A Journey in Customer-Centricity · · A journey in customer-centricity

Content

Forewords 4

1. The journey to customer-centricity 6

2. Translating customer needs into bank value propositions 9 alwaysAccessible 3. Customer Insights gathered 10

4. Focus on Active Youth 14

5. The partners 16

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CUSTOMER CENTRICITY PRESSING THE RESTART BUTTON ON CUSTOMER-CENTRICITY

When our banks started operating in 2006, it for data processing and analytics. On the other As a bank, we have always strived to put the cus- On the back of the insights we gained from the was in a market that was shaped by the suppli- hand, we need to maintain physical contact with tomer first, but after conducting customer needs Customer Needs Analysis project, we have al- ers of services, not the customers. Nobody con- our business clients – although on a much-re- analysis research we have found that there is ready begun to make changes in the way we op- sidered what clients specifically wanted outside duced level – to understand client needs, to de- much more to becoming a truly customer centric erate and what we offer our clients. Structurally, extending micro-loans to them. liver responsible financial services and prevent business. we have broken down the silos that stood in the over-indebtedness. Customer needs analysis is way of responding to customer needs in a seam- Market conditions have changed considerably an essential part of this endeavour. Digitisation Before embarking on the research, we segment- less way. Instead of operating as separate teams, since then. We realised that if we wanted to re- and organisational change are the other two ed clients into two broad categories: clients who offering clients either loans or savings products, main competitive as a business, we would need critical transformations required to further fos- had set up their own business operations and our credit and retail teams have been merged to adjust our products, channels and the way we ter customer-centricity. those who were employees. In retrospect, we and the business officers have been trained to interact with clients. Ultimately, we will need to were looking at our clients from a product per- serve the customer based on their individual advance our digital capabilities while still giving A change like this requires a dramatic mind shift. spective, putting them all into boxes and pre- needs rather than selling them products. banking a human face. Employees need to see the world from the out- senting them with the same solutions. side in, through the eyes of the customer, instead These changes, I believe, are a good start to our The core clients of the AccessGroup are micro of the inside out. We are in a perfect position In early 2018, when we kicked off the research customer centricity journey. However, we under- and small businesses, their family members, staff to achieve this change as our staff members are project, we sought to better understand our ex- stand that in order to keep abreast of changing and business partners. Delivering meaningful fi- part of the local communities we serve, and our isting and potential clients through a series of customer needs and preferences, we will need to nancial services to small businesses and, in par- people work with our clients face-to-face daily. one-on-one interviews and focus groups. The keep in touch with our customers. Thus, we have ticular, extending business loans will continue insights we got from the research enabled us to set up a department responsible for innovation, to require physical interactions with our clients, Bernd Zattler come up with detailed customer personas that which will capture client feedback, conduct pe- including first-time visits and debt recoveries. CEO AT ACCESS MICROFINANCE HOLDING AG articulated the different pain points experienced riodic focus groups and put together an annual by our clients. These personas have allowed us customer satisfaction survey. We will then revis- Technology helps us automate internal process- to gain a far deeper understanding of the differ- it, refine and adapt our offerings based on these es, become accessible to our customers 24/7 ent needs and aspirations of customers, which ongoing customer insights. on various channels and reduce costs by digit- has also helped us identify which products and ising information and thus making it available services will fulfil these. Arah Sadawa CEO AB RWANDA

Forewords4 5 A journey in customer-centricity A journey in customer-centricity

In this publication, we take you through our exciting journey The journey to where we set out to get a more detailed and comprehensive understanding of how existing and potential bank customers customer-centricity fulfil their current financial needs. In three banks in our net- work, AccessBank Liberia, AB Bank Rwanda, and AB Bank Zam- bia we elaborate on how this understanding, is used to build and deliver solutions based on the needs of our customers.

