> Posted by Eric Zuehlke, Web and Communications Director, CFI

One theme we come across repeatedly at CFI is the discrepancy between financial services access and usage. A central tenet of our vision of financial inclusion is that access isn’t enough; financial services need to meet client needs and actually be used. One example is mobile banking. As is now well known, millions are now accessing financial services for the first time with mobile payment platforms through telcos. As our By the Numbers report found, however, the proportion of financial services accounts that are mobile is much smaller for the world in general – East Africa is the outlier.

I just returned from an exciting two-week assignment through Accion’s Ambassador program with Akiba Commercial Bank in Tanzania. I met with Akiba staff, visited branch offices, and talked with clients. (You can read about my experiences, including a trip to Zanzibar and terrifying/awesome motorcycle taxi trips on the Ambassador blog.) Since I was in the region with the world’s highest adoption of mobile banking, I wanted to take the opportunity to learn more about how Akiba’s mobile banking experience has worked out, both from staff and client perspectives. Has adoption and usage met expectations? What kind of feedback was Akiba hearing from clients? What challenges was Akiba facing with their mobile platform?

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But first, some context is important. Founded in 1997, Akiba was Tanzania’s first microfinance institution to use a commercial model. Its success has led to other traditional banks starting microfinance operations as part of their portfolios, leading to a very competitive marketplace for base of the pyramid customers in Tanzania. When visiting three Akiba branch offices, I noticed many other financial institutions throughout the neighborhoods, servicing small businesses in the communities.

In Tanzania, mobile usage has been much higher for utility payments and person-to-person money transfers through mobile “wallets” linked to their mobile service provider. Mobile banking – loans, savings, and deposits through more traditional banks or microfinance institutions — has been less popular, partially because the KYC requirements are more challenging and the banking environment is more regulated (although recent regulations now cover KYC requirements for mobile providers).

Akiba launched their mobile platform in 2012 with basic services like paying off loans, topping-up mobile accounts, paying utility bills, and checking account balances. Soon, they started to receive a common feedback from clients: “Why can’t I transfer to my mobile ‘wallet’?” In 2013, Akiba launched their expanded mobile money platform, allowing clients to send money from their Akiba deposit accounts to their mobile “wallets.” In addition, as we covered a year ago, thanks to an interoperability agreement, you can now transfer money from your mobile wallet across mobile provider networks in Tanzania. The next step is transferring across banks. As noted earlier, banking is more regulated, so Akiba is now part of a pilot group working with regulators to allow bank-to-bank transfers via mobile.

So, how does Akiba get clients to use their mobile platform? Akiba’s Mobile Money Engagement Project includes client education and training. It’s a dual process of engaging their clients to answer questions and address concerns along with increasing buy-in among branch staff so they understand its benefits and don’t see promoting mobile simply as additional work. In addition, a call center was set up specifically to handle client complaints and questions on the mobile platform and ATMs. For active mobile clients, the amount of transactions is on average increasing month-by-month, with far more cash inflows than outflows, reflecting trust in the platform and in Akiba.

There are challenges, however. The adoption rate has been lower than expected. And the usage rate among mobile account holders is not as high as Akiba would like to see. There are currently around 50,000 registered mobile clients, while around 8,000 are regular users. I heard a range of issues from staff members and clients: mobile operators continue to increase fees on transactions so some clients are wary of mobile platforms while illiterate clients can’t use it. Fear and mistrust of technology is also common. According to Israel Chasosa, Akiba’s Managing Director, the challenges can be boiled down to three factors: a need for more aggressive marketing, a lack of agent banking, and a need to strengthen buy-in among branches. When I talked with the Assistant Branch Manager at the Kariakoo branch, I heard a similar story. What’s holding back uptake isn’t pricing (200 Tanzanian Shillings or $0.10 for a balance inquiry, and a mobile-to-bank transfer is 1,000 Shillings or $0.50). “It comes down to knowledge and education,” she said.

I met over 10 clients while working with Akiba, and each one uses the mobile platform. The most common complaint I heard was related to technical challenges, with networks being down at times, and longer-than-expected waits for funds to be available. Overall, however, every client was happy with the service and mentioned how easy it was to use once they were able to talk with an Akiba staff member, either at the branch or through the call center.

Akiba is taking some ambitious steps to increase uptake and usage. The mobile platform, ATMs, and agent banking will be consolidated under one program area for better coordination. Akiba sees the expansion of agent banking as important to not only increase their geographic range and influence, but as going hand-in-hand with an uptick in mobile usage. Headquarters staff are in the process of finding out which branch has the highest mobile adoption rate and determining why.

Akiba is prioritizing the growth of their mobile platform, seeing it as a way to get beyond the brick-and-mortar approach to serve more clients in wider geographic ranges. It can also be more convenient for clients as they can conduct payments whenever and wherever they are. But I saw firsthand that despite its benefits – for clients and branch staff – client uptake and internal buy-in can’t be taken for granted. A mix of marketing and one-to-one client education and dialogue is necessary.

As Edward Talawa, Director of ICT at Akiba says, “When it comes to internal issues…I think buy-in is normally a big challenge among staff and management. Internally our staff were not very aware of this technology in the early stages. And when we launched, we faced a number of problems with the system at the back-end with down-time which caused frustration and that frustration accelerated the buy-in issue…In terms of clients, the challenge is underestimating what to give…We find that customers may face challenges in the beginning on how to use it…Our clientele is lower bracket so we assume their literacy level is not as high. ..so they need more training.”

Image credits: Eric Zuehlke; CFI

Have you read?

Hitting the Ground Running with Client Visits on My Second Day with Akiba

Interoperability Agreement Signed Between Leading Tanzanian Mobile Money Providers

Helping Consumers Understand Their Digital Data: Initial Experiences from Tanzania