Client Centricity

The Key to Financial Inclusion

According to the World Bank’s Global Findex database, approximately two billion people don’t have access to formal financial services. And more than 50 percent of adults in the world’s poorest households, primarily in developing countries, are unbanked. Yet numerous studies show that financial inclusion is key to reducing poverty, boosting prosperity, and improving health, education, and other social standards.

Understanding the financial needs, worries, and aspirations of people living in poverty is the key to serving them effectively. Harnessing that understanding to create and deliver services and products that most effectively serve the unbanked poor is the essence of client centricity for financial inclusion.

Why is Client Centricity Important?

In a fully client-centric business:

  • knowledge of client needs, expectations, and behaviours drives decision-making;
  • empowering, engaging, and retaining clients for continuous product and service improvement is seen as central to success;
  • leadership and organizational structures integrate and reflect a deep desire to meet client needs and expectations; and
  • there is a constant drive to innovate, build partnerships, and develop capacity to meet client needs better and continuously.

The financial services industry, as critical as it is to poverty reduction, has laboured under a reputation of putting client needs low on its list of priorities, certainly in comparison with other consumer industries. To advance financial inclusion at the scale required to meet the goal of universal financial access by 2020, a relentless focus on client centricity by financial service providers is essential.

How Can Client Centricity Get Us to Financial Inclusion?

There are substantial barriers to financial inclusion that require a more intense examination of the business model from the client angle.

Barriers for unbanked clients and causes of aversion to formal banking products and services include:

  • Regulatory barriers: excessive documentation requirements often make it difficult and expensive for many low-income individuals to open accounts.
  • Physical barriers: the distance to branches, especially for low-income people living in rural areas, is a major disincentive to opening and regularly using accounts. Many of these people are farmers or small business owners whose businesses require their full-time availability. The cost of travel, in terms of time or actual expense, is too high. To respond to this, service providers must build appropriate delivery platforms and reduce transaction costs.
  • Financial barriers: account opening fees, minimum balance requirements, and high transaction fees are seen as unaffordable by mostly poor populations.
  • Education barriers: for many poor people, the advantages of digital platforms that offer financial services are mitigated by illiteracy, an inability to read and/or understand instructions on how to send or receive money. Advanced financial services on sophisticated digital platforms may not be the best product or service offering for this population.
  • Psychological barriers: many poor people believe that banks and other financial institutions are only “for the rich” and not for people like them, without relatively large sums of money to save, borrow, or send. They often feel intimidated and unwelcome in the offices and branches of many financial service providers.
  • Traditional barriers: for many poor people, there is little incentive to enter the formal financial sector. Informal saving methods, such as hiding money under a mattress, participating in savings groups, or utilizing collectors and family members, have provided them with distinct advantages to how they manage their financial lives — with familiarity, clarity, and usefulness.
  • Temporal barriers: people’s needs for financial services change over their lifetime and are based on their changing economic circumstances. While initial access to financial services is essential, service providers must also be aware that as client priorities evolve, so must the products and services they use.
  • Uncertainty barriers: for clients and financial service providers, uncertainty is cause for hesitation. Rising income inequality, rampant unemployment, and uneven economic growth contribute to a feeling of helplessness and inaction, which impedes decision-making based on costs, benefits and risk analysis.

How Client Centricity Can Pay Off

In 2010, MetLife was one of the world’s oldest and largest insurance companies. With 100 million customers in more than 50 countries, it had 65,000 employees and 95,000 sales agents. It offered thousands of insurance products in a very complex business model that often focused more on internal processes and controls than end-user satisfaction. This, combined with widespread customer confusion over what was being offered and how much it cost, led to falling levels of trust, declining sales, and market loss. MetLife’s profit was declining and analysts were starting to question how it did business.

MetLife decided to act. It hired a Chief Customer Officer who immediately set about simplifying products and services based on extensive research into what customers wanted. The process focused on listening to customers and their unique needs, and treating them as human beings. It prioritized simplification of products, services, and prices. And it trained MetLife agents to spend as much time as necessary to explain products and resolve queries.

The result was more easily understood products and services, more satisfied customers, and greater customer loyalty. Revenue and earnings also rose. MetLife demonstrated that loyal customers buy more, stay longer, and refer friends, a win-win combination.

Claire Burns, Chief Customer Officer at Metlife, presenting at SoFI 2015.

