Responsible Finance Forum

Enabling Customer Empowerment: Choice, Use, and Voice

Antonique Koning and Monique Cohen
28 April 2015
Source:  CGAP
The concept of customer empowerment zeros in on the interface between the customer and service provider.

The use of digital channels is changing the way financial services can be delivered to poor people. Growing mobile phone usage and the development of agent networks enable customer access to timely, low-cost digital financial services (DFS) (World Bank 2014). Despite this, active use of DFS is relatively low. In this Brief, we address the inactivity problem faced by many financial service providers (FSPs) and some of the underlying causes related to customers’ experiences. We explore how empowering customers can help address this issue and the role FSPs can play. This exploratory Brief reflects our hypothesis that customer empowerment—here defined as a process that builds customer trust and confidence through an interactive relationship between providers and their customers—can lead to a win-win for both providers and customers.

The premise is that when customers are empowered, they make more informed choices, trust the institutions they interact with, are comfortable using those financial services they value, and feel more in control of their financial lives. In turn, customers may become more loyal to and transact more regularly with their FSPs, which may bring greater consistency in transactions, positively affect provider sustainability, and generate greater value for customers.

Access to DFS is expanding rapidly, as evidenced by, for example, the high number of mobile money account registrations, which reached 300 million in 2014 (GSMA 2015). However, despite the high number of accounts, which is often used as an indicator of growth, the reality is that a majority of these are not used regularly. Globally account inactivity rates (accounts with less than one transaction in 90 days) are over 65 percent (GSMA 2015). FSPs are confronted with this problem across a range of financial services as they seek to tap large unserved markets and build sustainable institutions.