Does Branchless Banking Satisfy the Needs of Ghanaian Consumers?

As we saw in the first post on the CGAP survey results from urban and semi-urban Ghana, the basic market conditions for branchless banking services appear good and there are three mobile money deployments, one government entity and one independent provider active in the market. Still these services have all yet to reach significant client numbers or transaction volumes. Does this mean the branchless banking value proposition doesn’t match the preferences and pain points of Ghanaian consumers? Based on our survey results, we do not think so but believe that the fit should be a good one. This post will outline the results that form the basis for that belief and draw some conclusions for the providers going forward.

Transaction risk appears to be the primary concern of users of payment and money transfer services in Ghana, a fact which should play in favor of electronic payments. A massive 80% of respondents cite lack of trust or security as a reason for not using informal services like bus companies, drivers, friends or family to move money—and a full 45% cite it even for formal services. People know that informal methods are risky: nearly 10% have had money stolen or lost when using informal services. Yet people still use them very frequently.  It may be that when push comes to shove and money needs to be sent, the informal methods’ speed and convenience relative to banks and other formal services override cost and security concerns.  Indeed, while people whose main pain points are security and trust are far more likely than average to say they won’t use drivers, friends or family members to send money, they do not actually use these methods any less than average. Aside from theft and fraud, concerns around robbery and physical security are also increasing: 40% feel that carrying cash is getting more risky in general and 65% that it is getting riskier when travelling.

The above should provide a strong case on security grounds for the use of mobile money services that are instantaneous, use no human intermediary and allow money transfers across the country without requiring cash to physically travel along dangerous roads. And indeed security is cited as by far the most important feature for those Ghanaians who do use mobile money: nearly 60% of active users name this as a reason for their using the service—a figure at par with that of bank clients. Yet among mobile money non-users lack of trust is the second most commonly cited reason why they are not using any such service. This is an intriguing contradiction, and not the only one in our findings.
Aside from security, price is not surprisingly a key influence on the choices of Ghanaians when it comes to money transfer and payment services. High cost is cited by 55% as a reason for not using banks and other formal methods, perhaps compounded by the fact that the high price does not guarantee good service: 28% have also had at least one problem using formal methods. Yet over 45% of urban and semi-urban households still use formal services for bill payment and 40% do so for money transfer. Meanwhile low cost is the second most cited reason for choosing informal methods, despite the fact that bus companies routinely charge 10% of the money sent as their fee.
With prices that are clearly lower than the alternatives for amounts up to several hundred dollars, mobile money services should therefore do well against its competition. And indeed, low cost is the second most appreciated feature of mobile money by those who actually use it. But again, 17% of non-users cite cost as reason for not using these services, the fourth most common complaint. Given the actual price structures, this result should be shocking to the three MNOs and can be seen as indicative of their failure to communicate the advantages of their services.
Finally, accessibility and convenience are greatly valued by consumers and should be strong selling points for mobile money services, since convenience is a core part of their value proposition. Across the sample, lack of convenience and availability to the recipient are each cited by over 50% of respondents as reasons for not using a given method. In particular, these are the top two reasons people choose not to use formal methods, with a full 70% citing lack of access as a reason for not using banks and other formal services. Surprisingly, this is true even in developed areas: in the country’s second city of Kumasi 52% cite convenience as a pain point.
On the whole these results are not surprising: indeed the challenges around access to formal services are seen by many as the raison d’etre of branchless banking. But clearly Ghanaian service providers have not yet succeeded in leveraging this hypothetical advantage in their deployments: the number one reason for not using MM, cited by one third of consumers, is that the service is not available to the recipient; and lack of convenience is the third most common reason, cited by more than one in five respondents. These figures are about par with banks and direct payment, despite the fact that these should in most cases be substantially less convenient, requiring travel, waiting in line, etc. Still over 60% pay their bills directly and nearly 30% use banks for their bill payment.
The fact that mobile money services perform so poorly on convenience and accessibility is disappointing, since these should lie at the heart of their value proposition. Unfortunately our data do not permit deeper dives to explore the underlying reasons, but a few useful inferences can perhaps be made. Given that 64% of households have more than one SIM, this is not likely to primarily be an issue of interoperability and market fragmentation. The expressed lack of convenience and availability is more likely to be a reflection of weaknesses in the agent infrastructure that is supposed to provide easy access points for the service. This is not because the MNOs don’t have enough agents or enough geographical coverage, as they have a reported 8,000 agents between them spread across nearly all of the country’s 170 districts. It thus stands to reason that the visibility and service quality of that agent infrastructure are likely to be part of the issue. Indeed, the three MNOs are all hard at work strengthening their agent networks.
In summary, mobile money services respond well to customer preferences and should inherently hold advantages over current services with a large share of Ghanaian consumers.
Households experience lots of problems with formal methods yet are willing to suffer high cost as well as poor reliability and accessibility in return for the higher security.
Households suffer high risk and often high cost with informal methods but are willing to bear this in return for speed and flexibility.
Mobile money has the potential to rival the advantages of both formal and informal services while avoiding the pain points expressed by Ghanaian consumers and should therefore be quite competitive in this market.
The striking dichotomy of perceptions between users and non-users of mobile money services potentially indicates that while initial skepticism is strong, it can be overcome through exposure.
In order to better capitalize on these strengths, service providers could consider the following action points as part of an adjusted consumer outreach strategy.
Shift away from ATL towards BTL efforts, as getting people to actually test the services firsthand may be a critical piece and BTL marketing could be developed accordingly.
Incentivize users to recommend mobile money to their own friends and family (e.g. offer the most active customers airtime bonuses for each friend they sign up and transact with or introduce 10 free transfers a month to 5 friends or family members);
Emphasize word-of-mouth campaigns and do more to target community influencers;
Focus remaining ATL more aggressively on advantages that respond to people’s pain points, notably direct comparisons with current players to illustrate the time, money and worry saved by real people through using mobile money instead of their old method;
Continue improving agent networks’ presence and visibility.


13 August 2012 Submitted by Anonymous (not verified)

Quite an interesting analysis. The mobile money transfer business by the telecomunication companies in Ghana may not be enjoying enough patronage as compared to the Kenyan M-pesa.

But there is a tried and tested model developed by G-Life Microfinance Limited ( which involves the use of the mobile numbers and handsets of account holders to facilitate financial transactions, within the rural, per-urban and urban communities in Ghana. This model if harnessed, has a lot of potential to rope in more users into the mobile money ecosystem.

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