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Exploring Alternative API Product Concepts

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CGAP’s work in Applied Product Innovation (API) aims to understand how customer-centric
design methodologies (inspired by the human-centered design approach), used in other industries, could be tailored to branchless banking in order to achieve better financial service offerings for the poor. CGAP has conducted three API projects in Brazil, Mexico and Uganda in conjunction with independent design firms.

The processes in three countries yielded a number of interesting product concepts and
features. Several of these were not chosen by the provider or design partner for commercial
launch. Although there was a lot of enthusiasm around these concepts, they were not
chosen for a number of reasons specific to the particular provider, industry and/or market
(e.g. in some cases there were regulatory constraints, in other cases it was based on the risk
appetite of the provider). We believe they might be useful to providers in other geographies that find themselves in diferent circumstances and that might be inspired by creative new concepts.

Published in: Business, Economy & Finance

Exploring Alternative API Product Concepts

  1. 1. April 2013Sarah Fathallah, Claudia McKay,Wameek Noor, andYanina SeltzerEXPLORING ALTERNATIVEPRODUCT CONCEPTSAdditional Product Ideas from CGAPsApplied Product Innovation Projects in Branchless Banking
  2. 2. LearningFrom CustomersPreface2CGAP’s work in Applied Product Innovation (API) aims to understand how customer-centric design methodologies (inspired by the human-centered design approach), usedin other industries, could be tailored to branchless banking in order to achieve betterfinancial service offerings for the poor.CGAP has conducted three API projects in Brazil, Mexico and Uganda in conjunction withindependent design firms. To learn more about these projects, check out this deck. Tokeep up to date with CGAPs ongoing work in Applied Product Innovation, take a look atour ongoing blog series.The processes in these three countries yielded a number of interesting product conceptsand features. Several of these were not chosen by the provider or design partner forcommercial launch. Although there was a lot of enthusiasm around these concepts, theywere not chosen for a number of reasons specific to the particular provider, industryand/or market (e.g. in some cases there were regulatory constraints, in some based onthe risk appetite of the provider, and in some because ultimately customers werent thatexcited by the concept). Even though these were not launched commercially, we believethey might be useful to providers in other geographies that find themselves in differentcircumstances and that might be inspired by creative new concepts.If you’re interested in more details about a specific product, please contact ClaudiaMcKay at cmckay@worldbank.org or Yanina Seltzer at yseltzer@worldbank.org.
  3. 3. BRAZILPiggyBank FamilySeparate PocketsWeekly LimitsDeal FinderContentsMEXICOTangible SavingsHome-SavingsMicro-InvestingBank at the SupermarketMyROSCAUGANDABeat the BankMobile Data for CreditCKW Data for Agri-LendingSocial vettingWarehouse E-receiptsInsurance LotteryConcept Index3437404346491821242730581114
  4. 4. 4BRAZIL4 Products
  5. 5. 5PiggybankFamilyProvides a way for families to save together through a mobile wallet.
  6. 6. Piggybank FamilyPiggybank Family is a group savings pool for the family:HOW DOES IT WORK?6
  7. 7. 7Piggybank FamilyFamily member’s inability to save individually. By aggregating and pooling savingseach individual can be motivated to save more.WHAT NEEDS DOES IT ADDRESS?This product targets customers from the lower C and D segments in Brazil(households earning a gross monthly income between US$ 700-1,200 and betweenUS$ 350-700 respectively).Piggybank Family targets family-centered customers, more likely to be a parent or ahead of household, interested in pooling in savings from several household members.WHAT CUSTOMERS DOES IT TARGET?“Throw this away! Your money is your own.” People felt this could cause confusion andfrustration in the family, since people contribute different amounts – it could onlywork in some families with a strong sense of trust and good communication.WHY WASN’T IT LAUNCHED?
  8. 8. 8SeparatePocketsAllows individuals to separate a certain amount of moneyand keep it separate from ‘spending’ money.