1 SEGMENTING OUR TARGET MARKETS

All over the world, consumers have the same CGAP segmentation toolkit 1 and guided by the general needs. They want to improve their lives, question: what determines the financial behav- have better health outcomes, educate them- iour and needs of our clients and where do we selves and their children, save for old age, and have the most significant potential to meet their enhance their resilience, among other things. needs? Typically, our main target group, the en- However, the values, needs, and behaviour of dif- terprises, are defined by their business size or ferent low-income customer segments are very their debt capacity. We, however, looked deeper nuanced, and it is crucial to understand these if into the way they conducted their business. Us- Youth Salaried Day to Dayer Doers and Advanced you want to meet their financial needs. To do so, ing a multi-segmentation approach, we assigned Employees Makers Enterprise we needed to segment the target markets to get enterprises into categories such as “day to day- a deeper understanding of each segment’s aspi- ers/hustlers” and cash-based, family or advanced rations, financial needs and, behaviour, as well enterprises. These segments encapsulated the as attitudes towards financial institutions. We way they saw their business, as well as how they believed a needs-based segmentation of cus- managed finance and their businesses. In each UNDERSTANDING NEEDS tomer groups would country, we came up with slightly different seg- AND BEHAVIOUR identify new growth mentations both for businesses and for consum- A needs-based opportunities, uncover ers. However, the exercise highlighted and rein- segmentation of customer groups areas where we could forced the fact that the priority segments of the We developed an outline for research to de- The target segments, products and would identify new growth streamline product of- banks were small businesses (both urban and ru- termine each segments’ financial and banking service offerings on which banks ferings and improve ral). In all three banks, we also identified young needs and the context in which they made finan- opportunities should focus. profitability by provid- adults, or, as we called them, “active youth”, as a cial decisions. We aimed at detailing what trig- 1. ing tailored products, priority segment. Creating a segmentation that gered the uptake of financial services and prod- services and pricing and thereby transforming truly worked required an in-depth study of not ucts and what decision processes influenced How the bank could positively the banks into customer-focused organizations. only each segment’s unmet needs and potential continued usage or disruption of usage, i.e. we influence uptake of its products In all three banks, we used a combination of tools impact of these on their lives, but also attitu- wanted to explain the pathway clients followed 2. and services. and instruments to review existing segmenta- dinal and behavioral insights into how the seg- from beginning to do business with a particu- tion and arrive at the new needs-based segmen- ment related to money and financial services in lar bank to, hopefully, becoming loyal clients. If tation of the banks’ target markets in Liberia, different aspects of their life. the different elements that influenced decisions How the bank could influence Rwanda, and Zambia. The methods used to de- around uptake usage and continued usage were continued usage and enhance velop the segmentation were based on the well understood, clear decisions could be made on: 3. client loyalty.

1 www.cgap.org/research/publication/customer-segmentation-toolkit

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Using the insights we achieved, namely understan- Translating customer ding what customers required to manage the dif- needs into bank ferent aspects of their financial lives, enables us to move away from being product-centric and towards value propositions putting our customers at the centre of how we do business.

DESIGNING IN DEPTH RESEARCH

A qualitative deep-dive methodology was re- In each country, around 40 in depth one-hour 2 It puts us in a position to ensure that our products one hand, we are looking at the services and quired, based primarily upon face-to-face in interviews were conducted. These were comple- and services meet the specific, and deep-seated products we can bundle, reorganize, and design depth interviews and focus group discussions. mented by up to 10 focus group discussions. It needs, of our customers; helping them achieve to match the needs of the identified segments. Research would ex- should be emphasised that qualitative research their dreams and attain their financial goals. The On the other hand, we are refining the way we The research was also used to identify plore very specific samples are purposive and quota-driven in na- financial benefits bank products and services -of communicate and market to the segments and patterns in what people need aspects of uptake of ture; they have no statistical validity or reliabili- fer can be turned into compelling value propo- the public overall. These are the steps we need products and services, ty. The purpose of qualitative research is to give sitions that satisfy the emotional appeal of the to take to overcome a traditional product-cen- as well as decision-making processes. The re- generalised indications of the drivers of the re- product or service and directly speak to the cus- tric mindset. This remains a challenge because search was also used to identify patterns in what spondent’s underlying behaviour and attitudes, tomer’s need. This core principle allows us to de- it requires banks to make culture changes, break people need and what they do, thereby confirm- by exploring responses in greater detail and velop value propositions for each client segment, down silos and reorganize workflows. However, ing or adjusting the segmentation hypothesis. depth. However, it has no quantitative accuracy which demonstrate how the banks are meeting this research has given us the valuable insights This allowed us to document the needs, values, in terms of identifying proportions of popula- their customers’ needs. With this in mind, we are we need to inform future efforts, thereby ena- drivers and barriers, as well as social dynamics tions holding stated views. currently bringing these segments to life. On the bling our banks to engage with our customers in and cultural codes, of the different client seg- a meaningful and effective way. ments. In each of the three countries a market research institute was contracted to conduct the PERSONA SNAPSHOT research.

