Making Sense of Mobile Money in Urban Ghana: Personal, Business, Social, and Financial Inclusion Prospects

By Vivian Afi Dzokoto based upon her IMTFI-funded research project with Elizabeth Appiah

The goal of the current study was to explore personal, business, and social money-related practices that have emerged with increased patronage of mobile money (MM) in Ghana.  Of particular interest was the impact of MM on the urban poor who so far (based on previous research) appear to be the sector of the population that is the least aware of MM and the least likely to use it in their daily lives.

We (i) investigated MM 2012 uptake patterns, in year three of its re-introduction to Ghana, (ii) explored the social and cultural interfaces between MM and existing money behaviors, and (iii) investigated the internalized (cognitive) representations of MM that Ghanaians have developed. The study focused on the segments of the Ghanaian population and behavioral practices that were perceived as both included and excluded from the MM adoption process. Research to answer these questions was conducted using surveys, spending diaries, interviews, and analysis of secondary data.

"Transfer Money Instantly to Loved Ones with Mobile Money" (retrieved July 3, 2013 from  http://m.myjoyonline.com/pages/business/news/201304/104850.php)

Highlights of Results

Study 1: Adoption of MM into Personal Financial Practices, A Quantitative Inquiry

Monetary Preferences Study: Cash was the most preferred monetary tool in a college student sample. Prepaid phone cards were preferred over other cashless forms, and MM was preferred over many other forms of cashlessness and also higher denominations of cash.

Spending Diary Study: In a college student sample, cash was the predominant form of payment for daily expenses while non-cash transactions made up 2.86% of reported purchases. MM accounted for less than 1% of transactions.

Mobile Money Use Population Survey: 14% of respondents reported using MM at least once in order to receive a money transfer and/or send a money transfer, pay bills, make purchases of goods, and purchase airtime. MTN was the most popular mobile network operator (MNO).

Industry Data: Participants in the MM industry reported an increase in transaction frequencies and the volume of transactions over the course of the fiscal year.

Study 2: Adoption of MM into Personal Financial Practices, A Qualitative Inquiry

Interviews with Individuals in the MM industry: Interviewees cited regulatory, agent, educational, pricing, and profitability issues as barriers to MM uptake, but respondents were optimistic about the potential for growth in the MM industry in Ghana.

Interviews with Consumers (both users and non-users of MM): Participants expressed an overall preference for cash over MM, and displayed a lack of trust of MM, yet basic knowledge of MM was higher than in previous years.

Interviews with Early Adopters: First use of MM occurred in a situation where the individual had an urgent need to send money to someone in another part of the country. Nine out of 10 participants used MM again after this initial experience.

Interviews with Retailers: Retailers predominantly used cash over MM in commerce because of lack of trust (e.g. mobile network problems and concerns about fraudulent activity), yet knowledge of MM among retailers had increased.

Mobile Money in the Church: The nature of MM (intangible and mobile-phone based) made it undesirable for incorporation into church activities (including funerals and weddings).

Conclusion

The results of this series of studies revealed the following:

1. Cash is King in Ghana: Cash is still the main form of payment for day-to-day purchases. Large payments generally involve involvement of the formal banking sector. Cashless payment forms have not yet begun to dominate the payments scene.

2. MM knowledge and use has increased, but MM has not become a major means of payment for goods and services, or for savings.

3. MNOs have increased the number of MM products available to the public, slowly creating a MM ecosystem. However, apart from money transfer, this ecosystem is largely targeting the middle and upper classes.

4. Barriers to MM uptake remain: Information gathered from interviews indicates the persistence of regulatory, partnership, and educational barriers that hamper the growth of the MM industry in Ghana.

In conclusion, the answer to the question of how Ghanaians from different socio-economic backgrounds are making sense and use of MM in urban Ghana in their personal, business, and social lives is a simple one. The use of MM is increasing over time, and the commercial settings in which MM can be used are slowly growing due to the development of new products and business partnerships, but cash remains the major means of payment in urban Ghana. Also, the majority of the MM products are aimed towards the middle and upper classes to the exclusion of lower income groups. For instance, willingness to use MM especially in markets was low at the time of data collection. It is therefore hoped that as the MM ecosystem grows, new products that benefit lower income segments of society will be developed.

