> Posted by Alexandra Rizzi, Deputy Director of the Smart Campaign

The following is part of the Smart Campaign’s #FintechProtects series. We’re raising awareness about responsible digital financial services, spotlighting work from the Smart Campaign and others, and engaging with industry actors on how fintech can move forward in a way that’s best for clients. For more information on #FintechProtects, and to get involved, click here.

In financial inclusion circles there is palpable excitement around the promise of digital financial services (DFS) – most recently quantified by the McKinsey Global Institute as the potential for 1.6 billion individuals becoming banked, $2.1 trillion in loans disbursed, and 95 million new jobs. Yet, in order for this potential to be achieved, customers must trust the service. For instance, India-based MicroSave conducted research showing that while 85 percent of DFS customers said they would recommend DFS to others, they thought of it as a Plan B due to lack of trust. Issues that can erode or prevent trust from building include gaps in data protection and security, service downtime, insufficient transparency, agent misconduct and unauthorized fees, among others. As Graham Wright of MicroSave writes, “It is clear that there are immediate potential wins for DFS providers who address consumer protection issues.”

In this post the Smart Campaign spotlights a fast-growing fintech company, JUMO, that is helping to define what responsible digital finance means.

JUMO is a transaction and predictive technology platform that partners with mobile network operators (MNOs) and banks to reach consumers with digital financial services. JUMO’s first product is a proprietary technology platform that predicts which mobile customers are suitable candidates for credit, and then begins lending amounts as small as $2 USD that can, over time, progress to as much as $450 USD. To date, loans on JUMO’s platform have been accessed by over 4 million customers across Kenya, Tanzania, Zambia and Uganda. Direct interaction with both customers and MNO agents is intermediated through JUMO’s MNO partners, which is complemented by an in-house customer intelligence team that seeks feedback directly from customers.

JUMO has a vision beyond the successful growth of its technology platform. CEO Andrew Watkins-Ball has said, “Our ambition is to facilitate the financial inclusion of every adult in the markets we serve.” While many fintechs state similar aspirations, JUMO’s track record signals deeper commitment to quality financial services.

Last year CGAP conducted a series of experiments with JUMO in Kenya using variations in digitally-delivered terms and conditions to improve transparency and lower risk of default. Then in 2016, JUMO and its investor LeapFrog (via LeapFrog Labs) commissioned two adapted Smart Assessments of JUMO’s lending models in Tanzania and Kenya respectively. The Smart Campaign partner M-CRIL carried out the on-the-ground analysis which utilized the Client Protection Principles and standards to evaluate the mobile loan product offered on JUMO’s platform. It was a comprehensive analysis– from the design, marketing and piloting of the lending algorithm, to partner service level agreements; from communicating to clients around “strikes” (automatic debits from the customer’s mobile wallet against outstanding loan amount) to the customer service model to support queries/complaints. It was a valuable and meaningful learning experience for all parties, especially given how few fintech organizations have opened themselves up to such detailed analysis. Explaining JUMO’s perspective on opening up, Buhle Goslar, Director of Customer Intelligence at JUMO said, “Our work breaks new ground by including many customers that have never accessed formal financial services before. This is exciting, but also means we have a significant responsibility to make sure their first formal financial services experience is positive and empowering. That’s really important to us, so we’re open to testing, learning, sharing and collaborating – it’s a part of our contribution to building the digital financial services ecosystem.”

Following the two Smart assessments, JUMO used the insights to further embed client protection into its operations. As my colleague Nadia has blogged, one of the open questions in responsible digital finance, with its multitude of actors and client touch-points, is who is ultimately responsible for protecting the client? And the related question of how can individual entities, like JUMO, influence their partners’ practices? JUMO uses client-centric criteria to select its partners and has also developed a set of values and operating principles for its platform, directly addressing the issue of aligning actors and processes around customer protection. These values and operating principles have been embedded in JUMO’s strategic decision making and include processes such as direct marketing, product design, and pricing.

In addition, JUMO has increased its decision science, credit risk, and portfolio analytics capabilities after the two Smart Campaign assessments. For them, these operations are integral to strong operations but also to touch-points for ensuring healthy take-up and usage of its products. Moving forward client protection will continue to be embedded in the introduction of new products, as JUMO believes it is, “essential to a strong, sustainable business.”

In a separate exercise, JUMO recently worked with EA Consultants to understand customer benefits from its products. This research found that over 97 percent of customers perceive JUMO as easier to use than other lending sources. They also perceive the service as trustworthy, and value the speed and privacy of digital access.

While many digital financial services business models are still emergent, and stakeholders are still figuring out how to classify and regulate them, the financial inclusion industry can and must work together with them to define, embed, and incentivize strong client protection practices. It’s not only the right thing to do for clients, but a trust-building win for digital financial services.

For more information on #FintechProtects, and to get involved, click here.

Have you read?

#FintechProtects: Keeping Clients First in Digital Finance

#FintechProtects: Prioritizing Responsible Agent Management at Oxigen

Digital Financial Inclusion: Seizing $3.7 Trillion Opportunity