Spotlight on: Day to Dayer

Samuel is a soccer fan, but also sees If there is any money left over at Patterns of what people need Patterns of what people do himself as a street fighter. He is a the end of the day, he deposits it taxi driver and accepts cash from his mobile money account. However, his clients. On a daily basis, he buys he is not able to build up savings the necessary petrol to run the taxi as the money put aside is used for and pays for other expenses, such “emergencies”. as airtime and household groceries.

Needs: Drivers: » To deposit cash on a daily basis » Creative and innovative in » Help in making financial trans- overcoming challenges actions » Access to loans when business Challenges: Hierarchies of needs Drivers and Barriers Social Dynamics Cultural Codes is down » Has no access to capital need- » Assistance in money manage- ed to grow » Needs access to regular, small » Barriers keeping people from » All community decisions must » Cash is Flash (importance of ment » Plans and lives from day to day amounts utilizing existing offerings first pass through elders cash at ceremonies) » Needs it to be in cash » Drivers like mobile money » Importance of participating in » Interest rates are never dis- » Needs rapid decisions making it possible to transfer savings clubs cussed openly money safely Help to grow Location Matters Cost over Efficiency Prefers Simplicity

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We identified the values that mattered to customers when ma- Customer naging money to fulfil their financial needs, including when Insights gathered they stored or saved money and when they managed debt. We further analysed how different financial devices addressed these values.

Storage Rainy Day Savings Groups Savings with a Goal Receiving Value and Moneys that should Money put aside to be Money set aside for 3 WHICH VALUES MATTER IN MONEY storing it safely for help face higher than received later (socially a specified period of MANAGEMENT? usage along the normal expenses motivated) time (longer than the income cycle (term fees, household income cycle) with a In Liberia, we found that unlimited access to (in Liberia and Rwanda, they preferred to go to repairs, illness etc) clear goal for use money was, in some cases, more important than savings clubs, as repayment terms could easily safety considerations or, more importantly, re- be renegotiated). Overall, identifying the values ceiving interest. Many respondents preferred to around money management enabled us to get keep their money at home and not in a bank ac- a deeper understanding of the features in prod- HOW DO INDIVIDUALS count. We also found that people were willing to ucts and services that were most important to MANAGE THEIR MONEY? pay significantly higher interest rates on loans if our target segments they were granted “softer” repayment conditions Puzzled by overwhelming evidence that, al- countries. While in Rwanda, many respondents though national savings rates remained low, all had clear savings goals in mind or were saving participants were saving money, the research for old age and retirement, virtually no respond- teams began to unpack the meaning of sav- ents in Zambia and Liberia saved regularly, or Values that matter when managing money ings in these countries. They found that “saving”, towards a fixed goal (savings with a goal). A needs-based (example Liberia) translated into the local language, encompassed segmentation of customer groups several notions. It could refer to economizing, or would identify new growth using money more consciously (storage), as well opportunities » Knowing exactly when and » Physical access to cash as keeping and storing cash for future use. This how money is deposited and (opening hours and waiting Access to finding was significant as, not only did it encap- withdrawn from accounts Control time) Money sulate the source and frequency of income, but, » Absence of unexpected fees » Near home or work location more meaningfully, it identified the intention behind “savings,” which, in turn, determined the » Moral obligation » Easy to understand products choice of device. Respondents stored (“saved”) Help to » Peer pressure and services manage Relatedness money they wanted to use within an income cy- » Financial goal setting » relates to their community money cle in financial devices that offered them easy » Products that enable debt » Speaks to their specific management and savings Customers’ values social/economic situation access to the funds. These were considered “near to liquid” and included mobile money or airtime (rainy day). In Zambia, respondents felt that it » Few restrictions on Broad term used for was important not to keep cash, as the financial withdrawals Flexibility Security protection from threats device helped “economizing” money because it » Negotiable terms of » Safety and protection was not liquid and “at hand.” Respondents who repayment/interest against theft received salary payments in their bank accounts rate Affordability » Safeguards against thought- A Savings Group is comprised of 15-25 self-selected individuals and returns less expenditure would transfer a specific amount “to be saved” on their mobile money account. Zambian women who save together and take small loans from those savings. make use of chilimba, an informal local lending pool, to save for school fees, cars or businesses. » Fees transparent and considered “just” for service offered With regard to savings with a goal, in particu- » Expected return lar, we found significant differences between the