Socially, MM is gradually establishing itself as a means by which individuals can fulfill their financial obligations to extended family members in financial need.  Apart from sending remittances, however, these series of studies indicate that MM has not widely permeated the social sphere, and thus has not had a salient impact on social life (e.g. churches, funerals, weddings) so far. Whether or not this will change over time remains to be seen.

1. Link to their final report: Making Sense of Mobile Money in Urban Ghana: Personal, Business, Social, and Financial Inclusion Prospects.

Journeys for Water: A report on water ATMs in urban India

By Jan Chipchase on the IMTFI-funded Sarvajal project in collaboration with frog Design

Last week researchers from the IMTFI-funded Sarvajal project were on the road in Mumbai, Delhi and Ahmedabad to share the research, connect to others in the space, and to learn about what was going on on the ground. You can download the report titled "Journeys for Water: Survival Strategies in Urban India" by Gaurav Bhushan, Nitin Gupta & Jennifer Lee Fuqua here.

Photo credit: frog.

The team spoke at the Godrej India Culture Lab, the Indian Institute of Management and the National Institute of Design and as well as a number of smaller private events, engaging audiences from the design, innovation, industry, social impact space as well as those involved with the water and financial inclusion space. As researchers we pour a lot of energy into the final deliverables, but these talks were a reminder of how much further the conversation still has to evolve, and the breadth of talent from stakeholders and people available and wanting to explore a career in social impact work.

You might ask what the IMTFI is doing funding research into a "water" project. It's a valid question. As more of what people do is shifting to digital stores of value, how will the poor, who traditionally enjoy physical assets such as goats, gold and grain, feel about storing money in something as abstract as a pre-paid RFID equipped card? Our research suggests that for relatively small sums it seems to be ok for now (it might become more complicated if competitors or other service providers start introducing similar designs). We think that this new, abstract form of value will be not be the barrier to adoption for a service as long as Sarvajal ATMs provide clean drinking water at affordable prices. There are of course other issues related to the technology and existing social and political practices that are difficult to overcome.

Sarvajal's Water ATM. Photo credit: frog.

In presenting we were mindful of the boundaries of our role in this project. The Sarvajal team, and the Piramal Foundation that funds it were kind enough to invite us in and conduct the research; the difficult job is done by their team in bringing it to market. Having started in rural India, the Sarvajal team is now scaling their pilot in urban India. It will be interesting to see how it evolves, and what new insights can be formed by the transitional data that they are now collecting.

Banking the poor through mobile telephony: Understanding the challenges for expansion of mobile-based financial services in El Salvador, Guatemala, Paraguay, and Peru

This is an excerpt from a final report by Roxana Barrantes and Alvaro Grompone based upon their IMTFI-funded research project investigating financial inclusion efforts in Latin America through the expansion of mobile financial services.

There is growing consensus that banking the poor in developing countries could accelerate with the use of mobile telephony platforms. A simple comparison of the number of mobile telephony subscriptions and the number of bank accounts among people at the bottom of the pyramid shows an impressive discrepancy in favor of the former. What would be needed for every mobile telephony subscriber to also become, with that tool, a user of the financial system?

The answer to that question requires consideration of issues related to supply and demand. The latter include typical self-exclusion mechanisms due to risk aversion. Among supply-side considerations, we should determine why financial institutions do not partner with telecommunications enterprises to offer access to their service, and related questions.

This study explores these supply-side considerations. We adapted a methodology developed by Samarajiva (2005) and LIRNEasia (2008) to evaluate the regulatory environment for telecommunications and the extent to which it promotes investment in various components of the ecosystem necessary for the development of mobile financial services (MFS), as conceptualized by the World Economic Forum (2011). The methodology consisted of identifying private sector stakeholders who are important for development of the MFS ecosystem and asking them to respond to a questionnaire that evaluated various dimensions of the ecosystem on a Likert scale ranging from 1 (very ineffective) to 5 (very effective). This rating was corroborated with in-depth interviews, as well as an objective prior assessment of each dimension to be evaluated. The experts were grouped into three categories according to their ties with the sector, with each category given equal weight in the final result.

