Upload
lekhanh
View
232
Download
4
Embed Size (px)
Citation preview
LAO PDR EXPOSURE VISIT TO UGANDA:
CUSTOMER CENTRIC PRODUCT DEVELOPMENT
KEY LEARNINGS REPORT
18th – 22nd January 2016
Kampala, Uganda
Customer Centric Product Development Key Learning Report 2
Table of Contents
INTRODUCTION ............................................................................................................................. 1
OVERVIEW OF EXTERNAL CONSIDERATIONS FOR DFS ........................................................ 2
Key learning examples of Regulation and Business Models ....................................................... 2
Key Learning examples of Country Infrastructure Conditions ................................................... 3
Key Learning examples of socio economic conditions ................................................................ 3
OVERVIEW OF INTERNAL CONSIDERATIONS FOR DFS ......................................................... 3
Key learning examples of Institutional Readiness ...................................................................... 4
Key Learning examples of the Value Proposition for Customers ............................................... 4
DFS ECOSYSTEM AND OPERATING MODELS ........................................................................... 5
Key learning examples of Bank DFS Management Policy .......................................................... 6
Key learning examples of Telco DFS Management Policy .......................................................... 6
CUSTOMER CENTRIC PRODUCT DEVELOPMENT ....................................................................7
Key learning examples of Product Development Process ........................................................... 8
Key Learning examples of Pricing Strategies ............................................................................. 11
FRAUD AND RISK MANAGEMENT ............................................................................................ 11
Key Learning examples of Fraud & Risk Management .............................................................. 12
ANNEXURES ................................................................................................................................. 13
Sheila Okiro of MicroSave presents about the Product Development Process
Customer Centric Product Development Key Learning Report 3
List of Tables
Table 1 DFS Customer Offering and Value Proposition ................................................................. 4 Table 2: Basic Pricing Methods ..................................................................................................... 15
Delia Dean of MicroSave (r) with MTN Master Agent discussing the review of Agent records
Customer Centric Product Development Key Learning Report 4
Delia Dean of MicroSave (standing left) discussing the range of products offered by MTN - Uganda’s leading MNO
List of Figures
Figure 1 Digital Financial Services Ecosystem ............................................................................... 5 Figure 2: Customer Segmentation Criteria ..................................................................................... 9 Figure 3: Pricing Strategies ............................................................................................................10 Figure 4: Pricing Methods ............................................................................................................. 11 Figure 5 DFS stakeholder Value Proposition ................................................................................ 13 Figure 6: Systematic Project Based Approach to Product Development ...................................... 13 Figure 7: Customer Value Proposition for Product Development ................................................. 14 Figure 8: User Centered Design Tools ........................................................................................... 14 Figure 9: Pricing Strategy Application Framework ....................................................................... 15 Figure 10: Overview of Impact of Fraud ........................................................................................ 16
Customer Centric Product Development Key Learning Report 1
INTRODUCTION
From 18-22 January, 2016, 8 delegates from Laos, representing Banks, MNOs, and the Bank of
the Lao PDR visited Uganda on an exposure visit with a mission to learn about one of the most
developed DFS ecosystems in the world.
The specific objective of the exposure visit was to build the knowledge and technical capacity of
Lao DFS providers about the importance of human centered product development.
Specifically to help the participants to thoroughly understand the product development cycle
from idea creation to design, implementation and product delivery – always
keeping in mind their local context and target customer segment. Uganda was selected
as the destination for this exposure visit due to its well developed and growing DFS ecosystem
that supports a diverse range of innovative customer –centric products.
The week-long event was structured to combine classroom learning of theory and discussion of
product development and meetings with those local partners who are active in the development
and roll-out of innovative DFS products.
Meetings were conducted with Banks (Centenary Bank, Equity Bank, and Stanbic Bank) MNOs
(MTN and Airtel) as well as technology partners, aggregators, and Master Agents.
The goals of the Exposure visit were:
To train the Lao delegates on the process to develop different DFS products based on the customer needs and preferences and also to develop product development action plans.
To provide an in-depth understanding of the conceptual and practical issues involved in DFS product development.
Expose participants to the product development process through meeting and discussion with providers of DFS services.