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We found that borrowing was a regular activi- often found among respondents, and several re- HOW DO BUSINESSES MANAGE THEIR LIQUIDITY AND FINANCE INVESTMENTS? ty; part of everyone’s budget management and spondents were themselves professional “mon- deeply socially and culturally embedded behav- ey lenders”. Whether bridging a liquidity gap or We found that business’s aspirations were very iour. The ability to borrow money (socially from financing purchases, borrowing informally be- different among the business segments we sur- friends and family) at all times, impacted the tween friends, family, peers, and money lenders veyed and that these aspirations determined “It happens to us so often. It happens that when way budgets were made and expenses delegated. was common. This was also true for markets in their financial behaviour. The segments at the it is time to pay the rent, one has used the money which consumers had access to formal finance, bottom of the “business pyramid” included the to restock. In such a situation one borrows from his “If there is that need I always Borrowing was such as in Rwanda. We found that, while many so-called day-to-dayers/hustlers, cash-based colleagues, his fellow businesspeople while he is get credit from friends. I look for based on reciproci- respondents had access to loans from financial and household enterprises or “own account op- waiting to get money” ty and therefore im- institutions, they preferred to borrow from their erators”, which were informal business set up friends who can help by getting plied that everyone savings groups, friends, family, and colleagues at because the formal economy had not been able CASH-BASED ENTERPRISE, credit hence paying them at the was obliged to lend work. to absorb them. Others started their operations end of the month”. to friends, fami- to manage risks or cope with fluctuations in ly, and colleagues. We further examined how different financial de- household income or to increase household in- (SALARIED EMPLOYEE, MALE, ZAMBIA). Everyone formed vices were used for debt management and elab- come. Many saw themselves as undertaking in- The upper segment of the “business pyramid” in- part of a continu- orated on the values they addressed as well as come-generating activities rather than running cluded more established enterprises that were ous cycle of borrowing and lending. Being debt- the benefits and drawbacks they had. a business. These businesses had very short- formally registered and, therefore, more organ- free was the desired situation, which was not term goals, often living from “day to day,” which ized. Many had been in business for some years. reflected in how their money was managed. To In all three countries, they had business plans, cope with unforeseen situations, they relied on wanting to buy a machine for their business or Customer Perceptions of Financial Devices informal financial networks. to buy a house, build, or even buy a car. Only a (example Liberia) few had concrete ideas of how to finance these investments and purchases. Bank loans were » Interest reinvested in » Social pressure if community fail to pay seen as the best alternative and were associat- » Fast disbursement “The most practical thing for people who are in ed with long-term projects and more significant » Flexible repayment business, we depend on social networks. In a sen- amounts of money, which enhanced the bor- se that I am in business and there is a person in a rower’s financial discipline, and gave them am- similar business as of mine. Then, there are these ple time to realize the investment or purchase. However, for their business finance, many relied Susu Club written agreements where when you are urgently in » Accessible when in on non-formal business networks. » Accessible when in need need you go that person, and when they’re in need, need » Fast disbursement » Fast disbursement they will come to you. So, it more like an informal We dug deeper to unpack the reasons banks » Clear repayment terms » Clear repayment terms Money were not used more frequently for managing Susu social network. They are limited as it cannot go lender / pawn liquidity and business finance and what busi- » Expensive Collector » Expensive beyond an amount such as 500, 000 Kwacha for broker ness clients really valued. We found that, just as » Repayment pressure example. That is what we use for urgent payments. » Too rigid Customer with consumers, businesses stated that the ease We have what we call business relationships. Do you of access to funds (cash-in and out, as well as perceptions » Accessible when in » Longer term at lesser ever think of the bank at that time? No, never. They transferring value) was a main determinant in need interest rates always ask where your bank statements are. They the choice of financial service and institution. In » Fast disbursement » Easy to plan / manage Family will want to assess the risk. It will take three to five many situations, cash payments and cash han- » Clear repayment terms Bank Friends dling were seen as more convenient than trans- » Expensive weeks.” » Expensive » Rigid criteria acting through financial institutions. Businesses In kind ADVANCED ENTERPRISE, FEMALE, also greatly valued the physical proximity to the vendor financial instructions, finding it important to per- finance sonally visit branches. Thus they preferred banks with a wide branch network over others. We also found that recommendations by a peer or friend » Interest reinvest- » Social pressure if fail were important in deciding on the uptake and ed in to pay Benefits community even continued usage of a financial service. » Fast disbursement Drawbacks » Flexible repayment

