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ConsumerBehaviorsinBeninAnalysisandFindingsUnitedNa*onsCapitalDevelopmentFund

Background

•  UNCDF,FinanceInclusiveetDéveloppementlocal

•  MobileMoneyforthePoor•  Augmenterl’accèsauservicesfinanciersvial’u*lisa*ondetechnologieetagents

•  ProgrammesenOuganda,auMalawi,auLibéria,enZambie,auLaos,auNépal,auSénégaletauBénin

•  Plusieursdonateurs,ProgrammeGlobal(UNCDF,Sida,AusAID,Fonda*onGates,Fonda*onMasterCard)

•  Alignéaveclesini*a*vesdeUNDPetUNCDFdanslesPayslesMoinsAvancés(PMA),travailledemanièreétroiteaveclesprogrammesconjointsUNCDF/UNDPdeFinanceInclusive

2

Thisreportreliesondatacollectedthroughmixedmethods,bothquan=ta=veandqualita=ve

•  Quan*ta*veSurveyconductedonasampleof3,042Benineseaged15+betweenDecember2015-February2016

•  Qualita*vestudyconductedthrough:!  Focusgroups!  Dynamicfocusgroupobserva*oninthreeloca*ons(fourgroupseachloca*on,6to

8par*cipantseach)•  Aguegue•  Bohicon•  Banikoara

!  In-depthinterviews(16perloca*on)

•  Par*cipantsinclude:!  Newusersofdigitalfinancialservices(DFS)!  Prospec*veusersofdigitalfinancialservices!  MFIusers!  Women(foragender-specificapproach)

3

Execu=veSummary

Key Findings

5

•  TheBeninesefinancialmarketoffersconsumersdifferenttypesoffinancialservices,includingformalandinformalop*ons.Withinthismarket,25%ofBenineseadultshaveusedaformalfinancialproduct.!  Onlyabouttwo-thirdsofformalfinancialproductusageiswithdigitalaccounts(providingsomeformofdigital

access).•  While25%haveusedaformalfinancialproduct,just20%ofBenineseadultssaythattheyhavetheirown,registeredformal

financialaccountintheirownname,makingthemfinanciallyincluded.Only11%haredigitallyfinanciallyincluded,meaningtheyhaveafull-servicedigitalfinancialaccount.!  Mobilemoney,banksandnonbankfinancialins*tu*ons(NBFIs)alldrivefinancialinclusion,innearequalparts.!  Onceaconsumerhasanaccount,theytendtoac*velyuseit.Eightinten(80%)accountholdershaveusedtheir

accountinthepast90days!  Thosewhoarecurrentlyfinanciallyincludedaremoreeducated,liveinurbanareasandareemployed.Theyalsoare

ac*velyusingtheiraccounts,sugges*ngapoten*al“earlyadopter”biasamongcurrentusers.•  Awarenessofmobilemoneydoesnotconverttoregistereduse.Overhalf(54%)ofadultsknowofmobilemoney,47%are

awareofamobilemoneyprovider,yetonly11%haveusedmobilemoney,with9%havingaregisteredmobilemoneyaccount.

•  MoreBeninesearefinanciallyac*vethanhaveformalaccounts,indica*nganeedsgapaswellasinterestsinfinancialmechanisms.!  Closetohalfofadultssave47%,eventhoughonly20%haveformalaccounts.Twentypercentofadultsalsohave

borrowedmoney.Muchofthesavingsandborrowinghappensthroughinformalmechanisms.!  Informalfinancialmechanismsareusedmorethanformalonesoutoffamiliarity,notduetopreference

Understanding Consumer Needs

6

•  Thereisaneeds-basedprogressionwithfinancialservicesthatleadsaconsumertoabankaccount!  Consumersstartwithaton*ne,buildinguptoMFIuseandthenmaybehavingenoughofaneedorresourcestouseabank.!  Mobilemoneyanddigitalfinancialservicesarenotcurrentlyanexplicitpartofthisprogression.

•  Consumershavethreetypesofneedsfordigitalfinancialservices!  Circumstan=alneeds:havingaccesstofinancialservices,havingfinancialservicesthatareeasytouseandmatchconsumers’

cogni*veabili*es,andfeelingcomfortableusingtheservice!  Financialneeds:thatfacilitatelife,suchassavings,loans,moneytransferandatwilldeposit/withdrawal.Thesefacilitate

businessgrowth,payments,incomesmoothing!  Tangibleneeds:fromafinancialproduct,suchasfeesanddeposit/withdrawalamountsthatmatchbudget,incomeand

expensesaswellascustomerserviceduringfirstexperienceswiththeproduct

•  ConsumerswhoaremoreawareoffinancialproductsassociatemobilemoneyandDFSwithmee*ngconsumerneedsfromfinancialservices:!  Theseinclude:includingspeedandeaseoftransfer,presumedlowfees,andpresumedlowdepositrequirements.

•  Buildingmeaningfulawarenessandconnec*ngtheconsumerneedtoDFSisacri*calhurdleforthoseconsumers!  Inaddi*ontospeedandeaseofmoneytransfer,feesanddepositrequirementsthatmatchincomestreams,financialsafetyand

securitycanbeausefulhookforshowingDFSvalue.

•  Lackofinforma*onchannelsandheavydependenceonpeergroupsposechallengesforincreasingmeaningfulawarenessandknowledge!  Consumersingeneralhavelimitedaccesstoinforma*onsources,andthereforerecruitmenteffortsmustconsiderappropriate

messengersforconnec*ngDFSwithaconsumerneed.!  Demographicsmaier.Peri-urbanaswellasruralareasstrugglemorewhenitcomestoawareness,knowledge.Youthshow

poten*altobethenexttargetmarketinthecountry.

