ConsumerBehaviorsinBeninAnalysisandFindingsUnitedNa*onsCapitalDevelopmentFund

Background

UNCDF,FinanceInclusiveetDveloppementlocal MobileMoneyforthePoor

Augmenterlaccsauservicesfinanciersvialu*lisa*ondetechnologieetagents ProgrammesenOuganda,auMalawi,auLibria,enZambie,auLaos,auNpal,auSngaletauBnin Plusieursdonateurs,ProgrammeGlobal(UNCDF,Sida,AusAID,Fonda*onGates,Fonda*onMasterCard) Alignaveclesini*a*vesdeUNDPetUNCDFdanslesPayslesMoinsAvancs(PMA),travailledemanire

troiteaveclesprogrammesconjointsUNCDF/UNDPdeFinanceInclusive

2

Thisreportreliesondatacollectedthroughmixedmethods,bothquan=ta=veandqualita=ve

Quan*ta*veSurveyconductedonasampleof3,042Benineseaged15+betweenDecember2015-February2016

Qualita*vestudyconductedthrough:! Focusgroups! Dynamicfocusgroupobserva*oninthreeloca*ons(fourgroupseachloca*on,6to

8par*cipantseach) Aguegue Bohicon Banikoara

! In-depthinterviews(16perloca*on)

Par*cipantsinclude:! Newusersofdigitalfinancialservices(DFS)! Prospec*veusersofdigitalfinancialservices! MFIusers! Women(foragender-specificapproach)

3

Execu=veSummary

Key Findings

5

TheBeninesefinancialmarketoffersconsumersdifferenttypesoffinancialservices,includingformalandinformalop*ons.Withinthismarket,25%ofBenineseadultshaveusedaformalfinancialproduct.! Onlyabouttwo-thirdsofformalfinancialproductusageiswithdigitalaccounts(providingsomeformofdigital

access). While25%haveusedaformalfinancialproduct,just20%ofBenineseadultssaythattheyhavetheirown,registeredformal

financialaccountintheirownname,makingthemfinanciallyincluded.Only11%haredigitallyfinanciallyincluded,meaningtheyhaveafull-servicedigitalfinancialaccount.! Mobilemoney,banksandnonbankfinancialins*tu*ons(NBFIs)alldrivefinancialinclusion,innearequalparts.! Onceaconsumerhasanaccount,theytendtoac*velyuseit.Eightinten(80%)accountholdershaveusedtheir

accountinthepast90days! Thosewhoarecurrentlyfinanciallyincludedaremoreeducated,liveinurbanareasandareemployed.Theyalsoare

ac*velyusingtheiraccounts,sugges*ngapoten*alearlyadopterbiasamongcurrentusers. Awarenessofmobilemoneydoesnotconverttoregistereduse.Overhalf(54%)ofadultsknowofmobilemoney,47%are

awareofamobilemoneyprovider,yetonly11%haveusedmobilemoney,with9%havingaregisteredmobilemoneyaccount.

MoreBeninesearefinanciallyac*vethanhaveformalaccounts,indica*nganeedsgapaswellasinterestsinfinancialmechanisms.! Closetohalfofadultssave47%,eventhoughonly20%haveformalaccounts.Twentypercentofadultsalsohave

borrowedmoney.Muchofthesavingsandborrowinghappensthroughinformalmechanisms.! Informalfinancialmechanismsareusedmorethanformalonesoutoffamiliarity,notduetopreference

Understanding Consumer Needs

6

Thereisaneeds-basedprogressionwithfinancialservicesthatleadsaconsumertoabankaccount! Consumersstartwithaton*ne,buildinguptoMFIuseandthenmaybehavingenoughofaneedorresourcestouseabank.! Mobilemoneyanddigitalfinancialservicesarenotcurrentlyanexplicitpartofthisprogression.

Consumershavethreetypesofneedsfordigitalfinancialservices! Circumstan=alneeds:havingaccesstofinancialservices,havingfinancialservicesthatareeasytouseandmatchconsumers

cogni*veabili*es,andfeelingcomfortableusingtheservice! Financialneeds:thatfacilitatelife,suchassavings,loans,moneytransferandatwilldeposit/withdrawal.Thesefacilitate

businessgrowth,payments,incomesmoothing! Tangibleneeds:fromafinancialproduct,suchasfeesanddeposit/withdrawalamountsthatmatchbudget,incomeand

expensesaswellascustomerserviceduringfirstexperienceswiththeproduct

ConsumerswhoaremoreawareoffinancialproductsassociatemobilemoneyandDFSwithmee*ngconsumerneedsfromfinancialservices:! Theseinclude:includingspeedandeaseoftransfer,presumedlowfees,andpresumedlowdepositrequirements.

Buildingmeaningfulawarenessandconnec*ngtheconsumerneedtoDFSisacri*calhurdleforthoseconsumers! Inaddi*ontospeedandeaseofmoneytransfer,feesanddepositrequirementsthatmatchincomestreams,financialsafetyand

securitycanbeausefulhookforshowingDFSvalue.

Lackofinforma*onchannelsandheavydependenceonpeergroupsposechallengesforincreasingmeaningfulawarenessandknowledge! Consumersingeneralhavelimitedaccesstoinforma*onsources,andthereforerecruitmenteffortsmustconsiderappropriate

messengersforconnec*ngDFSwithaconsumerneed.! Demographicsmaier.Peri-urbanaswellasruralareasstrugglemorewhenitcomestoawareness,knowledge.Youthshow

poten*altobethenexttargetmarketinthecountry.