The ecosystem for MFS deployment is divided into three environments, each consisting of several dimensions. The first environment is institutional, consisting of six dimensions: (i) financial sector regulation for MFS; (ii) financial sector regulation contributing to financial inclusion; (iii) telecommunications sector regulation for MFS; (iv) telecommunications sector regulation contributing to financial inclusion; (v) coordination and joint policies for MFS; and (vi) consumer protection in MFS. The second is the market environment, consisting of five dimensions: (i) competition in the financial sector; (ii) competition in the telecommunications sector; (iii) innovation in the telecommunications sector; (iv) government leadership in MFS; and (v) management of data about beneficiaries of social programs. The last is the end-user environment, consisting of three dimensions: (i) support infrastructure for non-bank correspondents; (ii) network penetration of banking agents; and (iii) management of data for attracting new financial users. The experts identified were asked to assess each of these fourteen dimensions.

Read results of each case study in English and Spanish, available on the DIRSI website.

Four Reasons to Keep Your Money at Home

The following is by Katherine Martineau, IMTFI Fellow and Ph.D. Candidate in Anthropology at the University of Michigan. Reach her at kbmartin@umich.edu. The research on which this post is based was conducted with Pradeep Baisakh and Nishita Trisal. Photos by Nishita Trisal, except where stated.

Purno's house is his bank.

Purno keeps his money at home. A low-caste man in rural eastern India, his family is connected to different aid and low-income finance programs. Purno has even taken an 8000 rupee business loan from the non-profit bank located in a nearby town. But when his household saves, Purno does not take the money to the bank. Instead, he tucks it into a metal box that he hides in the thatching of his roof.

The metal box in which he keeps money.

 Why do poor people like Purno continue to save their money at home? Why do they take loans from private moneylenders when there are Self-Help Groups, Grameen-style microfinance institutions, and low-rate bank loans designed for their demographic? These questions demand answers that are culturally and historically specific.

Our research in one urban and one rural low-income neighborhood was conducted through long-form open-ended conversations with ten households over six weeks. Most of our participants worked as laborers or as domestic servants and a few were small-scale entrepreneurs. These households self-identified as Below-Poverty-Line households. The households claimed monthly gross incomes between 3000 and 6000 rupees -- all made less than 25 USD per capita per month.

Below are four culturally and historically specific reasons that have emerged from our research to explain why Purno and other poor people in Odisha might choose to keep their money at home.

Banks cannot predict droughts.

Reason 1: Hardship is coming
Management of unpredictable hardship is essential to the livelihoods of our research participants. It is a temporal category, a phase that comes and goes. But it is seen as something that is likely to happen to everyone. It raises issues of liquidity, but it is not something that banks can always accommodate. We heard numerous stories of savings lost in the face of hardship -- flooding, drought, illness, and crop failures among the worst. When bad things happen, such as a terrible illness, access to money can mean life and death. The poor timing of hardship motivated many loans from private moneylenders in our study, and the expectation of hardship was repeatedly cited by our research participants as a reason to save money in their houses.

Responsibility is not a major concern in most cases, thus the occasion of hardship allows for requests for help. When Seema’s daughter contracted a high malarial fever, she borrowed the necessary amount from a neighbor who is also part of her caste group. That family had similarly received help from Seema’s family during a long illness. Hardship and its threat creates obligations and material interdependencies.

Reason 2: Liquidity is friendly

When in hardship, ask for help; when others are in
hardship, expect requests for help.
Photo by Pradeep Baisakh. 

Small amounts of money are constantly circulating among neighbors, friends, co-workers, and kin. This was especially true in our rural site. In the urban site it was more often confined to kin-groups and led to conflict more often. The basic principle was consistent: when in hardship, one can request help; when someone else is in hardship, one should give it. This means that knowledge about who has what circulates. There are strong moral feelings about the obligation to return assistance.

There is also moral ambivalence about removing money from social circulation as occurs publically when saving through banks. Though many of our research participants had used banks, most did not feel comfortable actually going to the bank to deposit money because everyone would know what they were doing. One participant explained that it would make people think that he thought he was rich. Of course this also becomes a risky strategy in the face of one’s own potential hardship: others are less likely to help out if they suspect you are not helping them like you could be.

Sometimes it pays to keep things from loved ones.

Reason 3: Nobody need know -- not even your husband
One’s own family members can be even more troublesome than other households when it comes to money management.