Main barriers to DFS Uptake

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•  TherearetwomaintypesofbarrierstomobilemoneyandDFSinBenin:lackoftoolsandskillsforusingDFS,andlackofknowledgeaboutDFS.

•  Lackoftoolsandskills:Therearelimita*onsthatcouldhamperDFSuptake.Theseinclude:!  Limiteddiffusionofdevices(75%ofadultshaveaccesstomobilephones,butlessthan66%owntheirownphone)!  Limitedliteracy(justover33%areliterate)!  LimiteduseofSMS(0nly33%regularlycommunicateviaSMS,whichisalsoacri*calcapabilityforDFSinterac*ons)!  Limitedawareness(althoughawarenessofmobilemoneyisover54%,mostconsumersaren’tasfamiliarwithwhat

mobilemoneydoesorhowtouseit.Mobilemoney,acoreDFStool,ismostlyunknownorconsideredtobe“notneeded”intheeyesofconsumers:42%don’tknowwhatitis,17%feeltheydon’tneedit)

•  Lackofknowledge:Inaddi*ontolimitedawareness,consumersdonotyethavecore,cri*calknowledgeofDFS.Thisincludes:!  Prospec*veusersdonotknowwheremobilemoney(orDFS)agentsarelocated!  Theydonotknowenoughabouthowtousetheservice!  Theydonotknowaboutservicesrequirements(feesandhowtheprocessworks)!  Theseareespeciallylimi*ngformobilemoneyadop*on.!  Adop*onofdigitalaccesstofinancialservicesamongcurrentuserscouldincurfewerbarriersbecauseoftheexis*ng

productrela*onship

•  Growthinknowledge,awarenessmaycreatenewbarrierstouptake.Onceconsumersknowaboutit,theymaydecidethattheycannotaffordit,ortheircurrentmeansoffinancialaccessismoreaffordable.Thesearebarriersthattypicallyarisewithgreaterknowledgeandexposure,eventhoughtheyarenotcurrentlypresentinthemarketplace!  Thismeansthatitisimportantforpro-ac*vemessagingaroundDFSmatchingone’savailableresourcesandincome

streams,toallayanyfuturefearsorcost-basedobjec*ons.

WhatisBeninfinanciallandscapelike?

8

There are a number of different types of financial services in the Beninese market

FormalFullservice

Non-digital

MNOs MFIs

Informal

Notfullservice

Digital

Banks &More

Figuresarecategoricalonly.Asrepresented,theyarenotnotexclusiveofeachotherordrawntoscale 9

Financialservicesuse(Shown:PercentageofBenineseadults,N=3,042)

Digitalusersoffinancialservices(Shown:PercentageofBenineseadultswhohaveusedformalfinancial

services,n=702)

25%Haveusedformal,regulatedfinancial

services

75%Havenotusedformalfinancialservices

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Not all formal financial services are digital

17%Haveuseddigitalfinancialservices

11%haveaDFSaccountintheirownname

8%:Ontu=lisédesservicesfinanciersformels,maisjamaisde

servicesfinanciersdigitaux

!

10

Bankaccountownership(Shown:PercentageofBeninese,n,3,042)

Havefull-servicebank

account,7%

Notregistered,92%

Bank accountholders are active users of their accounts

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).*Appearsthesameasaccountholdersduetorounding

11

39%

60%

Haveabankaccountandamobilemoney

account

Bankaccountandmobilemoneyaccountoverlap(Shown:Percentageofbankaccountholders,n=215)

13%

87%

HaveabankaccountandanNBFIaccount

BankaccountandNBFIaccountoverlap(Shown:Percentageofbankaccountholders,n=215)

Bank account holders tend to have an additional financial mechanism

12


Benin is a two provider-dominated MNO market with room to grow; over one-third of adults do not yet have their own phone

75%

63%

Haveaccesstoamobilephone

Ownamobilephone

2015(N=3,042)

SIMcardproviders(Shown:Percentageofmobilephoneownersw/atleastonesimcardfrom

provider,n=1,781)

0%

1%

3%

45%

65%

Libercom

BELBenin

GLO

MOOV

MTN


Reflectsmul*pleSIMcardownership

Mobilephoneownershipandaccess(Shown:PercentageofBenineseadults)

"37%donothavetheirownphone

13

Most individuals with mobile money access are account holders

89%havenomobilemoneyaccess

11%haveaccess

Mobilemoneyaccess(Shown:percentageofBenineseadults,n=3,042)

62%ofmobilemoneyusers

havearegisteredaccount

Registeredmobilemoneyaccounts(Shown:percentageofBeninesewithmobilemoneyaccess,n=306)

9%ofallBenineseadultshavearegisteredmobilemoney

accountSource:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

14

Most accountholders are active users; they are mostly men, above the poverty line, and living in urban areas

Ac=veusedemographicprofile(Shown:Ac=vemobilemoneyusers,n=185)

Men Women Urban

Rural

Abovethepovertyline

Belowthepovertyline

68% 32% 74% 27% 59% 41%

Source:Lesenseignementsdel’inclusionfinancièreauBéninpourleMM4PQrésdel’étudeconduiteparIntermedia(Décembre2015–Février2016surunéchanQllonde3042individusde15ansouplus)

25%ofac*vemobilemoneyaccountholdersareurbanmaleslivingabovethepovertyline.

80%areac*veusers

20%arenotac*veusers

Ac=vemobilemoneyuse(Shown:percentageofBeninesemobilemoney

accountholders,n=232)

15

Approximately one in 10 adults use only informal financial services

16

5%

11%

84%

Useinformalandformalservices FormalusersandnonusersoffinancialservicesOnlyuseinformal

financialservices

Useofinformalfinancialservices(Shown:PercentageofBenineseadults,N=3,042)


20%Financiallyincluded*

Profile:Informalusers’demographicsn=365

Above$2.50adaypovertyline 26%

Female 62%

Under35 37%

Rural 52%

Primaryeduca*onorless 82%

Employed 77%

Married 73%

Ownmobile 71%

Advancedphoneuser 36%

Financial inclusion currently reaches 20% of Beninese adults; 11% are digitally financially included.

