The Art of Discovery: Incubating Mobile Money Ideas In Uganda

A loan recipient stands against a wall in a training session

In early December 2012, Safaricom partnered with the Commercial Bank of Africa (CBA) to launch M-Shwari, a product that facilitates on-demand loans of up to $1,100 and has a credit-scoring mechanism that determines loan amounts based on past usage of Safaricom products. The product also encourages savings and pays customers 2% to 5% on their deposits if they keep a balance in their M-Shwari account. Safaricom has noted that the product was introduced to fill a vital need amongst Kenyans: short-term credit.

The product is getting many in the industry excited and the uptake is impressive. On the day of launch, nearly 70,000 customers opened M-Shwari accounts. Now, just one month after launch, one million customers have registered with the service. An impressive $11.5 million has been accumulated in savings and more than $1.7 million worth of loans have been disbursed.

As exciting as the rapid growth of M-Shwari has been, it has been controversial. Airtel, in partnership with Faulu, introduced a very similar product in May 2012 called Kopa Chapaa. The on-demand credit product facilitates loans of up to $115, repayable in 10 days, and also uses a credit-scoring algorithm. Faulu Kenya has said that it approached Safaricom with the product concept before going to Airtel, but was turned away. A few months later, Safaricom launched nearly the same product with CBA. Because of this action, Faulu has accused Safaricom of breaching their non-disclosure agreement and contravening its trade secrets.

The story of M-Shwari substantiates several points that we at Grameen Foundation’s AppLab Money have been emphasizing. Large organizations like Safaricom are very good at the science of delivery – that is, putting good ideas into widespread usage through creative thinking, investment and marketing. But its duplication of Kopa Choppa makes clear that it needs to get better at the science of discovery – that is, coming up with the breakthrough product ideas that have real impact in the market.

At AppLab Money, we are continuously disseminating lessons through our case studies to help organizations – especially those that have an appetite to go down-market – master the art of discovery. The first part of our case study recounted the early phases of the AppLab Money Incubator, during which consumer insights and generated early ideas.

The second part of our case study describes our concept-testing phase. During this stage, we fleshed out our ideas into robust concepts, assessed the feasibility and commercial viability of key concepts, tested the concepts with users through low (e.g., paper) and medium fidelity (e.g., USSD) prototypes and even survived an organizational crisis.

Some of the insights from our work include:

1) Test with users early and often. We used prototypes, such as storyboards and tablets, to test the concept before we invested in its further development. Early testing provided us with critical feedback that was used to flesh out and improve the concept, and tweak product features.  

2) Good products require great service design.  Innovative new products thrive in a service ecosystem. We enrolled a service designer to help us ensure that the product is not just desirable for customers but also viable for our commercial partners, and possible to implement from a technological and legal perspective.

3) Innovation stalls during crises. About nine months into our innovation process, MTN Uganda (MTNU) experienced substantial fraud on its mobile money system. By necessity, MTN executives needed to focus on the primarily priority at hand – addressing the fraud and securing the system – and put innovation on the backburner. The AppLab Money team continued to test the products with customers and only re-introduced the products to MTN after the system was stabilized.

4) Organizational data can lead to powerful ideas. Many larger organizations do not know the power of the data they hold and how much it can enhance the product-development process when properly analyzed. We used customer insights drawn from MTN’s own data to demonstrate the opportunity for product concepts based on existing customer behaviors.

5) Products die because of non-user related issues. We shelved concepts for various reasons, from lack of partners to perform critical roles, to regulatory risks and weak business models. Although user feedback was important to our selection of which concepts to progress, numerous other factors killed good ideas.

6) Develop business models early. The business case had to be apparent from the beginning for our partner to champion the product. We worked hard to balance the need for partner profits with the knowledge that poor customers could not afford to pay high prices. We also tested different pricing options in the field with customers, and used their feedback to revise the business models.

This is the last part of the case study that will be released publically. We have now moved toward the product-testing and launch-planning phases and need to respect our confidentiality agreements with our commercial partner. But we will start to make noise again after our product is on the market, or if our launch attempts prove futile, for whatever reason. But check back on our blog series Applied Product Innovation in Branchless banking regularly for synthesized learning on commercial roll-outs across Applied Product Innovation (API) projects that can help motivated players master both the art of discovery and the science of delivery.

--- The author leads Grameen Foundation's App Lab Project in Uganda.

Photo Credit: Patricia Rodriguez Pulido