Lessons from SoFI

Since 2013, the Mastercard Foundation has held an annual Symposium on Financial Inclusion (SoFI). It promotes the idea that financial service providers in developing countries should focus more on the needs and expectations of people living in poverty to drive financial inclusion at scale. Every year, the theme of the Symposium has been Clients at the Centre. One of the goals of SoFI is to convene industry leaders and specialists to share thinking and create momentum in client centricity and financial inclusion. With SoFI as an annual forum for discussion and debate, the sector comes together to nurture and support the development and growth of big ideas and form a common trajectory.

Five Years of SoFI

Symposium Report

2014

Symposium Report

2015

Symposium Report

2016

Understanding the Client

At the Mastercard Foundation, we believe that people in developing countries can leverage opportunities to improve their livelihoods if they have access to secure, convenient, and affordable financial products and services.

We hope to focus discussions on the most marginalized groups in these countries: women, youth, farmers, and other rural residents far from traditional financial institutions.

These efforts work best when commercial service providers truly understand the complex financial lives of poor people, and design and deliver products that respond to them.

Who Is the “Client” in Client Centricity?

  • Every client needs financial products or services. At the heart of client centricity is understanding who the client is.
  • Increasing our knowledge of that client enables service providers to offer the most meaningful experience. With a meaningful experience comes loyalty.

The Client Journey

Understanding clients means understanding their journey.

The overall client experience with a financial service provider determines impact. Client experiences occur not at a single moment but at multiple interactions over time with a bank or other financial institutions. In fact, it is useful to trace how this client journey moves from first impressions of a financial institution to continued usage and loyalty. Clients then often share their positive experience with others.

The client journey helps us to see how client centricity can enable the move from understanding the client to loyalty and success.

There are multiple ways in which unbanked poor people enter into and use formal financial services, similar to the ways in which any person learns about, purchases, and uses any other product or service. There are also multiple drop-out points in the journey to financial inclusion, and the path is often not linear. One step does not inevitably lead to the subsequent one.

Nevertheless, a “typical” client journey from being an unbanked person to the regular use of a transaction account tends to involve five basic steps.

Building Knowledge About the Client to Deliver Relevant Products and Services

A consistent and welcome theme that has prevailed at all five of the Mastercard Foundation Symposia on Financial Inclusion has been how to harness the power of data to understand the needs of large groups of poor people who want and need financial services. Analysis of the huge amounts of information that can come from poor people before they even become clients of an organization can allow that organization to design products and services that are expected and valued. Continuous data collection and analysis, while adhering to good client protection and privacy practices, can enable banks and other financial firms to become partners with their clients and to accompany them throughout their life.

For example, Microcred, a digital financial inclusion group, is investing in its information technology capabilities to drive personalization and reduce time and effort on the part of the client.

The Mastercard Foundation’s research and case studies show that gathering and analyzing data about our customers and clients is worth the investment. New tools and technology are expanding opportunities and lowering the cost to collect that data so that we can better understand a client’s experience and reality.

The Client-Centric Organization

What does a client-centric organization look like?

True client centricity is visible throughout an organization because it is reflected in:

  • how its leaders lead, and how they manage and direct the workforce;
  • how it talks about itself, its products, and its services; and
  • how it interacts with the public and, most importantly, its clients.

Organizations don’t change easily. Even when change is welcomed and embraced, strong leadership is essential to building and sustaining client-centric organizations.

Leaders, however, have the unique capacity to:

  • articulate the vision and the pathway that needs to be taken to make client centricity a reality;
  • ensure that employees are provided with the necessary tools and resources;
  • build organizational structures and teams around the goal;
  • create a hunger for and commitment to effectively using client data;
  • create and maintain the momentum needed to achieve client centricity;
  • demonstrate a willingness to take risks and make difficult decisions that may only have longer-term benefit; and
  • create a sense of urgency for these efforts.

Organizational Culture is Key

Changing organizational culture requires taking a 360-degree look at potential barriers to client centricity and how to overcome them, so that a new mindset permeates the organization at all levels. The Consultative Group to Assist the Poor (CGAP) has devised a list of attributes to determine if a financial service provider is truly customer-centric:

What Does it Mean to “Shift the Narrative”?

To achieve such a monumental degree of change requires not just changes in systems, structures, goals, plans, leadership, and operational practice. It also requires a change in how the organization conceives itself and talks about itself, both internally and externally.

It means changing the collective mindset from one that revolves around slow, incremental, safe change to one that is prepared to create, innovate, take risks, fail fast, recover quickly, and learn from both successes and failures.

IFC

  • IFC (International Finance Corporation) works with the Mastercard Foundation in the Partnership for Financial Inclusion. This partnership helps African banks and microfinance institutions to design products and services that meet the financial services needs of clients, while maintaining a solid business case in doing so.