31.8%ofBenineseadultsreportbeingwithin5KMofamobilemoneyagent,bankingagentorastoreorakioskwithover-the-countermobilemoneyservices

(30.3%ofwomen)

5.5%OfBenineseadultshaveusedsomeformofdigitalfinancialservices

(includingOTC)inthepast90daysbutdonothavearegisteredaccount

(5.5%ofwomen)

RateofBenineseadultswhohaveusedanaccountintheirnameforsomeformofdigitalfinancialservice

(e.g.bankaccountwithdigitalfeatures,e-walletservice,NBFIaccountwithdigital

features)

(6.9%ofwomen)

20%Financiallyincluded*

N=3,042

11.3%Digitallyfinanciallyincluded*

N=3,042

17


Beninese women lag behind their counterpoints in every financial inclusion indicator

4%Havebankaccounts

9%HaveNBFIaccounts

6%Registered

mm

12%Havebankaccounts

9%HaveNBFIaccounts

12%Registered

mm

84%Financiallyexcluded

76%Financiallyexcluded

18


For comparison across Africa and Asia:

Kenya India Tanzania Bangladesh Uganda Nigeria Indonesia Benin Senegal Pakistan

Financialinclusion 69% 65% 62% 43% 39% 37% 24% 20% 15% 9%

Mobilemoney

ownership67% 65% 61% 9% 35% 1% 24% 9% 8% 1%

FullserviceNBFI

ownership11% 9% 1% 24% 6% 3% 3% 9% 4% 1%

FullserviceBank

ownership27% 63% 8% 19% 11% 37% 23% 8% 7% 7%

•  Sharedmarketdis*nguishesBeninfromothercountries,mostcloselyalignedwithSenegal

•  Somesimilari*eswithBangladeshbecauseallthreeformsofformalaccesshavereach

*Nigeria,Tanzania,Kenya,Indonesia,Uganda,Pakistan,IndiaandBangladeshsta*s*cscomefrom2015FinancialInclusionInsights 19

Howaredifferentfinancialins=tu=onsperceived?

Account holders describe making needs-based decisions on which financial mechanism to use

21

•  Someuseton*nesfordailysavingsandincomesmoothing,andanMFIforabusinessloan

•  Someusemobilemoneytoconducttransac*onsandanMFIforbusinessloans

•  Othercombina*onsexist–somerela*onshipsbecomedormantascapabili*esbegintooverlaporsavingsbecomedepleted

This progression gives consumers more than one financial mechanism, and a choice based on what suits them

22

Ton*ne Mostcommonfinancialtool.Tradi*onalforbuildingprosperityandcommunity

MFIAccustomedtoworkingingroups,borrowingasagroupwithMFIleveragesculturalnorms,buildssavingshabits

BankThosewhohavebuiltsteadysavingsandhealthybusinessesarecomfortableinbanks,wherebalancescanstaysafeandtransac*onsarefacilitated

MFIs help facilitate consumers’ businesses and provide savings accounts

23

WHATPARTICIPANTSBELIEVEMFIsDO•  Provideloanstostartand/orinvestinbusinesses

•  Providesavingsaccounts

POSITIVEPERCEPTIONS

•  Purposeistohelppeoplewithlessaccesstoresources!  Areaswheretherearenobanks!  Someareforwomenonly

•  Securemeanstosavemoney!  Savingsdoesn’tgetspent,destroyedor

stolen•  Createcommunity

!  Manydescribeobtaininga“group”loanwherebandsofwomengetaloantogether

NEGATIVEPERCEPTIONS

•  Notalwayseasytosetup,needrequirements

✗  Mayneedini*alamounttoputinsavingsaccount

•  Transac*onshaveprotocol✗  Havetosubmitforms

•  Canbedifficulttowithdrawmoney✗  Restric*onsonhowmuchcanbe

withdrawn

Tontines can be perceived as untrustworthy but are often the only available option to consumers

24

WHATPARTICIPANTSBELIEVETONTINESDO•  Providesmallloanstomemberstohelpwithincomesmoothing,smallbusinessinvestments

•  Providesavingsop*onsforton*nemembers,poten*altogainmoney

POSITIVEPERCEPTIONS

•  Convenient!  Ton*nesarelocallybased,madeupof

neighbors,friends•  Communitybuilding

!  Ton*nemembersworktogethertoprovideaidinadversityaswellasgrowsavings

!  Somedescribeplanningsavingsandincomestrategiestogether

•  Sourceofbonusincome!  Well-runton*nesprovidememberswith

interestfromthesmallloans

NEGATIVEPERCEPTIONS

•  Untrustworthy✗  Somedescribeton*nemanagersashaving

cheatedmembersandmisrepresentedprofits

✗  Othersreportthatsomememberstakeloansandneverrepay,sosavingsarelost

•  Notgoodforlargeramounts✗  Loanamountsareowennotenoughfor

significantbusinessinvestments

Banks enjoy respect and trust but are not accessible to everyone

25

WHATPARTICIPANTSBELIEVEBANKSDO•  Providesavingsaccountsandtransac*onalaccounts

•  Provideloans

POSITIVEPERCEPTIONS

•  Secureandtrustworthy!  Keepsmoneysafefromthew,

destruc*on,tempta*ontospend•  Enabletransac*onsthroughoutBenin

!  Merchantswithbusinessinterestsoutsideofvillagecantransactwithbusinessassociatesfurtheraway