  9. 9. Separate PocketsMimicking the existing habit of physically separating committed cash from the cashyou can spend from, Separate Pockets (Bolso Separado) is a tool allowing customersto commit part of their mobile wallet balance to a “separate pocket”.HOW DOES IT WORK?9The customer can seethe Separate Pocketbalance (in this exampleR$ 182.50) in addition tothe total balance (R$320), and can easilytransfer money from thetotal balance to theSeparate Pocket.
  10. 10. 10Lack of control and discipline. Brazilians often feel that if they have money in theirpockets they will spend all of it. It is common behavior to put ‘committed’ money in aseparate pocket so they will not ‘touch’ or spend this money. Physically separatingcommitted cash is a habit people currently have.WHAT NEEDS DOES IT ADDRESS?This product targets customers from the lower C and D segments in Brazil.Separate Pockets aims to serve people who have a hard time saving and could benefitfrom separating live money with money they cant touch, thus allowing for betterbudgeting.WHAT CUSTOMERS DOES IT TARGET?Although the idea mimics their habit, many felt that having it in their phone might leadthem to spend it.WHY WASN’T IT LAUNCHED?Separate Pockets
  11. 11. 11WeeklyLimitsCustomizable weekly limit of budget/money.
  12. 12. Weekly LimitsWeekly Limits (Separar Dinheiro Semanal) helps customers better plan their cashspending by dividing it to weekly amounts that act as spending ceilings for that timeperiod:HOW DOES IT WORK?12The customer canselect an amount fromthe total balance (inthis example R$ 400)and separate it intofour weekly limits (R$100 each). They willreceive a notificationonce they have reachedthe weekly limit theyset to spend.
  13. 13. 13Increased need for better budgeting, control and discipline. Will allow users to plantheir spending ahead of time. Weekly separation of cash was seen as something thathelps people plan, but many felt in control.WHAT NEEDS DOES IT ADDRESS?This product targets customers from the lower C and D segments in Brazil.Weekly Limits was conceived for people who are not as disciplined about budgetingand would like help setting up weekly budgets and limits to how much they can spendwithin a specific time frame.WHAT CUSTOMERS DOES IT TARGET?For those people who have control it is not that interesting. Most people preferred tosee everything not divided since they think they don’t have consistent weeklyspending (so they cannot plan by week).WHY WASN’T IT LAUNCHED?Weekly Limits
  14. 14. 14DealFinderA service that allows individuals to search for andcompare product prices and sales.
  15. 15. Deal FinderDeal Finder (Buscador de Promoção) is a tool for customers to research and find thebest deals and prices. Customers who own the GPS-enabled handsets can also receivelocation-based notifications.HOW DOES IT WORK?15The customer can select the “ComparePrices” option in the menu, and search foran item that they would like to find thebest deals for. The results show thedifferent brands and offerings for theitem, displaying the prices filtered bydistance from the customer, then fromlow prices to high prices.
  16. 16. 16Smarter spending and ‘stretching’ money to optimize spending with people’s limitedbudgets. It allows people to make educated choices and to find the best deal whenpurchasing a product. Researching to find the best deals and prices is part of theculture.WHAT NEEDS DOES IT ADDRESS?This product targets customers from the lower C and D segments in Brazil.Deal Finder targets shoppers, especially the smart shoppers who would like to beable to find bargains close by.WHAT CUSTOMERS DOES IT TARGET?Deal Finder“I always research price, but friends also pass the information if they find good prices.”Some found the concept interesting, but not that appealing – most people shop atlocal markets where they know always have the best prices.WHY WASN’T IT LAUNCHED?
  17. 17. 17MEXICO5 Products
  18. 18. 18TangibleSavingsPhysical tools that connect you to your money.
