October 2, 2017
A big thanks to Gregory Makau from Musoni Kenya, Antonique Koning from CGAP, and Brent Chism from TaroWorks for a great conversation about how financial service providers are thinking about and incorporating relationship management into their work.
We’re recapping the conversation here, but you can listen to the conversation in its entirety in the recording above.
Financial service providers have evolved tremendously in the use of systems since they started with microfinance organizations in the 70s. A common thread we’ve heard is that there’s a growing need to not only track the financial product and transactions, as core banking systems are meant to do, but to start tracking client-centric activities as well. Throughout this conversation, the panelists delve into what trends they’re seeing, why this shift is important, and what to look for in a tool to help digitize agent networks.
As a note, we’ve broadened the topic to consider agent networks for financial service providers in general, and are not just focusing on MFIs because it seems like this trend is broader than just MFIs.
Gregory: Throughout East Africa and Africa, microfinance has always started with systems that help with tracking loan details. Over time, we’ve seen that systems have started to improve on the interactions with clients. Especially in Kenya, these systems include Temenos and Orbit. For microfinance organizations, these systems are quite expensive and can seem out of reach, so players like Craft Silicon and Mifos come into play because they act as a core system and allow organizations to build additional functionality around it. For example, Musoni uses Musoni Systems as its core banking software to manage client details (registrations, underwriting, tracking performance), but they built up a mobile tool for agents to deliver services remotely, without having the client travel to a local branch. When choosing a tool, you should make sure that it allows for integrations or allows you to build functionality yourself to help with the cost.
Currently, Musoni operates completely on a cashless basis, which required us to partner with SafariCom, the major telecom provider in East Africa. Now our clients are able to repay and have their account information be reflected in our core system. When we disburse funds, we disburse to those same mobile wallets to reduce the need for the client to travel.
Now I’m seeing other organizations partnering and integrating systems in an effort to offer better products and services to their clients.
Brent: Musoni has been quite advanced, but in my experience in East Africa, the primary technology MFIs have used have been pencil and paper. A big difference between systems is what they are focused on. Core banking systems are crucial for running a financial organization but fundamentally, they’re organized around products, for example loans. From a different angle, CRM systems are focused on the customer. Theoretically, you could be using both a core banking system focused on the financial activities and agents using pen/paper to track client activities. There’s a real potential to deliver service by using widely available tools to manage customers.
Another trend is the spread of CRM being available on the cloud. This took off with Salesforce.com and has broadened to many other CRMs now available in the cloud. Making systems available in the cloud plus the growth in cell phones has made these types of systems much more accessible to more institutions.
Antonique: Technology has revolutionized financial service delivery to increase outreach and improve access to service over the last couple years. Through agents who are now connected through digital channels, we can reach further than ever before. However, there are still issues to resolve. For example, many of the new accounts that are opened remain dormant, insurance policies lapse, and the GSMA reports that 63% of mobile wallet accounts are used less than once per 90 days. For its increased reach, there are still things to consider to make sure that the poor are truly benefiting.
Financial service providers now have an opportunity by using digital tools to turn this around using some of these newer tools that focus on the client and providing customer-centric and not just product-centric metrics. I agree with Gregory’s perspective of thinking of systems as a way of learning from customers so you can improve your services, your business, and your customer experience and ultimately improve overall outcomes.
Costs are certainly a challenge, but it’s important to think of CRMs as investment that will pay off over time.
Antonique: Financial Service Providers have been focused on pushing their products out there and waiting for people to use them, but that is no longer a valid approach. What CGAP would advocate is a customer-centric business model, which empowers agents to deliver a distinct customer experience. This is a change in perspective to go beyond delivery of a product to a delivery of an experience. This means agents must be trained to anticipate customer needs and behaviors so they can interact most effectively.
CGAP is currently developing research and a toolkit on employee and agent empowerment. We’ve concluded that agents must be willing and able to deliver a positive and consistent customer experience. This suggests that to move the needle, we must be focusing on these drivers, with the end goal being able to deliver value to the agent, the firm, and the customer.
The research highlights 9 areas where organizations can leverage and strengthen to empower their field agents. Of the 9, there are a few that should be highlighted for this question.
Side note: CGAP’s Customer-Centric Guide has since been published and you can find it here: http://customersguide.cgap.org/
Brent: We’ve all been on the customer side – interacting with a large company when it’s very apparent when they don’t have customer-centric systems and there’s no history of your transactions – and it’s super frustrating. In this way CRM systems become institutional memory – it allows agents pick up where they left off and see what’s already happened. Generally, systems that are built to do this will be more customer-centric than systems that are built to underwrite a bank loan.
While it’d be great for one system to do everything, trying to build “one system to rule them all” results in a system that does many things not particularly well. You’d be better off taking systems that are specialized and integrating them.