•  Earninterestonlargeramounts!  Savingscanprovideinterestincomeif

notwithdrawn

NEGATIVEPERCEPTIONS

•  Inconvenient✗  Branchesmaynotexistinvillage

•  Longwaitsinlines✗  Transac*onsrequirevisi*ngabranch,wai*ng

foravailablestaffatacounter•  Restric*ve

✗  MusthavegovernmentissuedIDandini*aldepositamountstoopenanaccount

•  Networkconnec*onsgodown✗  Manyreportthatbanks’networksare

unreliable,makingtransac*ngwhendesiredunreliable

Even though it is a newer financial mechanism, the benefits of mobile money are known and attractive

26

WHATMOBILEMONEY(MM)DOES•  Providesatransac*onalaccounttosendandreceivemoney

•  Providesameanstosavemoneydaily

POSITIVEPERCEPTIONS

•  Widespreadinterest•  Secure

!  ManydescribeMMasbeingjustassafeasbankandMFIaccounts

•  Fast!  Transac*onsareinstantaneous

•  Convenient!  Youcanperformtransac*onsfrom

whereveryouareandwhereveryourrecipientorsendermaybe

!  YoucansavedailywithMM•  Noini*aldepositrequirement

!  Youdonotneedmoneyonhandtoopenanaccount

NEGATIVEPERCEPTIONS

•  Norealobjec*onsornega*vitytowardMM:Nooneruleditout!

•  Somerecognizeditisinconvenientforthosenotlivinginareasservedbycurrentmobilemoneyproviders✗  ManydescribethatMMhasnotarrived

intheirvillageyet,buttheyknowit’sinneighboringareas

•  Someconcernoverfees✗  Somecomplainedthefeesfor

conduc*ngindividualtransac*onsaretoohigh

Mobile money is not yet part of that progression and instead fulfills a different need

27

Ton*ne,MFI,bankaccounts:!  Savingsandloans

!  Liquidity

!  Incomesmoothing

Mobilemoney:!  Geyngmoneyfromoneplacetoanother

quickly,safelyandconveniently(bigdraw)

!  Knowledgeofitsfunc*onasasavings

account,lowdepositrequirement

!  ThisbodeswellforMFIs,LaPosteconsideringamobilemoneytransfer

Don’thavetowaitinline. –Itissecure. –Allmysisterhastodoiscallme,andIcanjustsendanditgoesover. –Neitherofushavetogetonabus. –

Whatarethemainneedsandaspira=ons?

28

Consumers have four main financial services needs:

•  Access to safe, reliable savings

•  Access to loans, credit

•  Ability to transfer money safely, securely, quickly

•  Ability to withdraw and deposit money at will

Factorsintoincomesmoothing,makingpayments,buildingbusinesses,convenientaccess

29

They are also largely dissatisfied with their current financial condition; creating an opportunity for financial services that mitigate that pain point

29%

Comfortablehavingsomedebtinordertoachieve

goals

15%

Havetoomuchdebtrightnow

14%

Buyfromseveralshopkeeperstoensurecreditavailability

Sa*sfied,22%

Neithersa*sfiednordissa*sfied,

19%

Notsa*sfied,59%

2015:Sa=sfac=onwithfinancialcondi=on(Shown:PercentageofBenineseadults,n=3,042)


15%

30

The main perceived benefit of saving is the ability to manage emergencies and unexpected expenses

31

•  Mostexplainthattheyusetheirsavingsmoreforcoveringsuddenillnesses,accidents,funeralexpenditures

•  Nothavingmoneyavailablefortheseunforeseeneventscancreatedisasterforthefamily

•  Someexplainthatsavingscanleadtoabeierfutureforthefamilyinthelongterm

Moreover•  Savingswillbuildstrongerbusinesses•  Savingscanfundeduca*on•  Savingscanbuylandandbuildhouses

For the purpose of saving, home building is a top goal

32 Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

1%

2%

2%

4%

6%

8%

8%

17%

21%

21%

Acquiringfurniture

Payingoffadebt

Takingcareofrela*ves

Acquiringsomekindofpersonalassest

Payingschoolfees

Buyingapieceofland

Inves*nginthefarm

Makemoremoney

Growingyourbusinessorafamilymember'sbusiness

Buildingorupgradingthehome

Mostimportantfinancialgoals(Shown:PercentageofBenineseadults,n=3,042)

Sta*cacrossmostdemographics

Separate from mobile money, many would also like to have digital access to tontine, MFI and bank accounts

33

Interestin

MovingmoneybetweenanMFIandbank/mobilemoneyaccount

Accessing MFI through mobile phone

AccessingMFIthroughATM,oronlineinterface

Makingdepositstoanyfinancialmechanismdigitally

Receivingpaycheckdigitally

Receivingpaymentsforservicesdigitally

Paying vendors/suppliers digitally

Note:“digital”referstotheconceptofaccessingcurrencyinaformotherthanactualcashinhand,includingmobilephones,ATMs,directdeposit,agent.Lackofknowledge/exposurelimitedobserva*onsoftruepreferenceduringthisexploratoryphase.

HowreadyisBeninforDFS?

