The Journey to Client Centricity in Financial Inclusion
We have written in the past about the importance of listening to customers and designing products, but through experience have realized that products are not developed in a vacuum and customer experience is not just about the product. Financial service providers repeatedly share with us that one of the biggest challenges they face is actually translating customer insights into a better service offering for customers. Putting the customer at the center of decision making requires an institution to re-orient its entire operations around the customer. This has far-reaching implications for the operational structure of an organization. The process of evolving from a product- or channel-centric organization to a customer-centric one is complicated. CGAP is collaborating with Janalakshmi Financial Services, one of India’s largest urban microfinance institutions, to explore what it takes for an organization to shift its operational focus to its customers. The goal of this project is to learn together about three interrelated areas: understanding customers, designing effective delivery and making the economics work.
Janalakshmi currently has over a million group-loan customers and has recently designed a new full-service delivery channel called “JanaOne” for a specific segment of its customers - high growth potential microenterprise owners. JanaOne seeks to be a one-stop shop for these customers by providing financial solutions and also working with them to define their financial roadmap. While JanaOne is fundamentally an innovation that seeks to build deep relationships with customers, the pull of everyday business will be to use it as yet another channel to sell credit. Janalakshmi is very cognizant of this fact and has consciously entered into this partnership with CGAP with the goal of maximizing JanaOne’s potential to be a channel that is built around customer needs and behaviors.
In the first phase of this project, Janalakshmi and CGAP are working with Innovation Labs, a local design consultancy, to better understand their customer’s needs and equip them to create solutions that fulfill those needs. The output of this phase will be a household map to help Janalakshmi profile its customers along a nuanced set of dimensions and ultimately use these profiles to recommend the most appropriate products to customers.
As a starting point, the teams spent a day each with six different customers, observing their life and speaking to them about a wide range of topics including their family and social contexts, their network, the catalytic events in their lives and of course, their financial behaviors. These life stories are available in a slideshow below.
In addition, Innovation Labs conducted a workshop with Janalakshmi’s staff to get a deeper insight into how the organization currently perceives its customers. Here are a few takeaways so far:
- Customers are great at ‘Cash Management’ but not as adept at ‘Wealth Management’: The poor lead extremely complex financial lives and have sophisticated systems to manage cash day to day. We spoke with the owner of a corner store who uses different cardboard boxes to manage different categories of expenditure. In addition, he has multiple loans and is managing their repayments. However, the pressures of his everyday life and knowledge of a very limited set of financial instruments prevent him from thinking about creating wealth in the long term.
- Going with current behavior or changing behavior: Some customer practices posed unexpected (and sometimes, uncomfortable) questions about the wider implications of making their operations client-focused. For example, a few families actively accumulated dowry for their daughter’s marriage. Many families had vastly different priorities for their children depending on whether they had a son or a daughter – they tended to focus on providing a good education for their sons, while a bulk of the financial planning for their daughter was for her wedding. Observing this, the Janalakshmi team had to ask themselves whether they wanted to change behavior or just facilitate the existing priorities of customers without judgment. Preliminary discussions within Janalakshmi seem to indicate that they will focus on how customers currently behave, with some of the other services offered by their non-profit arm working to change behavior in the longer term.
- The inside-out view: Janalakshmi’s founder, Ramesh Ramanathan, has explained how institutions are designed around processes and tend to view their customers through these processes. This became clear when we studied Janalakshmi’s current perspective on customers and found that all its products and processes are set up from the organization’s point of view and not the customers’. Customers think about their lives in terms of the big life events, not in terms of loans or savings or insurance. Recognizing that customers are event-centric will help Janalakshmi better match its products and services to the rhythm of customers’ lives.
- Building customer centric-capability is a cross-functional issue: We are beginning to get a sense for what building customer-centric capability within Janalakshmi will involve. Janalakshmi has a separate research wing which has been very involved in the customer immersions and research. However, as we start developing the household map, the business functions within Janalakshmi will have to increasingly take ownership. How these handoffs happen and the transfer of knowledge in the process has relevance to a number of organizations that have dedicated research wings but who ultimately have to produce business results.
Having just been in Bangalore to work with the Janalakshmi team, I came away with an appreciation for the multitude of initiatives that Janalakshmi is currently implementing as part of their pivot to customer-centricity. Janalakshmi is considering new front-end technology to facilitate doorstep delivery of all its products, expanding its product range and reengineering the processes of Jana-One to offer a more fulfilling customer experience. And it is doing all of this within the context of exponential growth in the core business. The challenge over the next few months will be to align these different initiatives in a common direction and to balance growth with getting the model right. Through all of this, Janalakshmi has been extremely open and forthcoming about what is inherently a fluid process.
As a next step, a diverse range of stakeholders at Janalakshmi will come together to model the data gathered from immersions to develop key attributes that define these household-microenterprises. We invite you to follow the progress of this project and participate with your insights through our regular journal entries on Facebook.
----Tanaya Kilara is a Financial Sector Analyst on the Clients and Products team at CGAP. She leads work on client centricity, including the project with Janalakshmi.