the rise and rise of digital lending
TRANSCRIPT
THE RISE AND RISE OF DIGITAL LENDING
5th Annual Africa Banking & Finance ConferenceNairobi, Kenya
19 MAY 2015
PRESENTATION AT A GLANCE
1. Introduction to the Financial Inclusion Insights Program
2. Bank customer segmentation, journey, demographics and financial behavior.(Nigeria & Kenya)3. Challenges & Opportunities for Banking sector.
FII – COUNTRIES AND CONTENT
A combined 2 billion-plus population representing a mix of more-advanced and early-stage DFS markets
A combined 2 billion-plus population representing a mix of more-advanced and early-stage DFS markets
Annual, nationally representative surveys of adults in 8 countries (n = 3,000 to 45,000), which… Track access to and
demand for financial services generally, and the uptake and use of DFS specifically;
Measure adoption and use of DFS among key target groups (females, BOP, rural, unbanked, etc.);
Identify drivers and barriers to further adoption of DFS;
Evaluate the agent experience and the performance of mobile money agents; and
Produce actionable, forward-looking insights to support product and service development and delivery, based on rigorous FII data.
HOW DOES FII’S DEMAND-SIDE RESEARCH ASSISTS IN PROMOTING THE EXPNSION OF DFS?
By providing knowledge and insights on:
• Client pain points in the current methods of transaction to help identify potential for introducing new/modified products and services
• Triggers and barriers to uptake and usage of services including quality of service, accessibility, cost, trust, awareness, education, and lack of financial literacy to inform providers’ strategy for promoting their services/products and engaging with existing and potential clients
• Transactions/financial activities that would benefit from digitalization to advise providers and donors on priority areas for digitalization
• Potential for digitizing payment streams in industry value chains -- for example garment industry, agriculture, government benefits – to advise how to target decision-makers with the right message to enable identified sectors adopt DFS
FII RESEARCH ELEMENTS: TRACKER SURVEY Data collected
Core data: Basic demographics Poverty measurement (Grameen Progress out of Poverty
Index (PPI)) Access/use of mobile devices Access/use of mobile money (MM) Access/use of formal financial services (e.g., bank accounts) Level of satisfaction with financial service providers and
products
Extended core data: Trust in financial services Use of “informal” financial services Use of digital/prepaid cards Use of savings instruments Use of insurance instruments Borrowing and lending habits
Additional data (selected countries): Mobile money adoption influencers Financial service interoperability Technical issues in mobile money use Perceptions/Opinions on consumer issues related to
interoperability Perceptions of fraud in mobile money
Survey summary
• A national survey representative of all adults aged 15+ living in the selected country, conducted annually
• Sample sizes large enough to facilitate demographic and geographic analysis
• Face-to-face interviews lasting on average 44 minutes
• Rigorous data quality control procedures
• Collection of participants’ household GPS coordinates
• FII Wave 1 provides baseline measurements. Subsequent annual surveys will measure trends and track market developments in DFS
• Datasets posted on online query tool and SPSS datasets available upon request
• First and Second wave datasets available
Data analysis at your fingertips http://finclusion.org/datacenter/
http://finclusion.org/datacenter/
FII ONLINE DATA CENTER
FII RESEARCH EXAMPLES BY COUNTRY: THE CASE OF KENYA AND NIGERIA
REGISTERED INACTIVE USERS Have a bank account in their name and have not used it for more than 90 days
preceding the survey.
UNREGISTERED USERS Use somebody else’s bank account to
transact.
ACTIVE REGISTERED USERS Have a bank account in their name and have used it for at least one transaction
in the last 90 days.
SUPER USERS Have a bank account in their name and use the account at least once a week to make at least one beyond-basic-wallet
transaction.
2%
7%
6%
15%
4%
6%
28%
9%
29% of Kenyans 43% of NigeriansAdults using banks
Source: InterMedia Kenya FII Tracker survey (N=2,995, 15+), September 2014. & InterMedia Nigeria FII Tracker survey (N=6,000, 15+) June-August 2014. .
BANK CUSTOMER SEGMENTATION
Super use
Regular use (active registered users)
Registration
Trial (ever used)
9%
38%
43%
50%
BANK CUSTOMER JOURNEY: FROM TRIAL TO SUPERUSE
Super use
Regular use (active registered users)
Registration
Trial (ever used)
7%
15%
28%
29%
Source: InterMedia Kenya FII Tracker survey (N=2,995, 15+), September 2014. & InterMedia Nigeria FII Tracker survey (N=6,000, 15+) June-August 2014.