Literacy, SMS experience limit DFS readiness, especially for women…

75%

97%

32%

44%36%

99%

79%

98%

38%

51%42%

99%

71%

97%

25%

38%30%

99%

Accesstophone

ID Beyondprimaryschool

SMSsend Literate Numerate

Popula*on Men Women

FactorsthatcontributetoDFSReadiness(Shown:BenineseAdults,n=3042)


… and rural adults

75%

97%

32%

44%36%

99%

84%

99%

45%

57%52%

100%

64%

96%

20%

32%22%

99%

Accesstophone

ID Beyondprimaryschool

SMSsend Literate Numerate

Popula*on Urban Rural

FactorsthatcontributetoDFSReadiness(Shown:BeninseAdults,n=3042)

36


For comparison across Africa and Asia:

2015/16: Benin Senegal Indonesia Kenya Nigeria Pakistan India Tanzania Uganda Bangladesh

Accesstoaphone 75% 90% 79% 93% 93% 76% 90% 96% 85% 96%

Havena*onalID 97% 95% 94% 77% 32% 89% 82% 11% 41% 0.6%

Literacy 36% 35% 95% 83% 78% 65% 66% 84% 57% 60%

Numeracy 99% 97% 98% 98% 96% 95% 95% 96% 80% 98%

SMS 44% 64% 69% 75% 80% 40% 38% 78% 47% 37%

BeyondPrimarySchoolEduca*on 32% 29% 60% 47% 73% 46% 58% 24% 39% 49%

•  Literacy,loweduca*onaiainmentagreaterissueforBenin•  Accesstophonesrela*velylowcomparedtoothercountries

ElementsofDFSReadiness(Shown:Alladultsincountry)

*Nigeria,Tanzania,Kenya,Indonesia,Uganda,Pakistan,IndiaandBangladeshsta*s*cscomefrom2015FinancialInclusionInsights 37

Rural Beninese are substantially more disadvantaged than their urban counterparts; all readiness components are lower among the rural population than urbanites

52%

Demographics/accesstofinance Ruraln=1,936

Urbann=1,106

Abovepoverty 14% 42%

Male 50% 49%

Over35 44% 47%

Primaryeduca*onorless 78% 54%

Involvedinagriculture(farmownerorlaborer)

62% 27%

Accessformalfinancialservices 17% 34%

Accessbank 3% 15%

AccessOTCservices 4% 10%

Accessmobilemoney 6% 18%

AccessNBFI 10% 11%

Rural(Shown:PercentageofBenineseadults,

n=3,042)

38


“Readiness” becomes a top need for customer adoption

•  It is a pain point for consumers, because they are conscious of their own perceived limitations

•  It is a gap in the marketplace, because consumers do not know where to turn to get “ready”

•  It is a NEED because consumers feel it will prohibit their own ability to use financial services

•  This pertains to new customers, who wonder if they have what it takes to use the product

•  This pertains to prospective users, who have not yet opened an account

39

Reflecting the gender, rural lag for phone ownership, these groups also are less likely to use a phone for advanced purposes

40

2015:Advancedphoneusebydemographic(Shown:Percentageofsubgroups)

36%

useamobilephoneforadvanced

func=ons

Totalpopula=on(Shown:Beninesemobilephoneusers,

n=2,130)


Urban(n=938)

44%

Rural(n=1,192)

26%

Female(n=1,004)

28%

Male(n=1,126)

43%

40

2015:Haveeversentatextmessage(SMS)(Shown:Percentageofmobilephoneusers,n=2,130)

33%financiallyincluded

59% 37%HavenotsentanSMS(SMSincapable)

HavesentanSMS(SMScapable,alladults)

14%financiallyincluded

*AsdefinedinFinancialInclusionsec*on

Consumers with greater mobile phone proficiency are more likely to have financial accounts, particularly mobile money accounts


41

Barriersandpainpoints

43

TangibleBarrierstoDFS

•  Costofmobilephones•  SMSexperience•  Distancetoformalfinancialpointsof

service(POS)

Barrierstomobilemoneyinclude:

•  NOTknowingwhereamobilemoneyagentis

•  NOTknowingenoughabouthowtousemobilemoney

•  NOTknowingenoughaboutproductrequirements,includingfeesandhowtheprocessworks

Forprospec*veusers,barriersareaboutawareness,notobjec*ontoservices

44

47%Awareofatleastonemobilemoneyprovider

11%Haveusedmobile

money

Awareness varies according to the region, with lows of 16% and 17% respectively in Atacora and Plateau

Region MobileMoneyAwareness

Alibori 40%

Atacora 16%

Atln*q 53%

Borgou 42%

Collnes 34%

Couffo 61%

Donga 30%

Liiorl 68%

Mono 61%

Oueme 63%

Plateau 17%

Zou 50%


[9%havemobilemoneyaccount]

45

Lack of knowledge is a key barrier to having a mobile money account

42%

17%14%

7%5%

2% 2%

Idonotknowwhatitis

Idonotneed,Idonotdo

transac*ons

Idonotknowhowtoopenone

Thereisnoofficeservice/orcaretaker,

Ineverhavemoneytocarryouttransac*on

Idonothaveana*onaliden*tycardorother

Idonotunderstandthatservice;IdonotknowwhatIpe

Reasonsfornothavingamobilemoneyaccount(Shown:thosewithoutamobilemoneyaccount,n=1151)


46

Barriers create imperatives for adoption

47

Barriers:Prospec*ve

userswouldliketousemobilemoney,but:

Therearenoagents/outletsintheirarea

Donotfullyunderstandhowinterac*onswork,even

thoughtheyliketheconcept

Areconcernedthatitwouldbecost-prohibi*ve,even

thoughtheyseethevalueinit

Areuncertaintheywillbeabletolearnhowtousemobile

money

"Needaccesspoints,andknowledgeofaccesspoints

"Needtodemys*fytheprocessofmakingatransac*ontobuildtrust

"Needinforma*ononfeestomakethisseemagoodvalue

"Requireassistanceinusingun*lcomfortable

Perceptions around fees: A barrier to customer adoption

48

•  Consumersareconsciousofthecostofusingfinancialmechanismsandwhatthe

mechanismyieldsthemforthecost(Bankshavehigherfeesanddepositrequirementstouse,butgiveyouaddedsafetyandsecurityforyourmoney)

•  Theycurrentlytalkaboutcostsofusingfinancialservices(ton*nes,MFIs)

conceptually,insteadofinmonetaryunits(CFA)•  Forinstance:Imake30depositsintoaTon*neandget29back.Ipayinfor3

monthsandthefourthmonthIcanwithdraw

•  Theyarealsoconsciousoftheliabilityofthegroup(ifsomeoneelseinthegroupofaTon*neorMFIdefaults,itcouldhaveimpactonthem).Thisfactorsintotheirconsidera*onofcost

•  Consumerslikefortheirmoneytoworkforthem,soanypricingcouldbeevaluatedas“whatamIgeyngforthis?”

