How can financial service providers, such as banks, microfinance institutions, and mobile operators, design and provide products and services that poor customers will not only choose, but actively use? CGAP has learned that a focus on the customer is essential.
To that end, CGAP works to advance customer centricity, a way of designing products and services that begins with understanding the customer. For poor customers, this starts by recognizing their great diversity: While often defined by a single attribute – their poverty level – they are a diverse group of people and require a range of products and services.
Access to financial services is central to financial inclusion, but it is clear that access without use is an incomplete financial inclusion result. People cannot benefit from financial services if they do not use them, and providers cannot generate income from their business activities when there is lack of use. For example, only 30 percent of registered mobile money accounts globally had been used at least once in three months, according to June 2013 data. Inactivity is not only an issue for mobile accounts; five of the largest retail banks in their domestic markets in Colombia, India, Kenya, Mexico and South Africa reported suffering from dormancy rates ranging from 20 to 90 percent in different account categories.
Becoming a customer-centric institution is not easy, and often involves completely shifting the way a financial service provider operates. However, analysts of successful business models across industries agree that customer-centric providers tend to fare better in the long run, as they are better at retaining customer loyalty and identifying and meeting evolving demand. But does this work for low-income customers, where margins are thin? We believe that it does, and that customer-centricity at the base-of-the-pyramid is a critical ingredient for success.
CGAP supports financial service providers in the adoption of the customer-centricity approach through research, resources and partnerships. Working closely with financial service providers, we hope to understand the institutional mechanisms that impede customer centricity, and support providers toward outcomes that benefit customers as well as providers. CGAP studies approaches to obtaining and integrating customer insights, including Human-Centered Design, segmentation and more.
Insights from these efforts are presented in the Guide to Customer Centricity as a Business Model – a resource for financial service providers on the journey to customer centricity. The Guide focuses on the five pillars of customer centricity: leadership, empowered employees, a customer-centric operating model, customer experience, and value creation. The Guide follows a logical approach, first looking at why providers should consider the customer-centric business model; and pursue a phased plan how to implement by starting with learning from customers (generating insights), followed by design solutions and lastly how to organize for delivery. The final focus of the Guide is on understanding and measuring the value for all stakeholders in the financial inclusion process, starting with the customer, the service provider and stakeholders (staff, management, investors), and including the value for society as a whole.
- Publication: The Journey to Customer-Centricity: How Janalakshmi, a Financial Inclusion Service Provider in India, is Transforming through Customer-Centricity
- Video: Janalakshmi’s Journey to Customer-Centricity
- Interactive Publication: Insights into Action: What Human-Centered Design Means for Financial Inclusion
- Blog Series: Building Empowered Customers
- Blog Series: Putting Customer Insights to Work
- Blog Series: Lessons on Leadership and Customer Centricity
Contact: Gerhard Coetzee