Equip participants with a framework and/or roadmap for developing customer centric products.
Provide participants with an in-depth and practical understanding of how products can be designed and implemented so as to not just provide basic CICO(Cash In Cash Out) services but to promote livelihoods, increase financial inclusion, and achieve developmental outcomes.
Expose participants to understand a range of product possibilities now available, lessons learned about leading product practices, and insights gained.
This report is intended to summarize the key takeaways from the exposure visit and reinforce the most important elements of customer centric product development.
Customer Centric Product Development Key Learning Report 2
OVERVIEW OF EXTERNAL CONSIDERATIONS FOR DFS
1. Assess the Regulatory Environment
Regulations
1. Regulations are directed towards the primary players in the DFS ecosystem i.e.
Commercial Banks and MNOs. When third party operators partner with Banks and MNOs
they are also governed by the regulations of their partners.
2. Key regulations for Commercial Banks and MNOs typically cover the following:
a. Mobile Banking and Mobile Money.
b. Payment Systems.
c. Consumer and Data Protection.
d. KYC and AML requirements.
e. Taxation considerations.
Regulation Impact Areas
a. Business Model
b. Business Continuity
c. Products and Services
d. Technology
e. Partnership Choices
f. Marketing and Communication
g. Risk Management and Consumer Protection
Key learning examples of Regulation and Business Models
a. Uganda uses a bank led model and MNOs partner with Banks to provide DFS services.
MTN Uganda has partnered with Stanbic Bank to offer their mobile money
services. In this partnership Stanbic Bank holds the trust account while MTN owns the
customer and facilitates the issuance of e-money.
b. Kenya allows Telco (Safaricom, Airtel), Bank (Equity, Co-operative) and Third Party
Models (MobiKash) to operate independently and even to collaborate (Equity and Airtel
for the Equity MVNO service (Mobile Virtual Network Operator).
c. Consumer Protection is mandated in the regulation and is evidenced through mandatory
visible display of product/service fees at Agent outlet. A call center and other
recourse for customers to address grievances is also required.
2. Understand the Prevailing Country Infrastructure Conditions and its effect on
DFS.
Key Infrastructure Considerations
a. Mobile Penetration and Market Share.
b. Mobile network coverage and connectivity.
c. Power availability.
Customer Centric Product Development Key Learning Report 3
d. Road network availability and access to rural and remote areas
Importance of Country Infrastructure
a. All of the above infrastructure conditions play an important role in starting and
managing the deployment of DFS
b. Existing technology infrastructure can enable low cost technology based payment
systems- but the absence of transport infrastructure may erode those costs savings.
Key Learning Examples of Country Infrastructure Conditions
a. High mobile penetration and network coverage are key foundations to a thriving DFS
market. MTN has the highest penetration in the Uganda and this has helped them
introduce and scale their mobile money offering. MTN also has the highest number of
active mobile money users.
b. Centenary Bank has a large customer base of more than 1 million active accounts 73%
of which are card linked. These factors are favorable for their DFS roll-out based on POS.
c. Availability of power is a basic consideration for Agency Banking roll out in Uganda (where
as little as 15% of the population has access to electricity). For this reason agents will
typically be found in town centers and activity hubs which have a source of power.
3. Understand the socio-economic conditions affecting DFS
Key Factors to Assess
a. Literacy and technology proficiency
b. Financial Access
c. Social norms and Value Systems
Key Learning Examples of socio economic conditions
a. The DFS products rolled out in Uganda by both Banks and MNOs predominantly use
basic handsets with the primary access being USSD. e.g. (*123#).
b. Poor penetration of traditional banking services results in limited financial access to
millions of people especially those in rural areas. Uganda’s economy is largely rural and
agricultural and therefore Uganda can readily see the benefits from DFS.