Thecostisthereforecalculatedbyconsideringnotonlythefeesoftheservice,butalsothepossiblerisksandthelackofbenefitscomparedtootherservices.Thisiswhypreservingfinancialalterna*vesiscrucial.

There are five hurdles on the path to digital financial services adoption; Technology and Education, in particular, form basis for DFS readiness

AWARENESS•  HowawareamIofDFS?•  Whatcommunica*on

channelsareavailabletoreachme?

TECHNOLOGY•  DoIownaphone?•  AmIcomfortablewith

tex*ng?

TRUST•  HowmuchdoItrustthe

providersoftheseservices?

•  HowmuchdoINOTtrusttheotherservices?

EDUCATION•  AmIcomfortableenough

readingwordsandnumberstobeabletousetheservice?

•  Howmucheffortwillittaketolearnhowtouseit?

NEEDS•  Howsa*sfiedamIwiththe

statusquoofmanagingmymoney?

•  HowwellservedamIwithcurrentfinancialproviderstowhichIhaveaccess?

[Hurdlesarefluidandmayfollowadifferentorder] 49

Addressingbarriers,speakingtoneedsbuildstrust

Consumers:

Mightbeunsureofwhethertotrustmobile

money

Donotknowenoughaboutmobilemoney

touse

S*llhaveneedsthatcanbe

sa*sfiedbymobilemoney

50

What is the Role of Social Networks?

51

Financial education and knowledge primarily comes from friends and family

52

2%

1%

1%

30%

31%

35%

Allother(excludingDK/refuse)

MFI

Bank

Myself

Spouse

Family,friends,neighbors

Whodoyoudependonforfinancialadvice?(Shown:PercentageofBenineseadults,N=3,042)


Prospective users can envision learning about DFS through a friend or family member, or number of different socially-oriented channels

53

AfriendorfamilymemberwhoiscurrentlyusingitintroducesthemtoitMostcommonlymen=onedchannels:•  Massmedia•  Town-hallstylemee*ngs•  Church,thecommunityandleaders•  Themayororcommunitychief,butnotthegovernment/authori*es

Offereduplessfrequently:•  Door-to-doorbyacommunity-memberproviderrepresenta*ve•  Employers•  Schools•  Electricitycompanies

The significance of social networks in financial practices suggests that various types of mobile money/DFS agents, rooted within the community, can play a key role to build awareness

54

•  Mobile,mobilemoney/DFSagent!  Bus,vanorsomeformofmobileunitthatcomestoanarearegularlyforcash-in/cash-outorbill-pay!  EspeciallyrelevantinAguegue

•  Postofficeasanagent!  Knownen*tyinthecommunity

•  Shopkeepersservingasagents!  Shopkeepersoffercredit,informalsavingsop*onsusingmerchandiseascredit!  Couldbenaturalsynergies

•  Billcollectors,moneylenders,ton*neadministratorsservingasagents!  Digi*zingtherela*onshipandpoten*allyaddingmoretransparencyintotheprocess/lessconcern

aboutmoneybeingstolen/lost

•  MFIadministratorsasagents!  Exis*ngsa*sfac*onwithMFIs,digitalaccesscouldextendtheiru*lity

•  U*litycompaniesasagentsorchannelsintoanaccount!  Alreadycollec*ngmoneyforservicesthatareessen*alforindividuals

What are the main financial needs?

55

Havetakenloan,19%

Havenottakenloan,77%

Don’tknoworrefuse

3%

5%

16%

16%

17%

19%

32%

38%

Largepurchase(e.g.TV)

Bills

Rou*nepurchases,suchasgroceries

Boostbusiness

Medicalpayments

Educa*onalexpenses/schoolfees

Emergencyexpenses

Investment

Borrowing money is primarily for investment and growth, sometimes for emergencies and routine expenses


Havetakenaloaninthepast12months(Shown:PercentageofBenineseadultsn=3,042)

Reasonsfortakingaloan(Shown:Percentageofthathavetakenaloanin

thepast12monthsn=527)

56

Consumers have mostly informal lending options at their disposal

Haveyoutakenaloanfromthefollowingins=tu=ons?(Shown:AllBenineseAdults,n=3,042)

Percentageoftotalpopula=on

Familyorfriends 10%

MFI 5%

ASCA/lendinggroup 1%

Informalmoneylender 1%

Bank 1%

SACCO 1%

Shopkeeperletsyoutakecredit 0.22%

Buyerofcrops/harvest 0.16%

Governmentins*tu*on 0.14%

Employer 0.12%


Formalop*onshalfascommonasinformalop*ons

57

Savings is driven by long term oriented investment and protecting family needs

1%

2%

6%

8%

11%

11%

13%

29%

28%

50%

Givebacktocommunity

Buildchildren'sfriendforwedding

Buildchildren'sfundforeduca*on

Getreadyforre*rement

Buyexpensiveitems

Educa*onforyourself

Protectbelongings

Makeendsmeet

Protectfamilyfrompoverty/crime

Start/expandyourbusiness

Reasonsforsaving(Shown:percentageofsavingadults)


58

Financial goals are primarily oriented around investing in future growth or prosperity

