CBD, is markedly different from Githurai’s packed informal market place despite both located in Nairobi. In this cash intensive ecosystem, in the thick of all the chaos characteristic of informal micro-economies, human agents sit right next to mama biashara and boda boda guys. Here is where, you are likely to find the unbanked, underbanked and lower income segments.

I can’t help but think there is a larger role for mobile money agents in financial inclusion; one that resonates with commonly observed themes in this segment – social groups, local, face to face, trust. Like Monica, a cyber cafe attendant in Maai Mahiu whose role in the local community extends beyond simply offering internet browsing services. Jan Chipchase aptly describes this as symbiotic : customers, agents and service provider.

“The careful use of real world analytics combined with contextual qualitative understanding has the opportunity to reveal not only what people are doing, but also the nuances of how and why . . . this in turn will lead to the next round of service innovation insights”

Quality of service at the last mile will make or break African e-commerce startups

Photo: Techpoint.ng

Photo Credit: Techpoint.ng

With new e-commerce startups sprouting up everyday, competitive advantage in the urban African context will boil down to their quality of delivery and logistics managment. Given the lack of infrastructure such as home addresses, post codes with embedded information, or  as is the case in India – the last mile of delivery in the form of the village postman – the responsibility for ensuring customer satisfaction lies squarely on the shoulders of the online businesses themselves.

Online stores in more developed operating environments can focus on the aesthetics of their web presence, the design of an order form, or building a loyal community of users. Their business models emphasize the way they will distinguish themselves in a crowded marketplace and build brand awareness to gain a critical mass of customers.

But for the slew of  startups in emerging markets such as Nigeria’s or in the Cote d’Ivoire, it will be their distribution strategy and logistics management in the last mile that will differentiate the winners from the losers. Does the business plan have a viable solution for addressing this challenge?

New players are emerging who see this distribution need as an opportunity space, one such is ACE in Nigeria, whose last mile solution has been documented in detail by Techpoint.ng today. Others eyeing this lucrative space include the global courier behemoth DHL, whose forecasts are rubbing their hands with glee. Big or small, their ability to serve their customers’ needs will have impact on the entire value chain, both online and in the real world.

A matter of strategy: In house delivery or third party support?

With so much dependent on the quality of the customer experience at the moment of fulfilment – timely delivery, ease of payment, courteous service, receiving the correct order, etc – the decision to invest in building in house operations, like the well-funded Kongas and Jumias, or to outsource to third parties becomes a critical component of corporate strategy.

  • Which approach will allow you the opportunity to offer the best customer experience for your brand’s needs?
  • What happens when the still nascent market matures enough for potential conflict of interest with competing brands being delivered by the same service?
  • How important is your branding in the real world as compared to the virtual experience?

These are all the questions and more besides that startups will need to ask themselves, before their potential investors ask it of them. Word of mouth travels as fast the smartphones that are fuelling the internet boom and no amount of PR will help with ensuring quality of service that will make customers return for more.

Innovations in transport business models across Europe

Spotted outside the Zuid Park Business Center in Amsterdam, this is a taxi stand cum charging station for electric vehicles. And its not the only one, as I saw the same taxis waiting at Schiphol airport. They were asking half the price of a regular taxi for the trip to the center of town.

In the same parking lot, I also noticed these Smart cars from the Car2Go service, a pay for use rental car service. A similar service is also becoming popular in Tallinn, Estonia where you can access the vehicle directly via your mobile phone. Rent instead of purchase business models are popping up all over. Below is the line of bicycles waiting for customers in Barcelona – the only downside here is that registration for this service is limited only to ID holding residents of the city.

Mind you, the urban pay as you use bicycle concept is not new, though ubiquitious but the cafe/bar below is certainly different even though it won’t get you anywhere ;p

Impact of mainstreaming and commodification of cyber cafe services

Central Business District, Nairobi, 6th October 2011

Around 2007, the urban cyber cafe industry began to display signs of maturing as the market saturated and the services specific to internet access underwent a process of commodification.  As it came to be perceived as no different a business than setting up a corner kiosk or hot dog stand, there was a shift in the profile of owner/operators. Many employed professionals such as doctors, teachers, accountants et al purchased going concerns as a means to increase their income streams, considering it no different from owning any other type of  shop which could be manned and run by employees during the day.  While computer literate, few in this new segment of owners were the computer savvy technical specialists or hobbyists who’d originally set up internet operations as a business nor were their employees for the most part.

Given this context, Mathew, who runs a thriving cyber cafe business spread over three towns a couple of hours north of Nairobi, articulated three reasons why many cybers were seen to have shuttered their business:

1. Gaining a reputation for unreliability – Inexperience and/or lack of knowledge on basics like virus management, maintenance or even not knowing how to make all the equipment work meant that systems were often down or not working properly quickly leading to customers avoiding the shop.