  19. 19. Tangible SavingsTangible Savings (Seguimiento Tangible) is a set of four tools that connect people totheir money:HOW DOES IT WORK?Bank statements At home balanceATMs could print blankstatements that feelmore precious and alsoprovide space to writetheir notes.Wall-hang balance thathelps people keep trackof their balance athome. People canupdate this withreceipts from deposits.Cardboard calculatorthat serves as an easyway for people to planand follow up on theirsavings targets.My first calculatorPicture/puzzle thatallows people tovisualize the progresson their projects whilesaving in the bank.Project tracking19
  20. 20. 20Tangible Savings provides a variety of tools and features that address people’s need toexperience the “tangible comfort” that cash provides (people like counting and feelingtheir cash) while helping them keep track of their progress towards building a lumpsum of money.WHAT NEEDS DOES IT ADDRESS?Tangible Savings targets customers from the D income segment—betweenUS$ 290-970—in Mexico, which corresponds to low-income salaried workers, low-income entrepreneurs, and informal salaried workers.WHAT CUSTOMERS DOES IT TARGET?Tangible SavingsBancomer thought these concepts worked better as complements to another productrather than as stand-alone concepts. However, the Calculator was used as a sacrificialconcept, which allowed the team to realize that people think in pesos, not inpercentages, contributing to the design principle “Use people speak, not bank speak.”WHY WASN’T IT LAUNCHED?
  21. 21. 21Formal at-home savings.Home-Savings
  22. 22. Home-Savings (Banco Bajo el Colchón) allows people to keep “physical representationof their money” in a safe place at home, while the real money is in the bank generatingreturns:HOW DOES IT WORK?Buy savings in the store Save in bank, keep at homeSavings are bought just like anyother product in the store.People keep “mattress money”in a safe place at home, but thereal money is in the bank.Returns are printed on the“mattress money”so thatpeople can know exactly whatthey are getting.Clear languageHome-Savings22
  23. 23. 23Home-Savings addresses various interrelated needs: (a) keeping “flexible distance”from money to avoid spending temptation and preventing theft, while being able toaccess it in case of emergency; (b) experiencing the “tangible comfort” that cashprovides; (c) having a clear idea of earnings, allowing people to know exactly howmuch their lump sum is worth at any time.WHAT NEEDS DOES IT ADDRESS?Home-Savings targets customers from the D income segment—betweenUS$ 290-970—in Mexico, which corresponds to low-income salaried workers, low-income entrepreneurs, and informal salaried workers.WHAT CUSTOMERS DOES IT TARGET?Home-SavingsThere were costing issues but, mainly, there were strong regulatory concerns aroundcreating “parallel currency.” The idea of “buying” a savings coupon did not generatemuch enthusiasm among people, although they appreciated being able to see theirpotential earnings in a straightforward way.WHY WASN’T IT LAUNCHED?
  24. 24. 24Providing easy investment opportunitiesby reducing the amount needed to invest and created familiar offerings.Micro-Investing
  25. 25. Micro-InvestingMicro-Investing (Micro-Inversión) provides easy investment opportunities by reducingthe amount needed to invest and creating familiar offerings:HOW DOES IT WORK?Locked-in amount Familiar investmentsGives assurance topeople that their moneywill not lose value relativeto their product. It can beused as investment or asinsurance.Investments include arange of products thatare easily understood.The micro-investmentcan be exchanged forthe product amount orits equivalent inmoney.Flexible exchangeThe bank could seekout partners that couldexchange futures forreal products.Potential partners25
  26. 26. 26Micro-Investing mainly addresses people’s need to keep their money from losingvalue, providing an option that is clear, straightforward and tangible. It has an addedconvenience: it allows people to lock a price of a product at present value enablingthem to acquire the goods at a later date, without having to store them at home, inkind, for a long period of time.WHAT NEEDS DOES IT ADDRESS?Micro-Investing targets customers from the D income segment—betweenUS$ 290-970—in Mexico, which corresponds to low-income salaried workers, low-income entrepreneurs, and informal salaried workers.WHAT CUSTOMERS DOES IT TARGET?Micro-InvestingIt was not something the bank could readily implement; it seemed too costly andcomplex. It was not tested with potential clients.WHY WASN’T IT LAUNCHED?
  27. 27. 27Bank at theSupermarketIntegrating all the branch’s services and savings opportunitiesinto the safety and convenience of a store.