OVERVIEW OF INTERNAL CONSIDERATIONS FOR DFS
1. Determine Institutional Readiness
a. Strategy and execution capability
b. Product and marketing
c. Partnership and Delivery Channels
d. Fraud and Risk Management
Customer Centric Product Development Key Learning Report 4
e. IT Management
f. Agent Management
g. Customer Service and Operations
Key learning examples of Institutional Readiness
a. Equity Bank Uganda in preparing for Agency Banking is borrowing the technology
used in their parent company and augmenting this with biometrics to address the local
context - specifically the challenge of a lack of a national identification system.
b. Centenary Bank recognizing their technological shortcomings opted to partner with
four different providers. As a result, their mobile banking has disparate systems integrated
that are providing a seamless service i.e. USSD from one aggregator, core mobile platform
provider, aggregator who interfaces with both Telco and the mobile platform provider.
c. Aggregators. Pegasus demonstrated that they supply their technological services to
various players e.g. connecting the MNOs and Banks to the utility companies and other
billers.
2. Assessment of Customer Demand and Determination of Customer Value
Proposition
DFS CUSTOMER OFFERING AND VALUE PROPOSITION
DFS CUSTOMER CATEGORY
PRODUCT OFFERING VALUE PROPOSITION
Retail Consumer Airtime top-up Money transfer Bill payments Deposits-cash, electronic cash
withdrawals
Convenience Lower transaction cost Increased security Ease of use
Agents Airtime top-up Money transfer Bill payments Deposits-cash, electronic Cash withdrawals Retail financial services
Convenience Lower transaction costs Increased security Increased revenue Increased foot traffic Record management
Disbursing Entities Electronic disbursements Bill payment Bill confirmation Loan repayments
Convenience Lower transaction costs Increased security Increased efficiency Greater reach
Table 1 DFS Customer Offering and Value Proposition
Key Learning example of the Value Proposition for Customers
a. Equity Bank highlighted its value proposition for Agency Banking in their ability to settle
Agent transactions in real time as well as having an experienced team in place to support the
Customer Centric Product Development Key Learning Report 5
Agency Business model. Their advanced technology and use of biometrics added to the value
proposition for Agents.
DFS ECOSYSTEM AND OPERATING MODELS
1. Ideal Components
a. Connectivity
b. Cash in/Cash Out Networks
c. Customer Authentication
d. Virtual Accounts
e. Payment Platform
f. Common Business Rules and Technical Standards
Digital Financial Services Ecosystem
Figure 1 Digital Financial Services Ecosystem
2. DFS Operating Models
Types of Models
a. Bank Led Model
Customer Centric Product Development Key Learning Report 6
b. Telco Led Model
c. Third Party Led Model
Some Effects of Provider Positioning
a. Bank – Led
i. Bank will likely use a “hub and spoke model” leveraging branch infrastructure
to manage agents in a geographical proximity.
ii. Bank will want to use MNOs as delivery channels to garner access to their client
base, but will be reluctant to do so if they feel they will then not be able to
control the channel.
iii. Will likely try to use its own financial infrastructure to manage float and will
be less likely to involve other financial institutions. Holding the trust account
can be an additional
Key learning examples of Bank DFS Management Policy
a. Centenary Bank provides agency services within their existing branches.
Management is within the Banks’ existing infrastructure.
b. Equity Bank has assembled an in-house team to support the Agency Banking
model. A core team will sit at the Headquarters with representation at branches
spread across the country to support growth and management of the network.
This is a hub and spoke approach both from a team management and agent
outlet management perspective.
c. Equity and Co-operative Bank in Kenya have bank-led wallets and
manage the float internally. Customer funds are already protected under
Central Bank of Kenya regulations.
b. Telco – Led
i. It is very likely to put itself in the delivery channel category, ensuring the ability
to influence the channel, and is very likely to not place other MNOs in the
delivery channel.
ii. Is very likely to build the delivery channel on its existing GSM distribution
network, reaching scale quickly
iii. Will likely use an array of financial institutions for Trust Account hosting and
liquidity management, and may eventually bring them in as channels
themselves.
Key learning examples of Telco DFS Management Policy
a. Airtel assumes a hybridized agent management approach. Master Agents are
recruited and managed by the Telco. The Master agents then have the
responsibility of recruiting and managing the atomized agents. This includes
training them and assisting them with float management.