1%

2%

2%

4%

6%

8%

8%

17%

21%

21%

Acquiringfurniture

Payingoffadebt

Takingcareofrela*ves

Acquiringsomekindofpersonalassest

Payingschoolfees

Buyingapieceofland

Inves*nginthefarm

Makemoremoney

Growingyourbusinessorafamilymember'sbusiness

Buildingorupgradingthehome

Mostimportantfinancialgoals(Shown:AllBenineseAdults,n=3,042)

Sta*cacrossmostdemographics


59

60

LimitedinclusiondoesNOTmeanlimitedfinancialinterest

There is also significant interest in mechanisms that help pay for school fees, and bundled products

2015:Interestinfinancialproducts(Shown:Percentageofadults,N=3,042)

19%

19%

21%

25%

30%

36%

36%

37%

23%

24%

25%

32%

35%

31%

31%

31%

Pre-paidcardforreceivingincome

Pre-paidcardtomakepayments

Mobilemoneyaccountthatcamewithasmartphone

Loanthatcamewithaninsuranceplan

Loanthatcamewithamobilemoneyaccount

Loanthatcamewithabankaccount

Creditplanforschoolfees

Layawayplanforschoolfees

Veryimportant Somewhatimportant


Schoolfees

Bundledproducts

61

Additionally, women tend to exhibit less demand for financial services, save for a desire to obtain business loans

54%

66%

74%

73%

66%

88%

50%

61%

65%

66%

71%

87%

Bankaccount

Insurance

Savingsaccount

Mobilemoneyaccount

Businessloans

Mobilephone

Women Men

Demandforfinancialservices,mobilephonesamongthosewithout(Shown:Percentageofadults,bygenderandsubgroup)

Theprimaryreasonfornothavingeachoftheseitemsis“donothaveenoughmoney”,regardlessofgender.


Rural Beninese are not resigned to this gap, though, as they place great importance on financial tools

42%

38%

33%

34%

41%

77%

38%

38%

40%

40%

47%

72%

Bankaccount

Insurance

Loanthatcamewithabankaccount

Layawayplanforschoolfees

Loanforyourbusiness

Mobilephone

Rural(n=1,936) Urban(n=1,106)

Veryimportanttoolsforhouseholds(Shown:Percentageofurban,ruraladults)

52%

Rural(Shown:PercentageofBenineseadults,

n=3,042)


Consumers have significant needs when it comes to managing money

64

•  Focusonhelpinmanagingdailytransac=ons,sendingandreceivingmoney,helpingtosavethroughsmallamounts

•  Allowsmall,incremental,and/orinfrequentsavingsdepositsthatmatchthewayinwhichaconsumercansave

•  Lowfeesornofees–formalaccountsseemunapproachableiffeestaketoolargeachunkofconsumers’funds

•  Convenienceiskey–peoplewanttotransactwheretheyare,whenevertheyneedto

•  Keepmoneysafefromcheaters,thieves,accidentsandthetempta*ontospendthrougheasysavingofsmallamounts

BuildingaDFSvalueproposi=onWhatdoesDFSneedtoconveyandtowhom?

Building readiness is key to capitalizing on consumer interest in the marketplace

Readyandinterested,

13% Readyandnot

interested,1%

Notreadyandinterested,

70%

Notreadyandnot

interested,16%

ReadinessandInterestacrossBeninamongtheun-included(shown:noformalaccount)

•  ManyBeninesearenotyetreadyforDFS,lackingcri*calcomponentsforuptake.

•  Atthesame*me,thereisinterestinmanyofthefunc*onsofDFS,eventhoughformalfinancialaccountownershipisrela*velylowandconsumersdonotconnectformalaccountswithameaningfulvalueproposi*on

•  Tobestiden*fybroad-basedgroupstargetgroupsforbuildingavalueproposi*on,wecombinedreadinessfactorswithinterest:

•  Readinessfactors:basedoffofhavingsomecombina*onofmobilephone,SMSability,na*onalID,literacyandnumeracy

•  Interestfactors:basedoffofques*onposi*veresponsestosomecombina*onof:wouldyouliketouseyourphoneto:paybills,makepurchases,save,takeloans

•  Thisshowsthatupto83%areinterestedinthecorefunc*onsthatDFScanoffer,eventhough70%lackvariouscomponentsofreadiness.

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+). 66

There is DFS opportunity in the gap between what existing financial products offer, and what consumers need or want

67

Exis*ngproductsmostlyoffer:

•  Placetosave•  Placetogetaloan

•  Limita*onsonwithdrawals

•  Requirementsondepositamounts

ConsumersALSOneed:

• Waytotransfermoneysafely,securely,affordably

•  Op*onsformakingsmallerdepositsandwithdrawals

•  Accountswithfees/requirementsthatmatchtheirbudget

ConsumerswouldLIKE:

• Waystotransfermoneydigitally

• Waystopaybillsdigitally

• Waystomakepurchasesdigitally

•  Shopkeepers:Waystoacceptpaymentdigitally

!Opportunity

Digital financial services may also address current pain points in financial management

68

PAINPOINT DFSUSECASEDailyincomeistypicallyunstableand

unpredictableDigitalaccountsconnectedtosavingscan

facilitateincomesmoothing

Itisdifficulttosavesmallamountsconsistentlyover*me

DFSpar*cularlysuitedtodailysavingsofsmallamounts

Smallbusinessesneedcashinfusionstogrowandprovidemoreincome

DFSconnectedtoMFIloansmakeaccesseasierandconvenient

Schoolfeescanbedifficulttopayon*meandconsistently

DFSmakespayingforeducaQonwithouthavingtophysicallydeliverpayments,andpoten*allywithasavingsmechanismfor

affordingthefees

Cashsavingsarenotsecurefromthew,destruc*onandtempta*on

DFSprovideinherentlysecuresavingsmechanisms

Savingswithgroupsrequiresrelianceonpoten*allyuntrustworthyindividuals DFSprovidestrustworthytransac*ons