Sita takes care of the children’s expenses and that money is kept separately from the other household expenses managed by her husband Ram. A normal case of earmarking you might think. However, hidden money can foster household drama. For example one of our urban households shared by two brothers’ families had literally been split into two. Intense conflict arose from a dispute over a house loan. The brothers had resorted to building a wall separating their living spaces and cooking hearths.

Rashmi’s husband was a daily laborer who had worked his way up to headman. He drank away most of his income every night, claiming that this was necessary for job networking and that without it he wouldn’t get good jobs. He also gave money to his lover whom Rashmi believed he was supporting, along with her son. When Rashmi’s husband did come home, he’d beat her, leaving bruises that were visible during our interviews. Rashmi used to work as a domestic servant and had, back then, hidden some money from her husband and sons (who were also going out to booze at night). But at the time of our interviews she had been sick for months so the money she had hidden had run out. She faced an uncertain future. Deep shame prevented her from seeking help from others.

How do you know you can trust financial services?
Photo by Pradeep Baisakh.

Reason 4: Financial services will cheat you 
All of our research participants had at one point taken part in Self-Help Groups and many had bank accounts and formal bank loans. But the abundance of services had made things confusing; stories circulated about cheating and they were reinforced by the irregular appearance of itinerant financial services representatives.

Manoranjan is a father of two sons and a daughter of a marriageable age. He works as a laborer and together with his wife, a domestic servant, they save a little bit from everything they earn. They save it in a metal box in their house, which they keep locked within a locked cabinet and hidden behind some fabric. They do not have a specific idea of what they will do with their savings, but there will likely be high costs associated with their daughter’s marriage. They also hope to add a room to their house. They are ideal clients for financial services but several years ago Manoranjan had taken a “microfinance loan” only to discover that it demanded a very high interest rate. Since then, he has not trusted his money with financial services. Stories such as Manoranjan’s suggest that regulation and systems with local oversight would improve trustworthiness. However, government-led oversight and conflict resolution would face the same problems that private financial services seek to overcome -- the slowness of government and judicial action, corruption (e.g., demanding bribes from complainants), and the reproduction of entrenched caste/community inequalities in the structure of local institutions.

These four reasons for saving money at home shed light on some of the conditions affecting financial inclusion programs in Odisha, India

Can Mobile Money Revolutionize an Ancient Saving System among Indigenous West Africans? Evidence from Ghana

By Eric Osei-Assibey based upon his IMTFI-funded research project. 

Introduction
The susu savings scheme has for many years served as an important avenue for savings for low income and financially excluded people in countries across West Africa. On a daily basis, these susu operators walk to their clients to collect small amounts of savings and return the full amount (minus a day’s collection as a commission) usually at the end of each month. Even though there are about four types of susu schemes in the country including a type that looks like the well-known rotating savings and credit association (ROSCA), the most common one is where an individual susu operator reaches an agreement with a client (e.g., traders in the market, hawkers, barbers, hairdressers, etc.) on an amount, commission, and intervals for collection; makes daily (or weekly) rounds on foot, bicycle or motor bike to collect the amount; and records it on a simple card kept by the client.

A susu collector with a client (Photo credit: Michael Yeboah, Field Survey Assistant)  

This study attempts to provide insights into the ancient susu savings operation in Ghana and the behavioral intention or willingness of susu collectors and users to adopt a mobile money (hereinafter referred to as “MM”) platform as part of their savings practices. More specifically, this study investigates factors that determine one’s intention to adopt the MM space as a savings channel, particularly in place of a traditional way of saving among many people in West Africa, i.e. susu. Using field survey data from market traders and susu collectors in several local markets in Ghana, and applying Innovation Diffusion Theory (IDT) and Technological Adoption Model (TAM) conceptual frameworks, this study has produced some interesting findings.


Preliminary Findings from the Susu Collectors Survey 

1. The average amount of money per client that the susu operators collect in a given day varies somewhat across the survey respondents. The majority of operators (61.6%) collect between GHC1 and GHC5 at a time from their clients (exchange rate: US$ 1 = GHC 1.85). The number of susu operators decreases as the amount of money collected from clients increases. This suggests how relatively small their daily savings are. The smallest percentage of susu operators in this survey (5.8%) contribute GHC20.

