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Client Centricity

The Key to Financial Inclusion

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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.

“Instead of products, we should focus on solutions that address the problems and meet the needs of poor people. Instead of place, we should focus on access in facilitating the customer’s purchase journey. Instead of price, we should focus on value, in particular, the benefits relative to price viewed from the context in which poor people live. And lastly, instead of promotion, we should focus on education, providing information relevant to the customer’s needs at each point in the purchase circle.”

Monique Cohen

Microfinance Opportunities, Symposium on Financial Inclusion (SoFI) 2013

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.

“At the core of everything we do … is a quest for the kind of wonderful intersection of three points of view – figuring out what’s desirable for people, what’s viable for a business, and what’s feasible in the landscape of technology and the regulatory environment. But we start with people.”

Leslie Witt

IDEO, SoFI 2014

A client-centric approach helps to better understand and address these barriers, leading to greater financial inclusion.

There are also many other benefits to a client-centric approach:

Greater Efficiency

Insight

Greater Efficiency

For financial service providers, knowing with greater insight what clients need and want allows for a more efficient allocation of resources to serve them. With a greater reliance on data to drive product and service design and offerings, banks and other financial institutions can segment clients and market products that are more appropriate for these segments, and more commercially viable.

Improved Consumer Confidence

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Improved Consumer Confidence

A focus on clients is essential to attracting and keeping them in a climate where financial crises have damaged global consumer confidence in the banking industry. A greater attention and response to client needs and expectations can help to engender greater confidence in the formal economy. Knowing that their savings are safe and readily available when needed gives consumers more confidence to spend in other areas of the economy.

Driving Change

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Driving Change

Around the world, banking is changing dramatically, with different and much greater client expectations resulting from demographic shifts, the digital delivery of products and services, new business models and actors (traditional or non-traditional), and new products and services. A focus on giving clients what they want, need, and expect in financial services drives innovation.

Relationships Matter

2.5x

profit for bank branches that assess customer needs

Relationships Matter

Client trust is the most important factor in consumer loyalty, even ahead of price. Bank branches that use a client-centred needs assessment have earnings 2.5 times greater than those that do not. More importantly, clients who trust their financial institution to meet their needs use its products and services more often and more regularly.

Bottom-Line Value

55%

decrease in customer complaints

Bottom-Line Value

Client centricity can enhance performance in many ways. Research from KPMG shows that financial service providers have seen 10–25 percent reductions in operational costs across channels, 30 percent increases in sales, 20 percent increases in the number of customers and in customer retention, and an up to 55 percent decrease in customer complaints. The Forrester Customer Experience Index, designed to measure the impact of client centricity among all businesses, showed the companies that perform best in customer experience outperform the Standard & Poor’s 500 by three to one and outperform client-centric laggards in their sector by six to one.

“You need to think a little bit more about what you mean in your own initiatives when you talk about inclusion for women. It requires going a level below where you are … Let’s be serious about including women. Not just inclusion. Not just driving businesses for profitability … Women should come to you and say, ‘I’m wearing a better dress now. We eat better in my family.’ That’s the level we need to go in terms of inclusion.”

Jennifer Riria

Kenya Women Holding, SoFI 2016

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

Key takeaways from SoFI:

2013

  • The greatest challenge to delivering well-designed products is the cost of truly understanding customer needs. Not understanding the business case for client centricity hinders its application.
  • There is a need for a global community of financial inclusion professionals to put financial service providers in the driver’s seat of the client-centred financial inclusion movement.

2014

  • The financial services sector needs to know more about client lives, their goals, and their needs to design better products and services.
  • Leadership is key to reorienting an organization toward client centricity.
  • Evolved business models are needed to better serve those living in poverty.

2015

  • Understanding the behaviour and aspirations of clients is key to increasing use of financial products and services.
  • Client centricity starts with and is driven by organizational culture and leadership.
  • Technology increasingly offers new ways to reach the excluded. There is enormous potential to bolster the business case for financial inclusion by lowering operating costs, but technology itself is not a panacea.

2016

  • Understanding the context of poor clients’ lives is the only way to reach them.
  • Building capacity for client centricity within an organization can shape financial product and service offerings, build trust, and create new business opportunities.
  • Partnerships can help organizations to expand their understanding of clients, deliver better products, and build a solid business case for client centricity.

2017

  • Client centricity is the best means to greater financial inclusion. Greater financial inclusion, however, is not an end in itself but a means to economic inclusion: better livelihoods and more meaningful lives for poor people.
  • Increasingly ubiquitous digital technology has been shown to radically transform people’s financial lives. Now, it may be about to radically transform the financial services industry through the entry of new, super-platform players.
  • In markets everywhere, there remains a need to deepen products and services and provide value to bridge the critical “last mile” of access to financial services.

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.

“I live in the Mbozi district of Zambia. I am chairperson of the Juhudi Shilanga Women’s Group. Most of the 80 members are farmers. We buy seeds and fertilizer together, and get training. I grow vegetables and keep cows, goats, and chickens. This year, my yield went from eight bags of maize per acre to 22 bags. With extra income, I will pay school fees, buy an extra cow, and maybe get a cement floor for my house.”

Fanes Kibona Zambia

“I’ve been a One Acre Fund farmer in Rwanda for three years. Before, my farm wasn’t doing well and I could barely feed my family. Since joining the program, I’ve received seeds, fertilizer, and training on farming techniques. Now, I feed my family and I have a surplus that earns me a modest income. The extra income has allowed me to adopt an orphaned girl. I pay her school fees and transportation costs so she can complete her education.”

Fanes Kibona Zambia

“I live in Kayunga province in Uganda. I received an agricultural loan from Opportunity International. Before, I was not doing well. I used to store my savings by purchasing assets, like cows, but this could not be liquidated easily. Now, I go to the bank and make deposits and withdraw money when I need it. Life is much better. Access to financial services has allowed me to manage my money more effectively.”

Lubega Yunusu Uganda

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.

Five basic steps in a “typical” client journey:

1

Become Aware

A potential client learns about a financial service or product that could be helpful to her or his daily life.

2

Acquire

Having engaged with the financial service or product provider, the potential client becomes an actual one, opening an account.

3

Use

With the account opened, the client uses it a few times to ensure that it functions well and effectively serves her or his needs.

4

Use Regularly

Having seen benefits, the client regularly uses the account and/or other services of the financial service provider.

5

Share

Satisfied with her or his experience, the client tells others about the benefits of financial services at a particular provider.

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.

“All organizations start building an organization with clients in mind but then get lost focusing on building the infrastructure and the institution.”

Ramesh Ramanathan

Janalakshmi, SoFI 2015

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:

CGAP's Customer-Centricity Checklist

Download the checklist

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

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.

See the case study
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NBS Bank, Malawi

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.

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BIMA, the 2015 winner, is a micro-insurance company operating in many parts of the developing world. It used the Prize funds to conduct human-centred design to support its continued drive to contextualize the behaviours of clients with its products. BIMA has developed complementary services in support of the findings.

Similarly, Hello Paisa, the 2016 winner, leveraged the Clients at the Centre Prize to conduct research to build an understanding of its clients’ experiences and needs. It now uses these results to design all products and services.

The 2017 winner, JUMO, is a large-scale, low-cost financial services marketplace that serves poor people through the innovative use of digital footprints. JUMO plans to use the $150,000 in prize money to enhance engagement, measurement, and client centricity for the 60–75 percent of its five million clients who are in the micro, small, and medium-sized enterprises segment.

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.