The recent 2017 Findex findings have triggered another round of important discussions on usage in financial inclusion. They highlight that, in the absence of usage consumers don’t get value from the services they have and providers don’t make money. It’s a lose-lose situation.

Understanding usage is important for financial inclusion and has been one of the main objectives of insight2impact (i2i) (a programme co-hosted by Cenfri and FinMark Trust).

i2i’s previous blog on this topic discussed how it is becoming increasingly clear that the link between the uptake of financial products and the ongoing use of those products is neither automatic nor certain. If uptake does not necessarily translate into usage, and usage is necessary to achieve impact for both the consumer and the provider, the key question is really, “How can we increase usage?”

To answer this question, we set out to create a conceptual framework of what influences consumers to make ongoing use of financial products. Our framework identified five broad categories that, together, inform consumers’ usage decision:

1. Functional drivers are factors that influence the consumer’s perceived value that they derive from the product, such as whether the product meets a need, and cost in terms of both monetary value and time.
2. Relational drivers are decision-making considerations – such as trust and relatedness – that are associated with the way in which consumers relate to, or connect with, a financial provider or product.
3. Contextual factors are pre-existing conditions – such as gender or societal context – that influence uptake and usage of financial services and are not easily influenced by the consumer or provider.
4. Behavioural factors stem from deep-seated preferences, beliefs and decision-making tendencies, also known as biases and heuristics.
5. Financial knowledge and skills are factors – such as a consumer’s knowledge of financial concepts, awareness of financial products and practical know-how around using financial products – that influence the usage decision.

This blog examines how this framework can be used in practice to understand drivers of usage for different types of financial inclusion initiatives. It looks at three in Southern Africa: grant payments in South Africa, mobile money in Zimbabwe and retailers in South Africa.

Government-to-person (G2P) social grant payments in South Africa

In 2012, the Government of South Africa migrated G2P payments (previously disbursed in cash) to digital payments and opened transactional accounts for beneficiaries. While digitisation can make payments more convenient, very few of the recipients reaped the benefits of being financially included. One study found that 90% of recipients used their account only once to withdraw their income from their bank account as soon as they received it.

The account otherwise remained dormant. By applying our drivers-of-usage framework, we identified three factors that may have led to this behaviour:

• Lack of functional drivers: The restrictions on the type of transactions that could be made through the account limited the account’s ability to meet the financial needs for individuals beyond receiving income. For example, there was no easy way for recipients to check their bank balance and transaction history. This limited their perceived control of their finances.
• Limited financial knowledge and skills: Many recipients thought that their grant eligibility would be affected if they deposited additional funds into their bank accounts, which discouraged them from using it to save.

Mobile money in Zimbabwe

Mobile money has gained significant traction in Zimbabwe since EcoCash was launched in 2011. In 2017, over 47% of the adult population had an active mobile money account. We identified three factors that may have driven the use of mobile money:

• Contextual factors: Zimbabwe experienced hyperinflation and cash shortage from 1998 to 2008, which resulted in numerous bank closures, which reduced trust in the formal financial system. The absence of cash and the lack of confidence in the banking system created a gap in the market for mobile money.
• Functional drivers: The shortage of cash created a financial need for consumers who were looking for alternatives to transfer value. Mobile money addressed this financial need for consumers by reaching into local communities to enable them to meet their need to transfer value in the absence of cash.
• Relational drivers: Mobile money providers built trust and relatedness by employing individuals in these communities as agents.

Retailers in South Africa

Retailers in South Africa (such as those selling fast-moving consumer goods [FMCG], clothing, furniture or appliances) have been successful in offering financial products and services such as transactional, savings, insurance and credit products. For example, retailer services accounted for 20% of domestic remittances, i.e. money sent to family members or friends within South Africa, in 2016. We identified three factors that may have driven the popularity of financial services offered by retailers:

• Behavioural factors: Credit accounts at retailers can only be used to purchase the specific goods or services offered by the retailer. Consumers noted that they valued this aspect of retailer accounts, as it helped them to control their spending habits.
• Functional drivers: Retailers have extensive physical footprints and late store hours, unlike more traditional financial services. This made them more convenient for consumers who did not need to miss work or find transport to access them.
• Relational drivers: The terms and conditions of the products offered by retailers made consumers feel that the retailers understood their lifestyles, challenges and financial needs and that the products had been designed for them. The retailers allowed consumers to determine the amount they wanted to pay, the timing of payment and the form of payment. This flexibility built relatedness.

The above are a few of the insights that can be drawn from applying our usage framework to financial inclusion initiatives. They highlight that FSPs should focus on:

• Meeting the financial needs of consumers
• Building trust and relatedness in addition to reducing costs
• Making contextual and behavioural factors work for them

This is only a starting point, and we would encourage FSPs to engage with the framework when they evaluate their own initiatives. If you would like to learn more about it, you can access it here or send us email at comms@cenfri.org.

insight2impact (i2ifacility) was funded by Bill and Melinda Gates Foundation in partnership with Mastercard Foundation. The programme was established and driven by Cenfri and Finmark Trust.