Just a few years ago, Human Centered Design (HCD) was widely considered a key element in the development of DFC products and services, and featured prominently in industry discussions about the development of digital finance. And while recent years have witnessed incremental changes in the quality and relevance of digital finance products and services, considerable problems, particularly with regard to dormancy (see a previous Mondato Insight on the topic here) remain. Not even one quarter of all mobile money accounts were 30-day active in December (see infographic below), pointing to a significant ongoing lack of engagement between customers and providers of digital financial services in these developing markets.
But HCD is just the starting point to upholding a customer-centric approach to DFC. Unfortunately, however, keeping customers at the center of DFC businesses, and understanding customers' needs is often easier said than done, with the result that account dormancy and product irrelevance remain matters of considerable concern, despite the backdrop of continued growth in the overall number of mobile money (MM) and other digital finance accounts and products.
So while the sector overall appears buoyant (posting 25% growth year-on-year in the number of registered mobile money accounts) a peek below the surface reveals a level of stagnation that should be cause for concern, and which points to a phenomenon that HCD was supposed to address: despite the growing ubiquity of mobile money, the majority of MM account holders still firmly reside in underbanked or "irrelevantly banked" category. Indeed, as a recent GSMA blog post noted, "User Centric Design [UCD] is only as good as your commitment to improve the service over time." In other words, UCD/ HCD is only the front door, and the effort will be wasted if such an approach is a one-off event instead of an iterative process.
Customer-Centric Theory And Praxis
In order to address this problem, in recent years stakeholders and practitioners have doubled-down on research and investment in resources that enable digital finance providers, including mobile money deployments, to adopt customer-centric processes that permeate the totality of the customer/business relationship. This begins with the (human-centred) design of digital finance products and services that must ultimately feed into the customer relationship life-cycle.
So, for example, the GSMA has long emphasized the importance of customer centricity in a wide range of its initiatives, from the design of mobile services for women to its projects on digital identities and interoperability. Similarly, going back to 2014, CGAP has been sounding the customer-centric call in specific relation to financial inclusion.
But with the recent release of its Customer Centric Guide and a range of extensive and detailed toolkits (e.g. the change management toolkit for delivering customer centricity runs to over 150 pages), CGAP has thrust the topic back into the spotlight. Moreover, the wide range of resources now available that are geared towards the DFC sector has flooded the space with a comprehensive range of conceptual frameworks and practical tools.
Most notably, the "Voice of the Customer" (VoC) toolkit provides an accessible and actionable to do list for DFC businesses seeking to improve DFC solutions for low-income customers.
The CGAP Voice of the Customer Toolkit offers guidance on creating customer solutions through feedback loops that drive providers from “listening” to “acting.” Voice of the customer (VoC) solutions focus on listening to customer voices and responding by improving products, services, and, ultimately, the end customer experience. The ultimate goal of every VoC solution is to unlock value for both providers and their customers.
CGAP Voice of the Consumer Toolkit
Voice of the Consumer
This VoC approach is an attempt to get at something of a paradox that lies at the core of digital finance. As the introduction to the CGAP toolkit accurately observes, "Often, today’s customers no longer have actual people to reach out to – people who can act on questions, complaints, or feedback. In the leap from cash to digital financial service, this may erode customer trust. Providers, too, have become overwhelmed with the transition to digital and often end up disconnected from the experience of their customers." The very technologies that make digital finance possible, accessible and scalable have also created a digital barrier between customers and service providers that hinders the development of useful and relevant digital finance products and services and holds back the growth of financial inclusion.
The key to overcoming this barrier and recreating meaningful connections between provider and customer is effective customer feedback loops. This will obviously include such well-known customer experience metrics such as Net Promote Score, Customer Effort Score and Customer Satisfaction Score. These metrics are only of limited use if they are not accompanied by an implementation plan that works towards turning the data into customer-centric solutions. For this reason, the toolkit recommend (in addition to Customer Effort Score), the adoption of Loyalty Measurement Index (LMI) and Return on Customer Experience (ROCE) as preferred metrics for measuring the success of VoC solutions, paying attention as they do to the SMART (specific, measurable, achievable, realistic and timely) project-management schema.
In other words, it is not enough for providers to just listen to customers, they have to act on what they hear:
The LUPA Framework
Listen to customers by gathering feedback
Understand their needs and perspectives
Plan and evaluate changes needed
Act to implement and monitor improved customer experience
Indeed, the VoC solution case studies/ pilots that form the backbone of this toolkit and its associated resources make them of interest to a broader audience than just those in the management tiers of DFS providers. Concrete examples of implementation by a variety of DFS providers, including CARD Pioneer Microinsurance (CPMI) in the Philippines, Wave Money (a mobile financial service provider) in Myanmar, AMK Cambodia (a deposit-taking microfinance institution in Cambodia), M-Pawa Tanzania, MetLife in South Korea and Tigo Money Paraguay, among others, are all cited, with reference to results achieved by the implementation of specific VoC strategies.
Source: CGAP VoC Toolkit
These sorts of hands-on, practical toolkits are a welcome addition to the resources available to DFC service providers. And although there are many, many factors that contribute to or inhibit the growth of active mobile money and digital finance accounts, the proof of their value will be reflected in the account dormancy and other data points in years to come. However, there is already a large body of research establishing a strong business case for customer centricity.
One Harvard Business School study demonstrated that businesses that focused on customer solutions rather than pushing products outperformed the S&P 500 by 136 percentage points over the 2001-2007 period. Other research has demonstrated that a 1 percent increase in customer satisfaction results in a 2.37 percent increase in return on investment (ROI), while a 1 percent decrease in customer satisfaction causes a shrinkage in ROI of over 5 percent. Setting aside the desirability of expanding financial inclusion from a human development perspective, DFS providers need to take note and take action from a purely business angle.
The idea that the customer is always right is as sound business advice as it was over one hundred years ago, when first uttered by Harry Selfridge. DFS and Mobile Money providers need to listen more to their customers, but more crucially, then act on it.