Customer Centric Product Development Key Learning Report 7
b. MNOs by regulation cannot host customer deposits and need to partner with
commercial Banks for this function. This applies in both the Kenyan and
Ugandan markets.
c. Third Party – Led
i. It will try and partner with all banks and telecoms to offer customers the most
interconnected system with as many options as possible.
CUSTOMER CENTRIC PRODUCT DEVELOPMENT
1 Product Development Process
a. Evaluation and Preparation
i. Analyze the institutional capacity and “readiness” to undertake product development ii. Assemble the multi-disciplinary product development team, including a “product
champion”
b. Market Research
i. Define the research objective or issue. ii. Extract and analyze secondary market data.
iii. Analyze institution-based information, financial information/client results from Consultative groups, feedback from frontline staff, competition analysis, etc.
iv. Plan and undertake primary market research.
c. Concept/Prototype Design
i.Define initial product concept ii.Map out operational logistics and processes (including MIS and personnel functions)
iii.Undertake cost analysis and revenue projections to complete initial financial analysis of a product.
iv.Verify legal and regulatory compliance v.On the basis of the above plus client feedback sessions, refine the product concept into a
Product prototype in clear, concise, client language vi.Finalize prototype for final quantitative prototype testing or pilot testing, according to
The risk/cost nature of the product
d. Pilot Testing
i. Define objectives to be measured and monitored during pilot test, primarily based on
financial projections ii. Establish parameters of pilot test through the pilot test protocol, including sample size,
location, duration, periodic evaluation dates, etc.
Customer Centric Product Development Key Learning Report 8
iii. Prepare for pilot test, install and test systems, draft procedures manuals, develop marketing materials, train staff, etc.
iv. Monitor and evaluate pilot test results v. Complete recommendation letter documenting the results of the pilot test, comparison
with projections, lessons learned, finalized systems/procedures manuals, etc. and the initial plans for the roll out
e. Product Launch and Rollout
i. Manage transfer of product prototype into mainstream operations ii. Define objectives to be measured and monitored during roll out based on financial
projections iii. Establish parameters of rollout through the rollout protocol including schedule,
location, tracking, budget, process iv. Prepare for rollout, install and test systems, finalize procedures manuals, develop
marketing materials, train staff etc. v. Monitor and evaluate rollout process and results
Key learning examples of Product Development Process
a. Airtel in developing their Airtel Weza savings product went through a detailed pre
and post development process. To define the product features they did primary
research through interviews and focus group discussions. They also made use of paper
prototypes in product conceptualization. This process may appear long but the result
is a rewarding product that resonates with customers.
b. Airtel miss stepped with their football ticketing product. They commenced the
product development without proper research and realized later that the product did
not have a compelling value proposition. The product had been offered before so a
product analysis both in terms of features and performance would have been beneficial
if done earlier.
c. MTN has a market research team tasked with scanning the environment for business
opportunities.
d. MTN has a rigorous post roll-out function that closely monitors the performance of
every product. The post roll-out monitoring assists with product refinement or roll
back. The monitoring goes on for a three month period.
e. MTN as rule of thumb emphasizes below the line (BTL) marketing approach for new
product launches. This allows for closer interaction with customers and enhances the
education/learning process. This approach also allows them to make any needed
changes to the products before they fully pick up in the market.
2 Product Design and Differentiation
a. Market and Consumer Research & Insights
b. Customer Segmentation. This is the classifying of existing/potential clients in groups
with similar characteristics. Segmentation helps to:
Customer Centric Product Development Key Learning Report 9
i. Identify opportunities for future business development
ii. Increase your product strategy and pricing options
iii. Achieve more effective outreach
Customer segmentation Criteria
Figure 2: Customer Segmentation Criteria
c. User Centered Design
i. This is giving attention to the needs, wants, and behaviors of the target customer
in designing solutions
ii. It helps ensure products meet real needs and thus have greater chances of
success from the start.
3 Product Pricing
a. Key Considerations in DFS Product Pricing
i. Internal Considerations:
Business Objective
Product Evolution
ii. External Considerations:
Partnerships
Regulation
iii. Fundamental Considerations
Cost
Competition
Value
Customer Centric Product Development Key Learning Report 10
b. Focus of Pricing Strategy
Figure 3: Pricing Strategies
Cost Focused Pricing:
Establish costs related to the product.
