news - Product Development for Microfinance Part 4: The AppLab's sustainable product development process

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Product Development for Microfinance Part 4: The AppLab's sustainable product development process
March 8, 2012

Microfinance Gateway, February 2012 - A close look at the product development process used by Grameen Foundation's AppLab in Uganda

This is the fourth article in our series on Product Development for Microfinance.

The first article presented three models for sourcing client insights. The second article highlighted guiding principles for market research from Jan Chipchase of frog and Graham Wright of MicroSave. Our third article focused on innovation in India and featured an interview with Dave Wallack of IFMR Rural Finance where he spoke about the KGFS model, an innovative approach to meeting the needs of their clients.

This week CGAP, Grameen Foundation, and MTN Uganda announced a new program, AppLab Money, to innovate mobile money products for poor customers. The Gateway spoke with Sean Krepp of Grameen Foundation’s AppLab in Uganda to learn about their process for translating the results of market research – insight on what customers want – into successful products.

In 2010, the Grameen Foundation’s AppLab, with support from the Western Union Foundation and MTN, set out to understand if and how mobile phones could improve financial literacy and increase financial inclusion among the poor in Uganda. Below is a summary of the AppLab’s innovation process used during this project, known as FinLit. For a more detailed account, read the FinLit project report.

Step 1. Focus

The FinLit team first identified several focus areas for their research. They sought to test the use of mobile phones to do the following:

    - Make formal financial services more accessible
    - Make financial information more accessible
    - Help individuals to structure savings

With a set of research questions in hand, the team identified several partner organizations, including the Association of Microfinance Institutions in Uganda (AMFIU), DED (now GIZ), MTN Uganda, and PostBank. The team worked with these organizations to understand the current challenges, identify opportunities to improve the existing offering of financial literacy and mobile banking products, and pilot new services.

Step 2. Generate

The team conducted desk research and a two month long needs assessment to better understand the target clients and mobile money agents. The research explored demand side topics such as financial habits, financial mechanisms used, knowledge of financial service providers, income flows, and periods of cash deficits. The report details the customer insights gained during the needs assessment. The team also worked with mobile money agents to understand supply side issues. Agents provided a number of useful insights, including the need for more training, that they experience occasional float problems, they lack sufficient marketing materials, and some of their customers are tentative about mobile money.

Step 3. Filter

With knowledge of the information gaps and needs of mobile money agents and clients, the team developed several hypotheses:

    Appropriately executed financial literacy efforts can increase uptake and usage of financial products.
    Resource poor individuals will save more if they receive support in structuring their deposits and setting savings targets.
    Mobile money field agents can act as savings mobilizers and link individuals to formal financial services if given the adequate training and proper incentives.
    Individuals will move their cash from a mobile money (MM) wallet to formal account if provided with the adequate guidance from MM agents, and appropriate incentives from the financial service provider (FSP).

Step 4. Pilot

The team carefully identified the target population, pilot locations in 8 rural areas in Western Uganda, and three primary interventions:

    Train MM agents to explain MM to clients, provide information on account options with the partner financial service provider, and encourage clients to save by working with them to develop structured savings plans.
    Provide SMS messages to remind clients to deposit money according to the structured savings plan they developed. Customers could make deposits directly to their MM account, making it easy and convenient to save.
    Increase the number of accounts through a Dedicated Sales Team (DST) and Footsoliders to market PostBank and sign-up new clients.

Step 5. Learn

The team was deeply involved in monitoring the pilot, which was followed by a quantitative survey. Based on the results of the pilot, the team developed a set of recommendations for the partner organizations.

Step 6-7. Launch and Scale

The final steps of the AppLab’s innovation process involve developing a launch strategy to incorporate the recommendations and take the product to scale, and drafting an exit plan after which the AppLab team turns the process over to their partner organizations. Read the report for more on the pilot results and recommendations.

Grameen’s AppLab provides an example of the hybrid approach described in Part 1 of our series. The AppLab team works in depth with the partner organizations to identify client needs, design a product/approach, test the product, and develop a plan to take to scale. While the AppLab team is deeply involved in the innovation process, the ultimate goal is to develop products to better serve the clients of their partner organizations.

One of the key lessons learned through the FinLit process was that qualitative field observations and informal interactions with agents and clients provided most of the inspiration and key insights for the new product.

Another lesson was that insights can come from anywhere. For example, the AppLab team discovered that there were pain points across the mobile money value chain. The head office needed transparency of their sales agent activities, the trade representative needed a mobile relationship management tool, and the agent needed more effective business support.

In response, the AppLab team developed a mobile field force management tool that was deployed throughout the MTN salesforce to strengthen the agent channel. The tool increased the velocity of mobile money registrations across the country.

While client needs were at the center of their approach, the needs of other actors in the value chain could not be ignored if the approach was to be sustainable.

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