2. Regarding the extent to which they use mobile phones as part of their business, 39.5% of the operators reported that they often call their clients when they are not able to meet them in order to collect the daily susu contribution. While 40.7% also sometimes call their clients, 4.7% reported that they never call their clients. When the susu operator is unable to visit clients on a given day in order to make the collection, 30.7% reported that their clients call them often to inquire about their absence while 52.3% reported that their clients sometimes call them in order to find out why they were unable to turn up. This implies that although almost every one of the operators owns a mobile phone, the extent to which they use mobile phones in their daily activities is limited. When asked what the main constraints on their operations are, about 32% mentioned a lack of cooperation or consistency on the part of their clients in making the daily contribution as agreed. However, a significant proportion (30%) cited commuting or walking to and from their clients every day. For example, one operator speaking in the local language (Akan) complained during one of our interviews that “this work is so difficult and tiring; sometimes you can walk miles to one customer only for him/her to say that he could not pay because of bad sales for the day.”

3. On the specific issues about MM uptake and willingness to adopt MM in their operations, we received very interesting responses from the operators. First, while about 83% of the respondents claimed to be aware of MM as a means of transferring money, exactly half (50%) do not think that it is feasible to employ such a technology in the susu business. Second, notwithstanding the responses above, more than 62% are actually willing to adopt MM, if made available, although more than one-third (34%) perceived it to be a potential threat to their business. Some of these concerns about MM uptake were also expressed during a focus group discussion. For example, some operators believed that the process would be too complicated particularly for the market women whose education and knowledge of mobile phones are limited. Besides, the issue of network quality and the frequency of going outside a coverage area or experiencing network loss could hamper the operation and discourage savings.  For example, one susu collector said, “What will happen if in the process of a client sending his/her contribution the network vanishes on the mobile phone, or the phone got stolen. Won’t somebody steal the money?” In his view, such an incident could discourage savings or lead to diminished trust along the line.

4. Others were also not sure what role they are likely to play in the event of MM adoption in susu operations. However, a few were optimistic and they are looking forward to it since they believe MM could enhance their operations by reducing the number of walk ins and outs they embark on daily basis and reduce the time they spend commuting between clients in order to make daily collections. However, if any such thing should happen, one operator suggested that they should be made agents of the telecom companies so that they can continue to earn a livelihood.

Preliminary Findings from the Susu Users Survey 

1. In regard to their daily contributions, the survey responses indicate that susu users contribute a minimum of fifty Ghana pesewas (GHC 0.50) and a maximum of GHC200 with a mean payment of just a little over GHC8.

2. Among the major reasons for which respondents use susu savings rather than formal and semi-formal banking institutions, 42.2% of susu users reported that their income is too low and thus they can only save small amounts at a time. Besides, 14.9% of susu users found susu savings more convenient when compared to formal banking institutions.

A susu collector with a client in a local market (Photo credit: Barbara Andoh, Field Survey Assistant)

3. On the thorny issue of trust, while about 93% of susu users trust their susu collectors, about 55% reported that they feel quite apprehensive if they do not see their collectors every day. While 93.5% of respondents own a mobile phone themselves, only 36.5% have ever sent an SMS using their mobile phone. The proportion is much smaller (2.4%) when asked whether they have ever transferred money via their mobile to someone else, although a little over 7% has received either money or talk time credit on their mobile phones. Of those who answered in the affirmative, 55.6% reported that it is convenient to transfer money via mobile phone while 22.2% find it easy to do so as well.

4. As a key determinant for the adoption of MM services, this study reveals that only 36.5% of the respondents would be comfortable texting their susu contribution via mobile phone to susu collectors. As to whether they are willing to do so, about 41% are willing to transfer their susu savings via a mobile phone to the susu operators.

5. Of the remaining 59.1% who are unwilling to transfer their susu contribution via mobile phone, 61.8% reported that they either do not have enough knowledge or are not conversant with some of the functions of mobile phones. Others (14.6%) are skeptical as to whether their susu contributions would be delivered to the susu operator. Close to 8% also think that they may forget to send their susu contribution if MM is adopted.

6. As to whether the level of education of the susu user has some association with their willingness to adopt MM as part of susu services, the results show that about 75% of the illiterate traders and 61% of primary school dropouts are unwilling to accept MM adoption. This implies that the higher one's educational level, the more willing he/she will be to accept the use of MM.