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“Active Youth” is an important customer segment for the banks Focus on because most consumers tend to “stick to their first bank” with little incentive to switch banks. Therefore, acquiring young active youth people as clients is important in bank efforts to build a solid future customer base.

4 This segment includes young adults who have life. Youth have inspiring ideas about their fu- recently become economically active; either em- ture and some dream of being agents of change ployed or running their own start-up business, as in society through various platforms. Some talk well as those on the verge of doing so (final year about redefining leadership while at university students, participants in incubators, etc.). Active and others are willing to dedicate their lives to youth are venturing into their first economic ac- help the less fortunate. tivity in life. They are aiming to achieve finan- RWANDA ZAMBIA cial independence and want to meet their basic Our research finding were used to describe needs. They are heading into “the next level” in dreams and aspirations of youth as: Youth in university dreamt more of pursuing certain careers Youth wanted to be employed, married and have a family. Fe- and getting further education, whereas some youth were more male youths had vaguer plans about their future and in the focused on financial independence. The noteworthy similarity short-term their own education and marriage seemed to be was that ultimately many youths wanted to be self-employed more important. One female youth said, “I need somebody by LIBERIA and own their own businesses. my side who can be helping me because my parents are not going to be always there for me. I need a partner who will be The typical source of income for youth is business. Their in- University students’ future goals revolved around finishing there to advise me and to achieve the future with.” come fluctuates and many feel the need to save for a rainy their current degree but also pursuing further higher educa- day. Their income is typically spent on household- related ex- tion. One youth from Kigali said, “I study international Busi- In the long term, female youths imagined opening and run- penses such as food, rent, and transportation. Youth do not ness and Trade at African Leadership University and I would ning social businesses (like schools or orphanages), while usually make a budget due to their highly irregular income. like to become a business consultant and study for my mas- their male counterparts were more concentrated on business- The youth who were interviewed have personal aspirations, ter’s degree while also working.” es that would maximize their income. such as getting married, having children, building a house, and owning a car. Some of the employed youth dreamt of working for them- In general, male youths were more realistic in their income selves and doing activities that bring them a sense of pur- expectations and had concrete plans for running businesses Several youths also shared business-related aspirations. For pose: “I would like to work for myself because it gives you or seeking employment: “For me to be a pharmacist, I have instance, one female youth said: “I would like to have my own purpose, you learn how to manage money well and it helps to big hope that I will finish my university level, and I have focus, supermarket, the biggest supermarket, a Liberian owned su- secure your income.” I am sure I will be getting a huge wage” permarket”. “Everyone wants to work for themselves. I used to be a house “I need to pursue a job for me and for someone to hire me, it However, compared to the two other countries, we found that help and worked hard to get a motor driving license and now means they have money. As I am working for him, I will make youth seemed to have fewer clear plans for their future, often I’m working to build like two or three houses that will help monthly salaries and I can make my own budget to start my mentioning their dependency on help and support of others: us retire well.” own business.” “As a young man, it is not an easy task. The focus is to get empowerment but nobody to come in to help”... Some of the youth felt they had limited income and didn’t feel like they were financially independent and meeting all their “... so I am depending on my brother to send me car to do basic needs. Others had dreams of being agents of change in commercial driving, that is my plan.” society through various platforms. Some talked about rede- fining leadership while at university and others talked about “...when I see an opportunity, I will jump at it. That’s the future dedicating their lives to helping the less fortunate. plan I got.”