2. Quality and training of staff – There would be a difference in operations if the owner were to check in with the business and dealt with issues as they arose rather than showing up once a week for example. Finding qualified people to manage the cafe in the meantime, ensuring that at least one person with the requisite technical knowledge was at hand or on call was imperative to ensure the smooth running of the operations and gaining customer confidence regarding the quality of services offered.

3. Customer relationship management – Thus, building relationships with customers, ensuring loyalty and repeat returns over the long term was of importance to sustain the business.  Mathew himself had a sophisticated customer loyalty program in use across his three cafes – a smart card which could be purchased for differing amounts in advance and printed with the customer’s photograph. He had set up a system by which his staff could monitor and track minutes used by this user base across the three different locations. It ensured loyalty as well as provided an upfront cash payment that is one of the benefits of a prepaid business model.

Perhaps this was why the decline was being seen so obviously in urban locations accustomed to having a cyber at every corner. In Mombasa, one of our interviewees mentioned that it felt like there was one in every building.  The urban industry had matured to the point that a cyber was as ubiquitous as an MPesa dealer or Coca Cola kiosk with the subsequent assumption by many that it could be run as easily as any other business. This aspect does not diminish the impact of other market forces such as internet enable mobiles and affordable data plans and modems but does help explain why we kept hearing that business was growing whenever we stepped out of the city.

As technology diffuses outward from the urban metros, the cybers are seen in ever smaller market towns and highway crossroads, that is, the industry is still in its growth phase, though certainly not in its infancy. A short conversation with a small town mobile shop assistant informed us that they were selling an average of 5 broadband modems a month and she herself found it cheaper and more convenient to browse via her phone. Another young man employed by a national operator observed that education was a critical factor as well – not in terms of the basics, as the region he supported had a very high literacy rate, but in terms of locales where more young people were going off to college and university, being exposed to the potential of this new technology then bringing it back home for it to spread further.

What this seems to imply is that its the casual or social browser – the chatting on IM, the Facebooking, the occasional email – who seems to have cut down on their cyber visits, and this is often the largest segment of people going online. The hard core enthusiasts, the business users or anyone who has not yet invested in their own set up but prefers the “comp” to quote one young man, aren’t abandoning their trips.

What is happening however to the industry as a whole is a natural evolution. In the city, its the innovators who are thriving even as the basic shops decline – a case of may the fittest survive. None among the knowledgeable IT savvy owner operators ever even considered the mobile as a threat to their business, perceived or otherwise. The only constant response to the subject was that of the pricing plans mentioned earlier.

While the answer to the question of whether its mobiles that are pushing the cyber cafes out of business seems to increasingly be a No, our exploration of market forces acting on the industry is still throwing up factors that we had not taken into consideration when we began.

Raising some concerns about urban user research insights being applied to design for rural markets

So, how exactly do you make this thing work again? (Jan 2009)

The Rural Market Insight Group at the Centre for Development Finance (CDF) conducted a six-week product test with a Base-of-the-Pyramid (BoP) household in Chennai, Tamil Nadu. The purpose was to explore whether urban user testing of rural-targeted BoP products yields relevant user insights in early design stages. Surprising results warrant further research of this potentially valuable technique.

It was with great interest that I browsed through the results of the CDF’s research conducted for a newly designed cook stove.  Their rationale for evaluating the applicability of their research results across the urban/rural divide was framed thus:

However, extensive rural user testing that would provide the necessary design insights is demanding for companies with limited time and budgets, looking to scale up quickly. Companies must locate rural test sites, target households willing to test and provide user feedback, make multiple site visits to collect data and analyse insights, modify prototypes and repeat the process several times in several locations.

A valid point. Particularly when the BoP market’s pricing requires minimizing sunk costs during the R&D phase.  The research team then tests the user testing process/methodology with an urban BoP user who shares many similarities with her rural cousins in her kitchen. Their findings include:

 While it will always be necessary to conduct BoP product testing with a rural target audience, urban testing can alleviate financial and logistical challenges that researchers face when conducting early-stage usability and design testing on BoP consumer energy products. Urban spaces offer high densities of BoP-product users, many of whom retain rural behaviours. Close proximity to potential testers allows for low-cost, high-contact interaction with testers and continuous tracking of user behaviours that would go unnoticed with less contact.

So why should there be any reason for concern? The team emphasizes the need to put the user at the center of the design process and articulates the challenges and limitations well.

Timing, context and relevance

The success of these findings should not imply that that understanding user behaviour among urban migrants from rural regions offer actionable insights for rural BoP users in their own environments.  User testing is not the same thing as user research, and certainly not exploratory or applied user research of the kind implemented to identify  opportunities or develop new market strategies.

What is the difference between user testing and user research as applied to the context of the user centered design process?

From Josh Walsh’s linkSimply put, the biggest difference is when they are used in the process.