Summary of Results from Logistic Regression Estimation

Generally, among the susu collectors, we found perceived risk, education level, relative advantage, and the age of the collector to be statistically significant in influencing the behavioral intention of MM adoption. With respect to susu users, we found such constructs as trialability, observability or awareness, compatibility or education attainment as well as the influence of the physical presence of the susu collector to be statistically significant in influencing one’s behavioral intention to accept MM. These findings have important implications for MM uptake and the modernization of the susu operations in Ghana. While MM uptake remains significantly low, these findings suggest that the way to increase uptake is to create more awareness, embark on financial literacy programs, and reduce the mistrust and perception of risk of the entire MM platform.

Concluding Remarks and Suggestions for Future Research

Although these findings are largely consistent with many previous studies on MM adoption, some of the findings are quite striking and may require further empirical research. For instance, the finding that the daily physical presence of their susu collector is the primary reason that motivates susu users to honor their savings commitment is potentially an important factor in explaining why respondents were not sure whether an MM platform would be an effective method of saving. The issue, then, is to what extent does the human factor matter vis-a-vis technology in encouraging saving among low income earners in developing countries.

Link to Working Paper, What Drives Behavioral Intention of Mobile Money Adoption? The Case of Ancient Susu Saving Operations in Ghana.

Landscaping Mobile Social Media and Payments in Indonesia: Final Report

This is the final report from Tom Boellstorff and his team of researchers regarding online shopping habits, social media practices, and mobile phone use among Indonesians. This IMTFI study received funding from sicap, a Swiss-based organization that provides software solutions for mobile network operators. To see an earlier post about the preliminary findings from this study, click here.

Fried Bananas Online. Ahmad Lutfi Amrullah, a fried bananas trader in Surabaya, grew his business using Facebook and Twitter. Photo credit SP/Nur Fajaruddin.

Tom Boellstorff and his team of research collaborators present here their final report--entitled "Landscaping Mobile Social Media and Payments in Indonesia"--on the "triple intersection" of (1) smartphones; (2) social network sites; and (3) purchasing and selling online in Indonesia, and how this intersection affects online shopping habits and social media practices in Indonesia today. Their research has produced eight key findings:

1. Mobile devices have definitively displaced desktop computers for commerce (and other uses), but laptops remain important.
2. Indonesians tend to follow specific pathways into electronic commerce that can move across platforms and be identity-specific. 
3. Multiple device ownership is nearly universal in Indonesia (often four to six devices), and this is linked to particular practices of online consumerism and payment.
4. BlackBerry is the dominant mobile device for Indonesians when shopping online, so much so that it is treated as a category of device unto itself, distinct from other smartphones. 
5. Providers and websites are extremely important to online shopping and payment, and are the primary factor driving multiple device ownership. 
6. Place-making is an important aspect of the intersection of (1) smartphones; (2) social network sites; and (3) purchasing and selling online in Indonesia, but often this involves localizing effects (for instance, using a smartphone and social network site to order snacks from a food stall at the end of the block). 
7. Experiences in buying online often lead to forms of online selling, with a wide range of formality and linkage to social networks. 
8. Risk is an ever-present aspect of online buying, but is often treated as a “risk of shopping” via the internet and addressed through various social and technological strategies.

To read the rest of the report, click here.

Tom Boellstorff is Professor of Anthropology at the University of California, Irvine. His research interests include contemporary Indonesian society (where he has conducted ethnographic research since 1992) and digital culture. His books, among others, include Coming of Age in Second Life: An Anthropologist Explores the Virtually Human (2008) and with Bonnie Nardi, Celia Pearce, and T.L. Taylor, Ethnography and Virtual Worlds: a Handbook of Method (2012).

Remittances vs. Savings on the Mobile Money Platform (Part 2)

IMTFI fellow Ishita Ghosh (along with her colleague Kartikeya Bajpai) studied the mobile banking partnership between the State Bank of India (SBI) and Eko in the bank-led regulatory environment in India. The following post reflects on her research findings. Part One of Ishita's post can be found here.