  28. 28. Bank at the SupermarketBank at the Supermarket (Bancosuper) integrates savings opportunities into theconvenience and safety of a store, by offer a “special banking line” to supermarkets”,automatically rendering discounts into savings accounts:HOW DOES IT WORK?In-store executive Modulo bankAdds functions of a bankexecutive, such asaccount opening, to thestore cashiers.Expands thecapabilities of thecurrent modules insupermarketsDiscounts in the storecan be transferred fullyor partially to a savingsaccount.Discounted savingsAllows people to savea fixed amount anytime they buy in thestore.Guardamorraya28
  29. 29. 29Bank at the Supermarket addresses people’s need to make savings an effortless andautomatic activity in a place they trust and go to frequently.WHAT NEEDS DOES IT ADDRESS?Bank at the Supermarket targets customers from the D income segment—betweenUS$ 290-970—in Mexico, which corresponds to low-income salaried workers, low-income entrepreneurs, and informal salaried workers.WHAT CUSTOMERS DOES IT TARGET?Bank at the SupermarketThe “In-Store Executive” and “Modulo Bank” were considered prohibitively expensiveby Bancomer. The other two features just didn’t generate as much excitement as theconcepts that were selected.WHY WASN’T IT LAUNCHED?
  30. 30. 30MyROSCAThe bank takes the role of the tanda organizer,allowing for customization while preserving some of the social elements.
  31. 31. MyROSCAWith MyROSCA (Mi Tanda), the bank takes the role of a ROSCA organizer. Clients canchoose ROSCA members and the number of ROSCA rounds and specific features foreach round. And the bank tracks savings records and uses them to offer credit toROSCA members:HOW DOES IT WORK?Customization Social statusClients can choose the number oftandas and the specific featuresof each of them. They can alsochoose who will be the personputting social obligation.If members addfriends to their tandaaccount, they willbuild status and gainthe ability to accesslower numbers.People can opt in forfriendly reminders tokeep up with thetanda payments.RemindersThe bank could ratepeople based on theirpayment discipline andgive lower loans to thebest rated customers.Loan screening31
  32. 32. 32MyROSCA addresses the need to provide structure and a systematic way to build oneor several lump sums, away from the temptations of the home, with the securebacking of a bank.WHAT NEEDS DOES IT ADDRESS?MyROSCA targets customers from the D income segment—between MXP3,600 andMXP12,000—in Mexico, which corresponds to low-income salaried workers, low-income entrepreneurs, and informal salaried workers.WHAT CUSTOMERS DOES IT TARGET?MyROSCAMyROSCA was neither a ROSCA proper, nor did it have all the features necessary tomake it a truly distinct and valuable offering, but some of its features were added tothe two concepts that were selected (e.g., optional degree of social pressure, Tanda-style “saving up” or “down).WHY WASN’T IT LAUNCHED?
  33. 33. 33UGANDA6 Products
  34. 34. 34Beatthe BankA collaborative savings game.
