Safaricom M-PESA: Using Data Analytics to Improve Customer Service and Products

Susie Lonie and Oleksiy Anokhin
28 Mar 2018

Providing access to financial resources remains one of the main current goals of global international development. The simple provision of access to finance does not however necessarily change the market outlook for providers, nor does it resolve the constraints on customers. Service providers have to constantly improve the quality of the services they offer. Firms that manage by the three pillars of Responsible Finance should pay careful attention to fair and respectful treatment of clients, constantly updating transparent mechanisms for complaint resolution. This allows not only the creation of formal financial opportunities for the unbanked population, but also fully satisfy the needs of clients in terms of responsible customer service. The case of M-PESA in Kenya demonstrates how a data driven approach can successfully identify the most crucial gaps in services. Market players can develop necessary strategies to answer these challenges, significantly improving the quality of such services.

M-PESA was the pioneer of DFS at scale, and by 2016 had 20.7 million registered customers, a thirty-day active customer base of 16.6 million, and reported revenue of $450 million. When Safaricom launched the service in 2007, there were no templates or best practices; everything was designed from scratch. Continuous operational improvement was essential as the service grew. Uptake was unexpectedly high from the start, with over 2 million customers in the first year, beating forecasts by 500 percent. This huge demand forced the team to tackle capacity issues well before they had expected to do so. At this early stage in the product lifecycle, a bad customer experience could quickly erode customer confidence, so the operations team had to proactively anticipate scaling problems in both the technology and business processes. Data-driven metrics helped the team plan and guide operations appropriately. As uptake was unexpectedly high from the start, the number of calls to the customer service center was correspondingly much higher than anticipated, resulting in a high volume of unanswered calls. To improve call response levels and achieve their key performance indicators, the customer care team needed to make some changes. The problem was first tackled by recruiting additional staff, but recruitment alone could not keep pace with the increase in customer numbers. To identify bottlenecks and prioritize solutions, the team analyzed their data. PABX call data and issue resolution records were examined and some key findings were:

  • Length of call time: the average call was taking 4.5 minutes, around double the length of time budgeted.
  • Key issues for quick resolution: the two key call topics were forgotten PINs, and customers sending money to the wrong phone number; this covered 85 to 90 percent of the longer calls coming into the call center.

The analysis allowed bottlenecks to be identified, passing key insights into operations. It also highlighted the unexpectedly high incidence of some difficulties that customers were experiencing, namely erroneously sending money and forgetting their PINs. Managing against the Unanswered Calls KPI therefore delivered broader operational benefits. Using the analytic results, operations implemented a resolution strategy. Firstly, by understanding lengthy versus short problem types, difficult issues could quickly be identified and passed to a back-office team for resolution. This reduced customer waiting times and freed up the call center representatives, allowing more customers to be processed per day. Secondly, operations and product development teams worked to reduce times across all call types. This was achieved by improving technical infrastructure and the M-PESA user interface, mitigating the problems that caused lengthy calls. The combination of initiatives reduced the Call Length KPI and number of Unanswered Calls KPI, shifting both to acceptable levels despite customer numbers continuing to grow beyond forecast levels. Thirdly, this assisted in prioritization of interventions and refining consumer education activities to manage recurring issues such as pin activations.

The M-PESA case is an excellent example how data analytics solutions can be successfully used to provide significant improvements in customer service and create an opportunity for service providers to enhance the quality of their offerings and address the most urgent needs of customers. Developing a better complaint resolution system, the company both creates a responsible approach to finance by treating the customers efficiently and respectfully, and builds its reputation by providing a better service in an increasingly competitive market. Both the DFS provider and the customer benefit from such approach in a long-term perspective.

Adapted from a case study presented in the Data Analytics and Digital Financial Services Handbook (June, 2017), this post was co-authored by Susie Lonie and Oleksiy Anokhin, IFC-Mastercard Foundation Partnership for Financial Inclusion, for the Responsible Finance Forum Blog.

 

 

 

Making Change on a Mobile Handset

Zahra Niazi and Amber Davis
06 Sep 2015

Four IPA studies explore how to make digital financial services more effective and affordable

Mobile money is spreading at a rapid pace throughout Asia, Africa and Latin America. There are 203 million registered mobile money accounts worldwide and 256 mobile money services in operation, an impressive 100 percent increase over 2011. The promise of digital financial services is clearly reflected in the number of registered mobile money users and in the formidable example of Kenya’s digital finance revolution. This scope and expansion of digital financial services was one of the topics discussed at last week’s World Economic Forum annual meeting in Davos.

blogpostNBAs both public and private investment grows in this space, more rigorous research is needed to understand the full potential of this digital revolution in financial services for the poor. Usage remains low; according to 2013 data reported by GSMA, only 30 percent of the 203 million registered mobile money accounts have been used at least once in the last three months. Evaluations can help uncover effective strategies to encourage adoption and usage of digital payment channels, improve the design of financial products, and understand whether improved access translates into welfare effects for moderate and low-income households.

The limited evidence available to date suggests that mobile payments may help foster risk sharing across households. Research in Kenya found that access to M-Pesa lowered transaction costs and led to increased transfers between households, who were then better able to withstand economic shocks, an effect which was particularly marked for poorer households. Another study in Nigerindicated that distributing welfare transfers over mobile money led to substantial time-savings and increased intra-household bargaining power for women. Women were better able to conceal when the funds were available and were thus able to discuss with their husbands how the funds should be spent. As a result, households also saw an increase in the diversity of their diets and the number of meals that children consumed each day.

More work is needed to overcome some of the key barriers, to fully take advantage of these services and to understand whether digital financial inclusion can make the poor better off. To this end, Innovations for Poverty Action’s Global Financial Inclusion Initiative is partnering with researchers and financial service providers to implement several evaluations on digital financial services, with the support of the Bill & Melinda Gates Foundation and the Citi Foundation. Below, we highlight four of our ongoing studies that offer particularly relevant insights on how research can help advancements in this field. In these studies, we test hypotheses on how digital financial services can help people conduct transactions more securely, at lower cost, with different information on financial decisions and behavior, and experiencing fewer social constraints.

Digital channels for salary payments. Garment factory workers in Bangladesh receive their salaries in cash or through digital channels, as a mobile money payment or as a direct deposit into a basic bank account. This study examines to what extent digital channels lower the costs of distributing payments (payroll administration) and receiving payments (transaction costs for workers). It also looks at effects on workers’ wellbeing, financial behavior and work productivity.

Advertising a mobile commitment savings account. A mobile network operator (MNO) in Rwanda is offering its customers a mobile phone-based savings product. With this new product, customers are able to send money to themselves in the future and therefore commit to saving until a pre-specified date. The MNO and researchers are testing the impact of price and the framing of advertising delivered via text message on adoption, usage and welfare.

Default contributions to a mobile savings account. Employees at a large firm in Afghanistan, who receive their salary payments via mobile money, can automatically set aside a percentage of their salaries to be transferred to a long-term savings account on a mobile platform. We are testing various incentives and informational text messages to encourage enrollment and long-term savings.

Mobile savings account for education expenses. In Kenya, parents wanting to save for their children’s high school education are offered a new account that is designed to help them save for these expenses. The account allows clients to deposit money into a mobile money “lockbox.” If clients reach their savings goal date, they will earn an interest rate bonus on their balance. This study tests the impact of this product on savings and school enrollment.

Results from these evaluations on innovative applications of the mobile platform for financial services will help policymakers and practitioners uncover key insights to improve the design of these products. More fundamentally, our research can be used to determine how the mobile platform can effectively foster and scale affordable financial services for the poor.

This post originally appeared on the NextBillions website.