Promotional Material for Eko-SBI's Financial Products
Photo courtesy Ishita Ghosh

The State Bank of India (SBI)-Eko partnership started off with their flagship savings product. What Eko realized very early on is that while there was a demand for savings products and services amongst unbanked and underbanked populations, this seldom translated into actual uptake and usage. Eko believes that this can be rectified with adequate awareness programs, which also include specific financial literacy measures in order to drive the use of savings accounts. Eko and the SBI have as yet been unable to arrive at a consensus as to who should bear the responsibility (and the costs) of promoting this awareness amongst potential savings customers. Both institutions believe that the other is better equipped to undertake this drive.

Savings are generally understood as beneficial towards building assets and smoothing consumption volatility, but require initiative, discipline, and restraint, and are thus driven by a more implicit need, especially amongst low-income populations. What this means is that while potential savers feel the “need” to put money aside for future consumption, they may be unable to immediately meet this need within the constraints imposed by their limited, and often irregular, income streams. It becomes especially challenging to put money aside towards savings when money is running low or money management is wanting. During our fieldwork we met people who referred to expenditure shocks (such as a sick husband, which results in the loss of a main source of income, or the wedding of a daughter, which entails high expenses) as a primary cause for their low savings activity. 

Still, customers may sign up for mobile savings accounts whether or not they are able to sustain any activity on them in the future. Indeed, Eko observed that in the initial days after the launch of their savings product, many new customers were signing up for the accounts in response to marketing campaigns. For the first couple of years, SBI-Eko had waived transaction fees on the accounts, and deposit-withdrawal activity on the accounts was high. However, when the fees were reinstated, Eko observed a sudden drop in account activity across the country. Currently, there is almost negligible activity on the savings accounts, with some of the agents informing us that they hadn’t seen any savings customers in months, while their accounts remain open but dormant. Evidently, signing up for a savings account and registering actual activity on it may be two very different things. Still, financial service providers, and certainly SBI and Eko, continue to regard account opening as the sole success metric of their savings product. For one-time financial services such as remittance services, each transaction can be counted as it completes, and therefore the frequency of transactions can be the sole gauge of the service’s success. The savings service however, is made up of two separate transactions: a one-time registration process, and then subsequent activity on the accounts. Ideally, the success metrics of a savings product will take into account both uptake as well as usage, since uptake may not always translate into usage.

With respect to remittances, Eko soon realized that there was a natural uptake for the product on the mobile platform. In fact, remittance services are driven by a more explicit and immediate need; a safe, convenient and reliable remittance option will be utilized almost immediately by a customer who needs to remit money. Eko’s remittance product is especially popular in Delhi, which is the national capital of India and a commercial hub, and therefore attracts a large population of migrant workers from neighboring states, as well as from the rest of the country. Frequently, these migrant workers will tend to travel without their families, and will therefore remit money regularly back to their native villages or towns. Even if these migrant workers have travelled with their immediate families, they will almost always have kith or kin back in their native villages to whom they will need to send money at some point in time.

The migrants will commonly own a SBI account, given the bank’s strong rural outreach. Therefore, remittance counters at the SBI branches in New Delhi tend to be very busy, with the queues comprised primarily of migrant workers who want to send money back home. Consequently, SBI offloads its remittance traffic to Eko’s retail points. For the customers, this means a trade-off between cost and convenience. Customers can choose to battle the long queues at SBI, and pay the substantially lower service fees to remit money (SBI charges a flat rate of INR 25 per transaction, whereas Eko charges INR 100). Moreover, remittances sent over Eko’s platform are capped at INR 10,000 per day, in effect restricting the customer base to predominantly lower-income users. As an Eko agent in Delhi pointed out, their customers frequently elect to pay the higher fees in order to avoid hours of waiting at the bank branches, which results in missing work or wasting time, particularly pertinent for daily wage earners.

In conclusion, the implicit versus explicit demand for savings and remittance services respectively affects their uptake and usage on the mobile platform. Without adequate financial literacy measures, it is hard to drive the usage of savings accounts amongst low-income populations, although they may be convinced to sign up for the accounts through aggressive marketing campaigns. In contrast, low-income populations with a very real need to transfer money may be willing to pay the cost of a safe, reliable, and convenient remittance option. Indeed, as Eko quickly realized, this can be achieved with negligible investment in marketing efforts.

See their note in the ICTD conference 2013 close-out documentation.