  35. 35. Beat the BankBeat the Bank is a collaborative savings game where friends team up to support eachother in achieving their savings goals and win rewards from the bank:HOW DOES IT WORK?CustomizableTeam members each settheir own savings goalamount, but the goalsmust be reached in thesame timeframe(e.g. 6 months).If everyone reachestheir goal in time they“beat the bank” and thebank pays out a tangiblereward. Rewards aredivided proportionallybased on goal size.If ANY team memberfails to reach their goal,no reward is paid.Thosewho do not reach theirgoal are charged awithdrawal fee and alsocause other membersto lose the reward ontheir savings.Group incentivesThe whole team is notified ifany members are fallingbehind in their pace to reachtheir goals and teammembers can even contributeto each others’goals,encouraging teamwork.Teamwork35
  36. 36. Beat the Bank addresses two main needs: (a) “Save to smooth,” i.e. creating savings products thathelp people accumulate cash during “good times” that can smooth their consumption during “badtimes” of the farming cycle; and (b) “New networks,” i.e. lessening customers’ reliance on networks ofsocial obligation by providing alternative savings and investment mechanisms.WHAT NEEDS DOES IT ADDRESS?Beat the Bank targets three customer types:(a)  The “newly independent” customer, with a low income but a small household size, prioritizesliquidity, ease, and security in savings options. This customer puts high trust in mobile money and isvery interested in new payment products;(b)  The “financial manager,” with a high and regular income, is potentially hard to access as alreadyserved by a multitude of products and providers. This customer uses credit to invest in buildingexisting assets;(c)  The “careful investor,” with a relatively high but informal income, relies on savings as a means toinvest in building existing assets.While this customer does not borrow today, he/she express interestin future borrowing.WHAT CUSTOMERS DOES IT TARGET?Beat the BankMTN did not see the product as a money maker.MTN felt,however,that it could be a good tool for promotionof some sort. Some MTN team members also felt that the key to “progress” for Ugandans is not to savetogetherbutrathertobuilduptheirowncredithistories.Asaresult,theproductscoredlowonsustainability.WHY WASN’T IT LAUNCHED?
  37. 37. 37SocialVettingA lending product which identifies new loan customers virallythrough their association with existing, trusted borrowers.
  38. 38. Social VettingSocial Vetting is based on the basic assumption that trustworthy people trust othertrustworthy people. The viral nature of the product allows it to grow quickly with lowmarginal cost for customer due diligence:HOW DOES IT WORK?Reference-drivenTo receive their first loan,a newcustomer must provide phonenumbers for 10“references”who will receive an SMS inquiryon whether they would trustthis person to repay.For customers whoprove to be goodborrowers, theirreferences are assumedto be good borrowersand offered loans.Loans are“stepped”sothat they start small tominimize risk, but growover time if a positiveborrowing history isbuilt up.Trust-basedThe social aspects of theproduct can also helpmanage ongoing defaultrisk by putting socialpressure on laterepayers.Social networks38Start small
  39. 39. Social Vetting addresses four main needs: (a) “Data for credit,” i.e. using existing pools of data on ruralcustomers to make appropriate credit available to them; (b) “Lend for bad times,” i.e. creating creditproducts that allow rural populations to access cash on demand during“bad times”; (c)“New networks,”i.e. lessening customers’ reliance on networks of social obligation by providing alternative savings andinvestment mechanisms; and (d) “Expand networks,” i.e. reducing capital constraints in livelihoodnetworks by expanding their size and by providing these individuals with access to new forms of capital.WHAT NEEDS DOES IT ADDRESS?SocialVettingtargetsthreecustomertypes:(a)  The“financial manager,”with a high and regular income, is potentially hard to access as already servedbyamultitudeofproductsandproviders.Thiscustomerusescredittoinvestinbuildingexistingassets.(b)  The “village entrepreneur” is a low income trader with a large household size. While this customer’sloans are limited to local sources only, he/she has high demands for new credit products but littleaccesstoorcomfortwithbanks.(c)  The“careful investor,”with a high but informal income,relies on savings as a means to invest in buildingexistingassets.Whilethiscustomerdoesnotborrowtoday,he/sheexpressinterestinfutureborrowing.WHAT CUSTOMERS DOES IT TARGET?Social VettingThe product scored low on external feedback and sustainability. Many of those who reviewed socialvetting noted that it would be difficult to build a sustainable business model for the product. Manyalso felt that this product brought the least value to the customers.WHY WASN’T IT LAUNCHED?
  40. 40. 40WarehouseE-ReceiptsProviding credit to enable small-holder farmers to store their cropsand off-sell after harvest season for a higher market price.