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The Partners 5

ACCESS MICROFINANCE HOLDING AG ABOUT THE MASTERCARD FOUNDATION ACCESS2ACCESS (A2A) PROGRAMME

Access Microfinance Holding AG (AccessHolding) The Mastercard Foundation seeks a world where The Access2Access (A2A) programme was set-up The Capacity Building component strengthens operates a network of eight banks and microfi- everyone has the opportunity to learn and pros- in summer 2016 with a total value of USD 33 human resources of the NFIs by supporting Ac- nance institutions in sub-Saharan Africa, Central per. The Foundation’s work is guided by its mis- million. In September 2016, AccessHolding en- cessCampus (network-wide education of middle Asia, and South America. The Network Financial sion to advance learning and promote financial tered into a Partnership Agreement with Master- managers), AccessFoundation (training of train- Institutions (NFIs) are microfinance-oriented inclusion for people living in poverty. One of card Foundation to support the A2A Programme ers and local advanced learning for all staff) as and primarily located in urban and peri-urban the largest foundations in the world, it works with USD 15.5 million over a period of five years. well as the development and implementation of areas. To date, the core business in the majori- almost exclusively in Africa. It was created in an e-learning platform (AccessMind). The inten- ty of the institutions has been the provision of 2006 by Mastercard International and operates The overall objective of the A2A programme is sive and diversified Capacity Building initiatives micro, small, and medium business loans. All independently under the governance of its own to strengthen the capacities of the AccessHold- qualify staff to manage complex changes related African network institutions are deposit-taking, Board of Directors. The Foundation has offices in ing Network Financial Insitututions (NFI) with to the introduction of digital products and ser- as AccessHolding considers serving all of its cli- Toronto, Canada and in Kigali, Rwanda. the aim to increase outreach and improve access vices, and to put the customer in the centre of ents’ needs to be essential towards its mission. to financial services that meet client needs more all developments. The Digitalisation component In 2014, AccessHolding opened the training cen- Visit www.mastercardfdn.org for more informa- efficiently and profitably. The partnership with broadens the range of channels, products and tre AccessCampus for employees, which provides tion and to sign up for the Foundation’s news- Mastercard Foundation has two components: (i) services that customers can access, based on a the necessary education for bank middle-man- letter. Capacity Building and (ii) Digitalisation. client-centric business model. At the same time agers to perform more senior managerial roles the new developments improve the institutions’ in their institutions. Follow the Foundation at @MastercardFdn on internal efficiency, and are built on a solid, scala- Twitter. ble, flexible and secure IT architecture.

16 17 contact

.com Christoph Diehl (Senior Manager Partnerships) [email protected] +49 (0)30 30 87 47-0

Imprint This publication was written by Abenaa Addai ([email protected]) and Sharon Wood (sharonwood@linktank. co.za) and compiles research findings of Ipsos Zambia, The Khana Group Inc, Liberia and Karisimbi Business Partners, Rwanda; Berlin 2019 Credits: Coverphoto: accessholding, Inside photos: p.2: Natasha Ng’uni; p.4+5: Accessholding, p.8, left to right: unsplash//ran- dom-institute, kelly-sikkema, claudia-van-zyl, annie-spratt; p.9: Taxi Driver-?; p.11: Financial Sector Deepening Zambia (FSDZ), p14: hans-eiskonen/ unsplash; p.15: freepik