Financial institutions have historically struggled to viably offer savings products to low-income customers. Despite the strong imperative for these customers to save due to greater exposure to shocks and income volatility, low-balance accounts haven’t offered a sufficient business case given the costs investment banks incur to overcome low levels of trust and comfort with formal financial institutions.
The rise of gig platforms in emerging markets might be a reason for that to change. Gig platforms have brought a slew of low-income workers onto digital rails to find work and get paid. These rails can lower the costs providers face in reaching and building engagement with low-income workers, and, more precisely, can be harnessed to offer workers simple, embedded, and automated savings services that match their earnings patterns and provide visibility and access to their savings.
Moreover, offering workers savings services can benefit the gig work platforms themselves. Allowing workers to automatically save as they earn can facilitate deeper engagement between the platform and workers, driving loyalty and retention.
Between 2022 and 2023, CGAP partnered with platforms and fintechs to understand the potential of the platform ecosystem to make financial inclusion for this segment more effective, viable, and impactful. Part of the partnership included platforms and fintechs experimenting with savings products for gig workers in Sub-Saharan Africa, including SafeBoda, a ride-hailing platform in Uganda, ABALOBI, an online marketplace for small-scale fishers in South Africa, and LittleCabs, a ride-hailing platform in partnership with Britam, an insurance provider in Kenya. Together, these experiences illustrate three ways in which platforms can unlock savings for low-income workers.
Platforms can offer automated deposits which unlock saving account usage
Low-income people earning in cash must remember to set aside money to save and make the effort to go to a branch or agent to deposit. In contrast, platform workers earn digitally and can benefit from automated deposits and direct sweeps that take the effort and guesswork out of savings, thus building greater savings amounts for users.
ABALOBI piloted automatic savings by allowing fishers to choose a modest percentage of earnings to be swept into a savings account in their bank. At the end of the pilot period, ABALOBI workers had made 256 deposits on average and accumulated 20 weeks of income in savings. When asked what was helpful about this saving product, fishers indicated they liked the “set-it-and-forget-it” nature of the mechanism and were surprised by how much money they were able to save over the period.
When SafeBoda introduced its savings wallet, it offered two options: an account that required users to push deposits manually and one that automated daily deductions from their earnings wallet into their savings wallet. The registration rate and usage for the wallet with the automated deposits was higher, at 751 wallets registered in six weeks, compared to the wallet that required drivers to make deposits manually, at 1031 wallets registered over 18 weeks. Drivers who used the automated deposits wallet also accumulated slightly higher savings balances in comparison to drivers who made deposits manually.
In contrast, the Imarika wallet piloted by Little Cabs and Britam experienced slower uptake and lower usage as it required drivers to move their earnings via MPESA – a mobile money service – thereby creating an extra step for making deposits. Although the segment of workers was very similar to those in the Abalobi and SafeBoda experiences, the additional effort created by the MPESA step proved to be a limiting factor.
While automated deposits can be a critical enabler, other features such as minimum deposits can be deterrents to the usage of savings products.
Platforms can leverage both tech and touch for customer acquisition and onboarding
Given that platform workers are finding work online and using applications daily, it is tempting to assume that digital marketing can achieve engagement and acquisition. However, platforms have learned that maintaining a loyal cohort of workers requires both “tech-enabled” and “analog” (or “touch”) engagement (i.e., in-person worker training sessions and meetings). Both approaches are needed to grow worker enrollment onto platforms, orient their usage, build trust, respond to queries and concerns, and build product value.
SafeBoda utilized digital in-app messaging to raise awareness of the savings wallet coupled with in-person marketing outreach events. Those events were a game changer, as they doubled driver savings registrations in the weeks they took place.
ABALOBI also utilized both in-person training and digital outreach. The team included savings coaches offering one-on-one support and developed a chatbot to provide guidance via WhatsApp to workers on how to set up and use the savings accounts. For various reasons, 15 out of the 34 workers in the pilot leaned more toward using the coaches rather than the chatbot for registration, but the team believes the chatbot will be a critical tool once users are more familiar with the product.
The availability of both tech and touch demystified the product and created a better understanding of the value and utility of the product.
Platforms can deliver a strong value proposition for savings among workers
Bundling savings with credit or insurance can create stronger value propositions by bundling savings with other in-demand financial services. With greater visibility into workers’ behavior and needs, platforms can also craft value propositions that are relevant to platform work.
Credit provides workers with immediate access to funds to address work and livelihood needs while savings provide them with the opportunity to accumulate funds for future use. Given the relevance of the bundle, it has become a common offering across East Africa where Saving and Credit Cooperatives (SACCOs) commonly offer credit alongside savings. SafeBoda drivers indicated that they’d be incentivized to save more if their savings would allow them to access credit, particularly in larger ticket sizes.
In other cases, platforms create bundles that are specific to work needs – for example, credit for purchasing equipment like motorcycles, helmets, or other branded materials that can augment their earnings. Similarly, they can use data about workers to offer relevant bundles – for example, educational savings accounts or family health insurance policies for workers with children.
Although platform rails can enable regular savings behaviors, achieving longer-term stores of value remains a challenge for workers. Building savings products also remains a challenge since partnerships can be difficult to establish and make work. Despite these hurdles, platforms provide a worthy space for experimentation, iteration, and building savings accounts for platform workers.