  41. 41. Warehouse E-Receipts enables small-holder farmers to store their maize and off-sellafter harvest season for a higher market price while giving them access to credit tomeet immediate needs:HOW DOES IT WORK?Off-selling crops Coupled with loansThe Warehouse Receipt systemallows farmers to “beat the cycle”by storing crops and selling theirproduction away from saturatedlocal markets to large buyers.To help bring small maize farmersinto the warehouse receipt systemthe service allows immediateaccess to credit based on the maizestored while minimizing cost of duediligence for the lending bank.When a buyer purchases thefarmer’s maize,the payment ismade through the warehouse,whichfirst pays back the bank for the loanprinciple + interest and then paysthe difference to the farmer.Direct repayment to bankWarehouse E-ReceiptsValue of maize
  42. 42. Warehouse E-Receipts addresses the need for “off-sell produce”, by helping customers smoothconsumption across cycle by selling produce when most valuable or purchasing inputs when cheapest.WHAT NEEDS DOES IT ADDRESS?Warehouse E-Receipts targets three customer types:(a)  The “financial manager,” with a high and regular income, is potentially hard to access asalready served by a multitude of products and providers. This customer uses credit to invest inbuilding existing assets.(b)  The “village entrepreneur” is a low income trader with a large household size. While thiscustomer’s loans are limited to local sources only, he/she has high demands for new creditproducts but little access to or comfort with banks.(c)  The “careful investor,” with a relatively high but informal income, relies on savings as a meansto invest in building existing assets. While this customer does not borrow today, he/sheexpress interest in future borrowing.WHAT CUSTOMERS DOES IT TARGET?Warehouse E-ReceiptsThe design team, as well as MTN, felt this product had too many dependencies. For the product towork, we would need to bring the farmers into the an e-warehouse system as well as working withbanking partners to give farmers non-collateral loans based against the grain stored. The productscored low not only on external feedback but also practicality because of these considerations.In countries where a warehouse receipt program is already in place, adding a mobile moneycomponent makes a lot of sense.WHY WASN’T IT LAUNCHED?
  43. 43. 43InsuranceLotteryAn insurance product structured like a lottery leveraging the excitementof gambling to encourage customers to protect themselves against risks.
  44. 44. Insurance LotteryInsurance Lottery is an insurance product for which customers to pay a premium toenter themselves into a lottery and have the chance to “win big.” Those who do not winare still covered for basic life insurance.HOW DOES IT WORK?Tying life insurance to a lottery makes it easier for first-timeinsurance buyers to try out basic coverage. On the onehand, purchasing insurance is a hedge against a verynegative outcome. On the other hand, users simultaneouslybet on a very positive outcome with the lottery.More entries in a month increase acustomer’s life insurance coverage forthat month, giving customers theflexibility to adjust their premiums asnecessitated by irregular incomes.Lottery + Life insurance44Rewards
  45. 45. Insurance Lottery addresses the need for “new networks”, by lessening customers’ reliance onnetworks of social obligation by providing alternative savings and investment mechanisms.WHAT NEEDS DOES IT ADDRESS?Insurance Lottery targets three customer types:(a)  The “financial manager,” with a high and regular income, is potentially hard to access asalready served by a multitude of products and providers. This customer uses credit to invest inbuilding existing assets.(b)  The “village entrepreneur” is a low income trader with a large household size. While thiscustomer’s loans are limited to local sources only, he/she has high demands for new creditproducts but little access to or comfort with banks.(c)  The “newly independent” customer, with a low income but a small household size, prioritizesliquidity, ease, and security in savings options. This customer puts high trust in mobile moneyand is very interested in new payment products.WHAT CUSTOMERS DOES IT TARGET?Insurance LotteryCustomers were not too excited about this product. Many customers view insurance as a sunk cost anddo not trust that they would be able to collect their pay-out from the company if they, or someone in theirfamily died. A few also noted that a product like this would make them go through the hassle of getting adeath certificate,which they did not want to do.As such,the product scored low on appropriateness.This product could be very successful in a context where customers are familiar with insurance and/or isaccompanied by financial literacy training.WHY WASN’T IT LAUNCHED?
  46. 46. 46Mobile Datafor CreditAn insurance product structured like a lottery leveraging the excitementof gambling to encourage customers to protect themselves against risks.