Mercy Corps

  • Mercy Corps, through its AgriFin Accelerate program, has incorporated human-centred design techniques to learn deeply about smallholder farmers and which financial and informational products and services they most value.

CGAP

  • CGAP has a significant work program designed to advance financial inclusion, in large part by focusing on client centricity. The recently published CGAP Customer-Centric Guide helps financial service providers to design and deliver appropriate financial services for low-income clients.

GSMA

  • GSMA, the association of global mobile network operators, has a department focused on mobile for development. As the Foundation’s partner, it studies and reports on how people use mobile technology, ensuring that financial service providers can develop products that fit easily into existing habits and capabilities.

BFA

  • Financial Inclusion on Business Runways (FIBR) is an R&D project with BFA (Bankable Frontier Associates) that seeks to understand how to better serve low-income clients through new outreach channels.

Partnerships

The shift to client centricity can be greatly enhanced through the strategic use of partnerships.

The Mastercard Foundation has identified and supported numerous project partners who support client-centric change in the sector with additional expertise, insight, knowledge, or products.

Foundation partners are deeply committed to developing a greater understanding of what works for clients. These partners help to operationalize the Foundation’s philosophy of building intelligence and insight around what clients want and need. These partners also mobilize that intelligence to create better tools and solutions to meet needs and build loyalty. A few examples of the Foundation’s work with partners to advance client centricity for financial inclusion are: IFC, Mercy Corps, CGAP, GSMA, and BFA.

Case Studies

Two case studies show in greater detail the efforts that financial service providers have undertaken to become client centric.

Microcred Senegal

Microcred Senegal (MCSN) has embedded client centricity into the core of its business model, developing innovative products and services that better meet the needs of peri-urban and rural clients.

Interested in reaching this largely unbanked population, MCSN partnered with IFC (International Finance Corporation) to conduct research, listening to its potential clients’ views on the real and perceived barriers to banking. Microcred’s Pulse mobile application and Baobab agent network now bring banking services to the client, and new loan and service options better meet their needs.

MCSN understands that client centricity is more than creating a customer service desk or making ambitious statements. It is a transformation of an organization’s business model to provide value at each phase of the client lifecycle.

Their experience shows the importance of investment in people, processes, and technology. Client centricity is a journey that requires leadership commitment, the development of internal capabilities, and support for a long-term and sustained vision.

See the case study
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Microcred Senegal

NBS Bank, Malawi

NBS Bank had tried numerous ways to reach the large, unbanked population in Malawi, but kept running into obstacles. By partnering with Women’s World Banking, investing in research — including focus groups conducted in the local language — and data analysis, and adopting a client-centric approach, it found success with the Pafupi Agent Network.

This collaborative, client-centric approach, along with a favourable regulatory environment, a strong technical partnership, internal buy-in, donor funding, and a strong focus on providing services that meet customer needs, is changing both the way NBS does business and also the access many Malawians have to financial services.

Scaling down to serve the poorest segment of a population has its challenges, but NBS and its partners resolved to making the product a success.

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NBS Bank, Malawi

Clients at the Centre Prize

The annual Mastercard Foundation Symposium on Financial Inclusion delves into the challenges and opportunities of greater financial inclusion. The Foundation uses the occasion to present its Clients at the Centre Prize. The intention is simple: to celebrate organizations across the globe that fundamentally base the success of their businesses, products, and services on the depth to which they understand and meet the financial service needs of poor people. These organizations embed client value and protection into everything they do, and the Foundation believes they should be recognized.

The Mastercard Foundation has awarded three winners so far. Open the gallery to view the recipients of the Clients at the Centre Prize.

Looking Ahead

Over the last five years at the Symposium, the Mastercard Foundation has brought together global practitioners to discuss, debate, and share ideas about client centricity: how to do it better, faster, more broadly, and more deeply as a way of driving financial inclusion.

Today, the idea that more attention should be paid to the needs and expectations of people living in poverty to make improvements at scale is much more accepted by the financial services sector.

As this report has shown, numerous tools exist for financial service providers to respond to the needs and aspirations of poor people. From rapidly developing digital technology to new and important insights from the field of behavioural psychology, service providers are in a better position than five years ago to design and deliver what poor people want within a cost-effective, sustainable business model.

It has been our privilege to bring together financial services organizations, and the professionals working with and for them, who are committed to examining their own policies and practices through a client-centric lens. We believe this is one of the best ways to expand financial inclusion and offer hundreds of millions of unbanked – or under-banked – people in the world a gateway to a better life.

Our hope is that this global community will grow and strengthen its client-centric creativity and knowledge-sharing so the best ideas and practices can be implemented to address the remaining unmet needs of poor people.