Gregory: Musoni had to re-engineer its processes and product to start capturing the customer experience. We created a digital product that runs on the cloud. With this product, we bypassed the step of agents needing to visit an underwriting facility – agents can originate the loan, and the system will approve and disperse them automatically. To achieve this, we had to integrate with a CRM. The CRM also allows the agents to log each individual’s attendance at group meetings. We’re now able to capture the behavior of the client, and incorporate that as a step to qualify for loans.
Clients are now mostly supported by a “customer experience desk.” After a client applies and the loan is disbursed, Musoni agents call them to find out how the product is, how the experience was, and what areas to improve. At the end of the day, this call center is designed to improve the customer experience by eliminating paper and an agent visit. We’ve seen a big shift from our traditional loans to people opting for the digital tools, which in turn has helped our bottom line.
Previously, if agents were using pen and paper, is this shift toward digital tools a barrier?
Brent: There’s good and bad news. The bad news is that mobile user adoption is the key to making this all work and it can be difficult. The good news is that lots of organizations across industries have done this same thing and there are ways to make this happen. See some of TaroWorks resources on mobile user adoption: https://taroworks.org/abcs-adoption/
One example of mobile user adoption is from an organization called SOIL, operating in Haiti. Their agents need to meet with clients on a weekly basis and log activities using their phones. Before rolling out the system, they spent a lot of time testing so that the users would trust the system. When they did roll it out, they made sure to award participants with a TaroWorks Certificate because the local culture really values certificates. They also positioned the switch to smartphones as bringing the agents into the modern age to make them impressive on the job market. Lastly, they added some gamification touches to training; when embarking on the GPS mapping exercise, participants followed the GPS points to find balloons and chocolates. Not only did the users adopt the technology, but have embraced it to the point where they ask management to provide more functionality. See more details about SOIL’s roll-out: https://taroworks.org/successful_rollout_qa/
Antonique: 2 other thoughts about this topic:
Gregory: At Musoni, changing perception was a big shift. In the past, if you’re supposed to underwrite 100 loans, you underwrote 100 loans. We changed the focus so that even if you’re underwriting 100 loans, the customer needs to enjoy the experience of those loans. That meant improving on how we deliver the product and services. Much of the experience comes into play in the form of customer service, getting their feedback on the services, and continually checking in on the client.
One of our key parameters is social performance so they track how a client moves forward in their use of the product. Their loans start at $500, so by the time the client graduates to $1,000, they would see the social impact of the product.
We invest so much in our clients (in terms of training) that we cannot afford to lose them – we must continually invest to keep our clients. By focusing on client experience, we went from 70% client retention to 84%.
Keep in mind that the landscape in Kenya moves very quickly. In order to stay competitive, we must focus on the customer experience and provide what customers want.
Brent: I’d counter and ask “why do you need to overcome the roadblocks in the first place?” There are a couple of things we need to acknowledge. There are lots of institutions that are coming from MFI’s clients. Mobile network operators are now offering loans, for example Timiza in Tanzania and SafariCom’s M-Shwari. Likewise, we’re seeing other types of organizations starting to offer financial services, including solar companies, who are now providing asset-based financing based on the solar equipment. Additionally, banks are now rolling out correspondent banking networks. With these competitive services, you’ll have to digitize to compete, and also diversify the products so agents can have the best opportunities with your network.
Gregory: Yes, this need for diversification is true, especially in Kenya. In fact, Musoni now has an institution providing loans driven by Facebook accounts. These clients don’t even have a phone number or physical address where we can reach them – we can only reach them over Facebook, Twitter, or email.
Antonique: Certainly incentives play a part and is one of the resources for building skills, but we have to be careful about what the agents are getting trained on. Previously, training was focused on product information and making sure the agents are good salesmen. But what we’re hearing in this conversation is that we need to prepare agents to be better relationship managers. We also need to set a culture of values and attitudes within the organization to reinforce these values.
With incentives, the trend is exactly as Gregory mentioned – it’s moving away from checking the boxes and getting your numbers, to looking at the result of service delivery. These indicators could include how problems are being solved, how complaints have been handled, and overall customer satisfaction. It’s taking a longer term perspective on targets instead of the day-to-day.
Antonique: I’d like to highlight that some of the work what I’ve mentioned is part of the agent and employee empowerment toolkit that CGAP is creating and will be integrated into CGAP’s Customer-Centric Guide. We’re giving a sneak peek of the URL now (http://customerguide.cgap.org) and it will be live the week of Sept 25. Much of the resources can help financial service providers become more customer-centric.
Gregory: Digitizing as an organization is not easy. You must coordinate everything from having support from the top-level executives, including digitizing as a goal in business plans, considering the customer’s experience, the design of operations and products, and even the skillset of who you employ. It’s a journey that once you start, you’ll never say you’re comfortable. Everyday, the dynamics change because the customers are always demanding more as they are exposed to more products and services in the marketplace.
Brent: This is an exciting time because there are a lot of possibilities of what organizations can do now with smartphones and software. This means a lot of change, which can be difficult, but it also means an expansion of possibilities and a chance to expand financial inclusion around the world.
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