  47. 47. Mobile Data for Credit Is based on the observation that customers in the informalsector lack credit history data or credit scores that make due diligence on newborrowers expensive, especially given the size of loans demanded. Transactional dataon these customers does exist, but it is held largely by MNOs, not by banks.HOW DOES IT WORK?Mobile data-driven CustomizablePotential borrowers are identifiedusing a number of parametersderived from both MNO voice and/or mobile money data (volume andregularity of transactions, depth ofsocial networks).Parameters are created andtested by AppLab that utilize thevarious datasets to identifypotential borrowers: Applabidentifies high potentialborrowers, and banks providethe credit.To protect customer privacy,potential borrowers would besent an SMS message asking ifMTN can share their mobile datawith the bank in order for themaccess the loan.Customer privacy47Mobile Data for Credit
  48. 48. Mobile Data for Credit addresses the need for “data for credit”, by using existing pools of data onrural customers to make appropriate credit available to them.WHAT NEEDS DOES IT ADDRESS?MobileDataforCredittargetsthreecustomertypes:(a)  The“financial manager,”with a high and regular income, is potentially hard to access as already servedbyamultitudeofproductsandproviders.Thiscustomerusescredittoinvestinbuildingexistingassets.(b)  The “village entrepreneur” is a low income trader with a large household size. While this customer’sloans are limited to local sources only, he/she has high demands for new credit products but littleaccesstoorcomfortwithbanks.(c)  The “newly independent” customer, with a low income but a small household size, prioritizes liquidity,ease, and security in savings options. This customer puts high trust in mobile money and is veryinterestedinnewpaymentproducts.WHAT CUSTOMERS DOES IT TARGET?Mobile Data for CreditCreating a credit scoring algorithm would be an extensive exercise, and a lot of work would have to bedone to test that algorithm. The team was uncertain whether they would get enough data from MTN tocreate that score. The product concepts came out shortly after MTN went through their fraud case andwere naturally very data sensitive. Concerns like this made the design team rate the product low in termsof practicality. They also knew that numerous other players were working with credit scoring algorithmsin the market,so they scored the product low in terms of novelty.WHY WASN’T IT LAUNCHED?
  49. 49. 49CKW Datafor Agri-LendingFacilitates agricultural lending by identifying good borrowers using data collectedon farmers by AppLab’s Community Knowledge Workers (CKW).
  50. 50. CKW Data for Agri-LendingApplab’s CKW program reaches 70,000 farmers currently and has detailedinformation on each farmer regarding crops planted, planting area, inputs used, assetsheld, and historical yields.HOW DOES IT WORK?Potential borrowers are identified not onlybased on the quantity of their assets, but alsoon how efficiently they use the assets they have(by looking at the type of inputs, inputs per acre,and yields per acre).Credit could be provided short-term to helpfarmers get through the“hungry season”without liquidating productive assets, orlonger term to help farmers invest in betteruse of inputs at planting.Agricultural data-driven50Short-term credit
  51. 51. CKW Data for Agri-Lending addresses the need for “data for credit,” by using existing pools of dataon rural customers to make appropriate credit available to them.WHAT NEEDS DOES IT ADDRESS?CKW Data for Agri-Lending targets three customer types:(a)  The “financial manager,” with a high and regular income, is potentially hard to access asalready served by a multitude of products and providers. This customer uses credit to invest inbuilding existing assets.(b)  The “village entrepreneur” is a low income trader with a large household size. While thiscustomer’s loans are limited to local sources only, he/she has high demands for new creditproducts but little access to or comfort with banks.(c)  The “careful investor,” with a relatively high but informal income, relies on savings as a meansto invest in building existing assets. While this customer does not borrow today, he/sheexpress interest in future borrowing.WHAT CUSTOMERS DOES IT TARGET?51CKW Data for Agri-LendingThis product scored low on sustainability and practicality simply because of the amount of data that theCKWs had to collect to make the system work. Such a data collection process is not only timeconsuming,but also expensive,so they chose to go with the simpler concepts.WHY WASN’T IT LAUNCHED?
  52. 52. Advancing financial inclusion to improve the lives of the poorwww.cgap.org

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