Here, a product that has already been designed and prototyped is being tested in the field [implementation] in order to apply the findings to refine the design of the particular prototype. The basic idea or concept for a product emerges from the insights which are based on the initial user research (immersion) – the findings from prototype testing offer insights for improving an existing design but by this stage, but  will not answer the question of whether the basic design was appropriate for the user’s environment in the first place.

And if these research findings are also to be used to offer affordable and relevant products, then the financial behaviour as well as access to and affordability of the relevant fuel will change significantly between the urban and rural environments.

From the researchers’ own document:

The Quality of User Experience – Alben 1996
The UCD concept is based on questions about user experience with the product:

1. Does the user understand how to use the product?
2. How does the user feel while using the product?
3. Does the product serve its purpose?
4. How well does the product fit into the user’s environment?

Cost, Convenience and Caution

Refining an already designed prototype can certainly be done conveniently and cheaply nearby, however initial concept development and design strategy should not be assumed to rely on the same findings.

Another grey area of confusion emerges from the UCD process popularized in the development of softwares and websites, being conflated with the human centered design approach when it is implemented for industrial design of tangible artifacts that are manufactured with materials and resources.  It is far easier and cheaper to tweak a prototype for user interfaces or software applications and then test it with the users, after requirements gathering, than to change the basic engineering or mechanical aspects of a product’s design even in the prototype phase, once the concept has been developed.

Therefore, it is far more important to get the initial research done correctly among the target audience for actionable insights that lead to concepts and design criteria before the product is designed or prototypes are even built and test.  In the long run, that saves far more time and effort, not to mention costs, than attempting changes much later in the product development path. It is where major commitments are typically made involving time, money, and the product’s nature, thus setting the course for the entire project and final end product.

Here is a snippet on the role of User research or User centered research and the when and why  during the product design and development process:

User-centered research is regarded as an integral part of the design and development process. To most, UCR is presented as an essential component of how concepts are conceived, developed and tested in contemporary design. It is involved in all parts of the design process used to best address user needs and expectations. This entails using the research during early phases to identify new design opportunities as well as testing concepts during later development and postproduction phases. As such, the UCR is defined as a tool for  generating new opportunities as well as evaluating concepts in development.

Value for money and a return on investment

There are far too many well designed products for improving the lives of those at the Base of Pyramid that have never quite managed to achieve their goals than those that have succeeded.  Understanding the variety of powerful tools design makes available for observing our potential audience, their needs and their environment and knowing when to apply what and why can often save far more time, effort and money in the long run while improving the chances of success for the new product introduced.

Savings Circles

Sudha makes and sells floral garlands at Dharavi and as our conversation turned to savings she told me that she used bishi. I’ve spoken to a number of people at Dharavi who participate in bishi schemes (bishi = money matters in Marathi). Bishi is a kind of informal and voluntary local savings club which has a long history in India and has been employed rurally to also save and credit rice and grains. Bishi schemes constitute a type of Rotating Savings and Credit Association (ROSCA) – which are found across the world in base of the pyramid communities under a number of various names.

The schemes have various forms but at Dharavi basically go something like this example: a voluntary group is formed of 12 women within a particular community nominate an amount that they will each put into the scheme each month. (eg. Rs. 500) providing a monthly total of Rs 6000. Every month they will draw a saver’s name on a lottery system to be awarded the collective Rs 6000. Then that person will be removed from the list so that they cannot claim the full amount twice within a 12 month cycle. On occasion one of the participants may require credit from the group rather than waiting for their name to be drawn (eg. their cooker broke and they need to purchase a new one) They can appeal to the group and together they decide whether to award the full amount to them that month instead of using the lottery system.

Initially I had to work hard to put aside my assumptions about the inadequacies of bishi schemes. Yet after talking with a number of women I came to realise that they provide a local savings mechanism in which community participation creates a social pressure to save within a trusted environment with no transaction fees. The potential to fluctuate between emergency credit and the lottery system suits the flexible needs of investors. For some women I spoke to it wasn’t their only form of saving yet seemed to nurture a social platform on which to discuss money matters between women. Many were proud of what they had purchased via the scheme. (fridges, school fees, sewing machines, etc)

Some mentioned that even children run small bishi schemes, putting in Rs 2 each a day amongst 30 kids and drawing on a lottery system weekly to win Rs 420 – providing them more motivation to save than merely putting aside money alone which creates too much temptation to spend. Such incentivising to save is mentioned by all women I spoke to though others mentioned that the tendency to spend immediately on winning doesn’t support planned investment. Some told me it was an effective way of drawing some money away from male control of household finances.

The widespread and trusted nature of bishi schemes have indeed evolved into a number of more complex community run micro-finance models, some of which even intersect with more formalised banking. Merits and demerits aside – bishi highlights the social aspect common to many savings and credit schemes at the base of the pyramid.