A large number of institutions that provide financial services at the base of the pyramid - whether banks or MNOs - realize that giving access to previously unbanked populations is way easier than ensuring usage. For example, for mobile banking, in 2013 GSMA estimated that less than 30% of subscribers were active (transacted once in 90 days). The same story goes for many banks that provide simplified savings account in massive scale. At CGAP we believe that taking a more customer-centric approach to financial services for the poor will help solve the inactivity issue and create a better value proposition for customers.
Photo Credit: Nikki Sandino Victoriana
John Rubio, CEO of BanKO, a mobile-phone based savings bank in the Philippines, seems to agree. Like most digital finance deployments worldwide, BanKO faces the issue of low activity rate by subscribers. Their goal is to double customers’ usage rates, and the recently appointed CEO John Rubio has identified greater customer centricity as a tool to achieve this. While BanKO’s resources for research are limited it is committed to finding ways to better understand customers’ needs and better educate them on financial services. For instance, in the course of mapping out the BanKO customer journey, Rubio and his team discovered that 30% of subscribers are prepared to use a mobile app for their banking needs.
BanKO was created in 2009 as a joint venture of Bank of the Philippines Islands, Globe Telecom and Ayala Corporation. In the last 10 months, BanKO has more than doubled its number of clients from 320,000 to 700,000. The bank still targets low-income populations and around ninety percent of BanKO clients were previously unbanked. BanKO operates with just 300 staff and has now acquired close to 3,000 outlets (agents) who undertake all the cash-in cash-out operations for customers who get both a card and a mobile wallet to transact.
The financial inclusion community has talked about digital finance in the Philippines for many years, but its growth was never close to some of the implementations we have seen in Kenya, Pakistan or Bangladesh. But things are changing at BanKO. After meeting with him in Manila I was impressed by John’s vision of turning his bank into a much larger scale digital finance deployment by making it larger, increasing profits and better understanding customers’ needs and adapting services to them. John’s vision is to reach 1 million customers by the end of the year, and his long term vision is even more ambitious and inspiring: he wants every Filipino to have access to a bank account and be able to access it by traveling no more than ten minutes from their home.
BanKO’s new client acquisition strategy relies on the aggressive expansion of its agent network and by developing partnerships. For example BanKO is expanding its collaboration with Globe, a major telecom provider, by sharing Globe’s 7,000 GCash. It is also developing partnerships with major companies that have deep outreach in the country such as Nestle, and with NGOs to provide financial education to clients or sometimes deliver subsidies. BanKO has a special team dedicated in recruiting new customers and new outlets. By meeting every agent at least once a month, BanKO also maintains relationships with them.
But acquiring new clients alone will not enable John to achieve his vision for BanKO. The institution also needs to become more profitable to expand and customers need to become more active users of BanKO services. BanKO plans to increase its lending and is piloting a new consumer credit product to replace the usurious informal sector which charges 20 percent per month. This new product will assess the credit-worthiness of clients by analyzing data on Facebook and from mobile phone usage . BanKO is partnering closely with Lenddo on this initiative.
There is little doubt that if BanKO embarks on a customer-centric journey that incorporates the experience and behaviors of the customers into its business model, and continues to find innovative partnerships to offer a wider range of services at its customer’s doorstep, it will not only reach John’s one million target soon, but it will tremendously increase the usage and quality of the services BanKO provides to its clients.