Needtoquickly,easilytransactwithindividualsinotherareasofBenin

DFSfurnishesfasttransac*onstosend/receivemoneytoanyone,anywhere

This suggests five* important elements for a consumer-facing value proposition:

•  Easy to use !  Even with limited digital experience

•  Facilitates budgeting !  Which addresses a pain point

•  Facilitates saving !  Which addresses a need

•  Helps support financial stability !  Which is a pain point

•  Is meant for people like you !  To bridge the gap between financial mechanism and perception of

needing it

*Addi*onalmodesofresearchmayexpandthislisttoincludeoverfiveimportantelementsand/orrefinementsonthislist 69

There are specific gender-based challenges for women when it comes to financial management and financial services

70

!  Herpersonal*meandmoneyarelimited;thisnecessitatesthatshedependonotherpeopleand/orbecomequiteresourcefulinplanning

!  Herhouseholddynamicsmayrequirethatsheonlypar*cipatejointlyinfinancialac*vi*es,orberestricted

!  Ifshehasanaccount,shemightstruggletokeepitprivatefrommeninthehome,anditmaybecomevulnerabletoaman’shouseholddebt

!  Ins*tu*onsmayrequirethatamancosignanaccount!  Shemightfeelshehaslimitedfinancialop*onsbecauseofwhatisavailableinher

area,aswellasfeelingcomfortableusingaproductotherthananMFIorton*ne!  Communi*esofwomenusingaton*neorMFIcreatea“sisterhood”thatcanbe

verypersuasiveandcomfortableforwomen,makingitdifficultforthemtoprogresstoanotherfinancialproduct

!  Shewillexpectandrequiremoreperson-to-personinterac*ontoopenanewaccountandlearnhowtouseit

Imperatives that address challenges associated with fostering greater DFS among women:

71

Gender-basedchallenge Impera=ve

1:Difficultymanaging*meandfinances •  Appealtoawoman’sneeds,illustra*nghowDFShelpsinlife.Remember,oneMFIwascreditedwith“helpingmakewomen’slivesbeier.”

2:Threepersonasoffinancialmanagement;independent,co-decide,restricted

•  Donotassumeallwomenarerestrictedfromaccessingfinancialmechanisms

3and4.Keepingaccountsprivateinthehome,keepingamountinaccountsprivateathome

•  Equipherwithprivacy-protec*ngelementsonheraccount(biometrics,KYCrequirements)

5.Accountpoliciesthatrequireaguarantor •  Fosterresponsiblepoliciesandproceduresthatconsideralterna*veguarantors,orofferabenefittothemaleforbeingaguarantor

6.Limitedop*onsbeyondton*nes,MFIs •  Womenknowthatmicrofinancehelpsthemspecificallyinwaysthatotherfinancialtoolsmaynot

•  Considerdigitalaccesstoton*nes,MFIsasawaytobringherintodigitaltransac*onsusingafinancialmechanismwithwhichsheiscomfortable

•  Buildexposuretootherformalfinancialservicesbyillustra*ngthatshecanaccessthese,andthattheyareforher

7.Womenexpectahigh-touchrela*onshipwithherfinancialproduct

•  Emanaterecruitment,interac*onofton*nes,MFIswithwomen

Insights and implications What does this mean for next steps?

72

Seven key components will drive recruiting new consumers into DFS accountholders

1.  BepreparedtofosterDFSreadiness;manyconsumerslacktherequiredbasicskills

2.  DevelopDFSinterfacesthatarecomfortablewiththosewithlowliteracy,numeracy,orwhoaredevelopingreadiness

3.  Offerone-on-onesupportthatmirrorsanagent-consumerrela*onshiptopromoteuserskillsandcomfortwithusinganaccount

4.  Posi*onaccountsasatoolforkeepingmoneysafeandsecurebuts*llaccessibleforhouseholdneeds

5.  Employtargetaudienceplansthataccommodatehardertoreach,typicallyfinanciallyexcludedpopula*ons,suchaslowerincome,ruralresidentsandwomen

6.  Cul*vatetheyouthsothattheyenterthefinancialecosystemwithafull-service,digitalaccount

7.  Facilitateorevenu*lizemoreformalcommunica*onschannelsfordissemina*onofmessagesaboutaccounts

73

A way forward

74

•  However,consumersdonotyetassociateDFSasarelevantmechanismfortheirlives.!  Interestintheac*vi*esthatcanbeperformedwithDFS,andinterestinloanand

savingsproducts,issubstan*al(between57%and68%).Atthesame*me,mobilemoney,acoreDFStool,ismostlyunknownorconsideredtobe“notneeded”intheeyesofconsumers(42%don’tknowwhatitis,17%feeltheydon’tneedit).

!  Thissuggeststhatconsumersdonotyetrecognizeacorevalueproposi*onforDFS.

!  Italsosuggeststhatbuildingoutthedigitalecosystemandinnova*ngonbillpay,merchantpaymentsandsavingsproductswillhavesomerealtrac*ononceconsumersarereadytoadoptDFS.

•  Thepoten*alvalueproposi*oncouldpromptadop*onofreadinesselements,suchasphonesandSMS.!  Knowingofatoolthatfacilitateslifegoalsorday-to-dayneedsmightbeanudge

towardmobilephoneacquisi*on,SMScapabili*esorIDacquisi*on.!  Othercomponents,suchasliteracy,educa*onandnumeracy,willneedtobe

addressedthroughformandfunc*onofspecificDFS,op*mizedforlowliteracy,educa*onlevels.

For more information, contact: Colleen Learch

[email protected]

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