Nigeria bank users(Shown: Bank users, n=3,141)
Kenya bank users(Shown: Bank users, n=923)
0.9
0.9
0.2
0.6
0.5
1.0
0.18 0.24
21ppt
2ppt
Demographics
Profile of key bank account users
Unregistered users (n=52)
Registered inactive users (n=205)
Active registered users (n=461)
Super users (n=205)
% male 22 58 61 69
% female
78 42 39 31
% urban
41 45 52 59
% rural
59 55 48 41
% above poverty
49 67 73 86
% below poverty
51 33 27 14
Above poverty group are leading in usage of banks
Demographics
Profile of key bank account users
Unregistered users (n=356)
Registered inactive users (n=213)
Active registered users (n=1876)
Super users (n=611)
% male 29 49 57 65
% female
71 51 43 35
% urban
55 58 50 55
% rural
45 42 50 45
% above poverty
3 9 12 14
% below poverty
97 91 88 86
Super users and active bank account holders are mainly poor, males whereas unregistered users are poor, females.
Kenya Nigeria
Source: InterMedia Kenya FII Tracker survey (N=2,995, 15+), September 2014. & InterMedia Nigeria FII Tracker survey (N=6,000, 15+) June-August 2014.
BANK CUSTOMER DEMOGRAPHIC CHARACTERISTICS
Demographics
Profile of key bank account users
Unregistered users (n=52)
Registered inactive users (n=205)
Active registered users (n=461)
Super users (n=205)
% have a job (regular, self-employed or occasional assignments)
61 75 82 89
% not working
49 25 18 11
% have an account with semi-formal FIs
6 32 32 51
% have loans
22 31 29 38
% save 71 84 92 98
% have emergency fund
33 38 46 51
Saving is the leading activity with the banks.
Demographics
Profile of key bank account users
Unregistered users (n=356)
Registered inactive users (n=213)
Active registered users (n=1876)
Super users (n=611)
% have a job (regular, self-employed or occasional assignments)
50 68 70 70
% not working
50 32 30 30
% have an account with semi-formal FIs
15 12 13 15
% have loans
11 12 10 9
% save 59 90 95 97
% have emergency fund
47 53 59 66
Majority of super users are employed & save money.
Kenya Nigeria
Source: InterMedia Kenya FII Tracker survey (N=2,995, 15+), September 2014. & InterMedia Nigeria FII Tracker survey (N=6,000, 15+) June-August 2014.
BANK CUSTOMER FINANCIAL BEHAVIORS
CHALLENGES FOR DIGITALIZATION
• Poor Infrastructure• High poverty levels • Low education levels• High rate of rurality
SIMILARITIES: KENYA & NIGERIA
DIFFERENCES: NIGERIA ONLY
• Poor Network
• Lack of MM awareness & usage
Client pain points help identify potential for introducing new/modified products and services
Downtime and technical issues are a big complain, especially among bank users in Nigeria who face teller-system and ATM outages. Creating minimum uptime standards could help improve consumer trust in providers and increase attractiveness of banking services.
Network downtime
Very high mobile phone ownership at 87% of adults in Nigeria and 73% in Kenya can be leveraged to offer convenient mobile banking to those in rural and remote areas
Mobile ownership
9% of Kenyans and 8% of Nigerians receive G2P payments. Yet, only a small fraction of them use banks to such activities. Leveraging the high level of trust for banks and G2P continuous flow, banks can develop attractive G2P and P2G products.
Bill pay
ABOUT INTERMEDIA
• We are an independent, global consultancy with expertise in research and evaluation, particularly in low- and middle-income countries.
• InterMedia’s work supports strategic decision-making and program assessment by a range of clients and partners, including: international development agencies, philanthropic foundations, program implementers, content providers, government departments and commercial firms.
• InterMedia helps clients and partners understand the people and businesses they intend to support or engage. Most of our work focuses on producing practical “demand side” insights.
Thank youFor more information, visit www.finclusion.org
Lucy Kaaria, Research Associate, InterMedia [email protected]
Dr. Anastasia Mirzoyants-McKnight, Director of Research and Operations, InterMedia [email protected]