Determine an acceptable margin to add to the product cost.
Competition Focused Pricing:
Do competitor analysis and look at both formal and informal offerings
Use the market intelligence available and information gathered from market
research
Value Focused Pricing:
Identify and understand customer pain points with current solutions available
Understand ability and willingness to pay
Calibrate price to mimic this
c. Pricing Methods
Below are the four basic methods of pricing applied in DFS often in combination for
different aspects of their offering.
Customer Centric Product Development Key Learning Report 11
Figure 4: Pricing Methods
Key Learning examples of Pricing Strategies
a. Agency banking fees for customers are based on a tiered basis as seen at the Master
Agents and agent outlets for Airtel and MTN.
b. Agent, Master Agent and Super Agent commissions are based on a percentage basis as
seen at Airtel and MTN.
FRAUD AND RISK MANAGEMENT
1. Definition of DFS Fraud
This is intentional & deliberate action undertaken by any player in the DFS ecosystem aimed at
deriving gain, and/or denying other players revenue and/or damaging the reputation of the
other stakeholders.
2. Fraud Mitigation in Product Development
a. Ensure Customer Protection and Support
i. Apply client protection principles
ii. Provide financial education/financial consumer awareness
iii. Provide ccustomer service/ grievance redress
iv. Compensate victims of fraud in cases when customer was not at fault
v. Standardise branding and information posters
b. Deploy Control Systems
i. DFS channels monitoring
ii. Agent supervision and monitoring
iii. Mystery shopping and compliance management
iv. Daily reconciliation of accounts
v. Periodic process review security certification (ensuring IT security)
vi. Exemplary punishment for perpetrators of fraud
vii. Business rules such as authority limits, transaction limits, reconciliation policies,
four-eye principle
c. Enable The Organization and its People to Fight Fraud
Customer Centric Product Development Key Learning Report 12
i. Implement third party management / governance policies (technology provider,
3rd party agent networks, brand managers and so on)
ii. Preferably have a dedicated fraud/compliance team
iii. Implement a Fraud and Risk management programme
iv. Institute leadership, management and staff responsibilities in relation to
governance, security, monitoring and fraud risk mitigation
v. Provide staff performance incentives and disincentives
vi. Establish an Agent network strategy and management policy
vii. Constant product development
viii. Provide Whistle blower hotlines and incentives
d. Use Enabling Technologies
i. Evolution of biometrics
ii. Migration to cloud environment
iii. Greater centralisation of transaction management, data storage and security
iv. Online and real-time transaction processing
v. Adopt new security standards and schemes (combination biometrics, 3D secure)
vi. Use of analytics for pattern identification, identifying suspicious transactions
Key Learning examples of Fraud & Risk Management
a. The Master Agents demonstrated their digital/on screen monitoring of agents at
the outlets. This is used to assess the levels of operation and availability of e-money.
This helps in managing business risk through proactive distribution of liquidity and
also identifying inactive or sluggish outlets that can then be targeted for further
training or discontinuation.
b. Airtel has a full time Head of Compliance within the business whose primary role is
to monitor operations across the different strategic business units and ensure they
are working within policy and regulation.
c. Equity Bank intends to make use of biometrics for its Agency Banking to counter
the risk of fraud.
Customer Centric Product Development Key Learning Report 13
ANNEXURES
1. DFS Stakeholder Value Proposition
Figure 5 DFS stakeholder Value Proposition
2. Key Principles for DFS Product Development
Figure 6: Systematic Project Based Approach to Product Development
Customer Centric Product Development Key Learning Report 14
3. Identifying the Right Customer Value Proposition
Figure 7: Customer Value Proposition for Product Development
Customer Centric Design Tools
Figure 8: Customer Centric Design Tools
Customer Centric Product Development Key Learning Report 15
4. Pricing Basics and Application Framework
Review of Basic Pricing Methods
Table 2: Basic Pricing Methods
Pricing Strategy Application Framework
Figure 9: Pricing Strategy Application Framework
Customer Centric Product Development Key Learning Report 16
5. Overview of Impact of Fraud
Figure 10: Overview of Impact of Fraud