Research & Analysis

Designing Digital Financial Services for Smallholder Families

Digital financial services (DFS) are playing an increasingly central role in financial inclusion efforts. Mobile phones are reducing costs and connecting low-income clients to the formal banking system for the first time. New data collected via digital devices are breaking down barriers to reaching customers once considered too risky to serve. And for no one group is the promise of digital finance more compelling than for the world’s 475 million smallholder families (Lowder, Raney, and Skoet 2014), whose distance from brick-and-mortar branches and risk profile have traditionally excluded them from access to formal financial services. However, despite a growing number of digital deployments aimed at smallholders (Grossman and Tarazi 2014), significant obstacles to smallholder uptake and use of DFS remain. From poor rural mobile network connection penetration, to low rates of mobile literacy and access to phones (particularly smartphones), smallholder families are often unable to use or are uncomfortable with existing DFS. While the potential of reaching such a large, untapped market might offer clear benefits to financial service providers (FSPs), DFS cannot translate into the financial inclusion of smallholder families unless they also effectively meet smallholder financial needs and desires.

Recognizing the need for DFS that better respond to smallholder demand, CGAP partnered in early 2015 with an FSP in each of Zimbabwe, Senegal, Rwanda, and Cambodia to design a new generation of smallholder-specific digital financial products and services. Under the guidance and expertise of two human-centered design (HCD) firms (Dalberg’s Design Impact Group and, CGAP and its FSP partners worked to explore, create, evolve, and test possible digital solutions for smallholder families. The process not only generated key insights into smallholder demand for DFS, but also resulted in several innovative digital product designs with the potential to reshape how stakeholders approach DFS for this difficult-to-serve client segment.

Following on the successful completion of the design work, this publication synthesizes learnings from across the four countries, with the aim of providing FSPs, donors, and other stakeholders with actionable insights into the ingredients for building successful, smallholder-specific DFS. HCD, however, is not a quantitative research exercise. It focuses on in-depth conversations and interactions with a small number of end-users and other stakeholders (approximately 50–100 interviews during the course of each project discussed here). As a result, the relevance of preferences, features, and products discussed here are highly context-specific—they do not represent a “secret recipe” for all smallholders. Sample sizes were small, there was variation in smallholder preferences both across and within the four countries, and the products and features discussed here have yet to be piloted or deployed at scale. Still, where possible, CGAP has attempted to highlight insights and themes that emerged across provinces, countries, and continents. In addition, although smallholder families were the target segment, the holistic approach to meeting their financial services needs sometimes resulted in solutions designed to address a financial need unrelated to agricultural production. Consequently, some of the findings presented here hold true not just for smallholders, but also for a range of poor client segments, while others may apply to both digital and nondigital channels alike. Nevertheless, when taken together, they provide FSPs with several userinspired approaches to designing innovative DFS with the potential to more effectively meet smallholder demand.

This publication begins with a brief overview of the HCD methodology, before outlining a set of recommendations for FSPs to consider when developing new DFS offerings for smallholders. These recommendations, supported by field insights, are organized around four key design principles:

  • Design around Smallholder Needs and Aspirations
  • Design to Drive Adoption
  • Design for Continuous Engagement
  • Design for Customer Growth

Following the recommendations, this publication closes by identifying next steps in the design process, opportunities for further research, and potential challenges to bringing innovative DFS to market.