Main barriers to DFS Uptake

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TherearetwomaintypesofbarrierstomobilemoneyandDFSinBenin:lackoftoolsandskillsforusingDFS,andlackofknowledgeaboutDFS.

Lackoftoolsandskills:Therearelimita*onsthatcouldhamperDFSuptake.Theseinclude:! Limiteddiffusionofdevices(75%ofadultshaveaccesstomobilephones,butlessthan66%owntheirownphone)! Limitedliteracy(justover33%areliterate)! LimiteduseofSMS(0nly33%regularlycommunicateviaSMS,whichisalsoacri*calcapabilityforDFSinterac*ons)! Limitedawareness(althoughawarenessofmobilemoneyisover54%,mostconsumersarentasfamiliarwithwhat

mobilemoneydoesorhowtouseit.Mobilemoney,acoreDFStool,ismostlyunknownorconsideredtobenotneededintheeyesofconsumers:42%dontknowwhatitis,17%feeltheydontneedit)

Lackofknowledge:Inaddi*ontolimitedawareness,consumersdonotyethavecore,cri*calknowledgeofDFS.Thisincludes:! Prospec*veusersdonotknowwheremobilemoney(orDFS)agentsarelocated! Theydonotknowenoughabouthowtousetheservice! Theydonotknowaboutservicesrequirements(feesandhowtheprocessworks)! Theseareespeciallylimi*ngformobilemoneyadop*on.! Adop*onofdigitalaccesstofinancialservicesamongcurrentuserscouldincurfewerbarriersbecauseoftheexis*ng

productrela*onship

Growthinknowledge,awarenessmaycreatenewbarrierstouptake.Onceconsumersknowaboutit,theymaydecidethattheycannotaffordit,ortheircurrentmeansoffinancialaccessismoreaffordable.Thesearebarriersthattypicallyarisewithgreaterknowledgeandexposure,eventhoughtheyarenotcurrentlypresentinthemarketplace! Thismeansthatitisimportantforpro-ac*vemessagingaroundDFSmatchingonesavailableresourcesandincome

streams,toallayanyfuturefearsorcost-basedobjec*ons.

WhatisBeninfinanciallandscapelike?

8

There are a number of different types of financial services in the Beninese market

FormalFullservice

Non-digital

MNOs MFIs

Informal

Notfullservice

Digital

Banks &More

Figuresarecategoricalonly.Asrepresented,theyarenotnotexclusiveofeachotherordrawntoscale 9

Financialservicesuse(Shown:PercentageofBenineseadults,N=3,042)

Digitalusersoffinancialservices(Shown:PercentageofBenineseadultswhohaveusedformalfinancial

services,n=702)

25%Haveusedformal,regulatedfinancial

services

75%Havenotusedformalfinancialservices

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Not all formal financial services are digital

17%Haveuseddigitalfinancialservices

11%haveaDFSaccountintheirownname

8%:Ontu=lisdesservicesfinanciersformels,maisjamaisde

servicesfinanciersdigitaux

!

10

Bankaccountownership(Shown:PercentageofBeninese,n,3,042)

Havefull-servicebank

account,7%

Notregistered,92%

Bank accountholders are active users of their accounts

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).*Appearsthesameasaccountholdersduetorounding

11

39%

60%

Haveabankaccountandamobilemoney

account

Bankaccountandmobilemoneyaccountoverlap(Shown:Percentageofbankaccountholders,n=215)

13%

87%

HaveabankaccountandanNBFIaccount

BankaccountandNBFIaccountoverlap(Shown:Percentageofbankaccountholders,n=215)

Bank account holders tend to have an additional financial mechanism

12

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Benin is a two provider-dominated MNO market with room to grow; over one-third of adults do not yet have their own phone

75%

63%

Haveaccesstoamobilephone

Ownamobilephone

2015(N=3,042)

SIMcardproviders(Shown:Percentageofmobilephoneownersw/atleastonesimcardfrom

provider,n=1,781)

0%

1%

3%

45%

65%

Libercom

BELBenin

GLO

MOOV

MTN

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Reflectsmul*pleSIMcardownership

Mobilephoneownershipandaccess(Shown:PercentageofBenineseadults)

"37%donothavetheirownphone

13

Most individuals with mobile money access are account holders

89%havenomobilemoneyaccess

11%haveaccess

Mobilemoneyaccess(Shown:percentageofBenineseadults,n=3,042)

62%ofmobilemoneyusers

havearegisteredaccount

Registeredmobilemoneyaccounts(Shown:percentageofBeninesewithmobilemoneyaccess,n=306)

9%ofallBenineseadultshavearegisteredmobilemoney

accountSource:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

14

Most accountholders are active users; they are mostly men, above the poverty line, and living in urban areas

Ac=veusedemographicprofile(Shown:Ac=vemobilemoneyusers,n=185)

Men Women Urban

Rural

Abovethepovertyline

Belowthepovertyline

68% 32% 74% 27% 59% 41%

Source:LesenseignementsdelinclusionfinancireauBninpourleMM4PQrsdeltudeconduiteparIntermedia(Dcembre2015Fvrier2016surunchanQllonde3042individusde15ansouplus)

25%ofac*vemobilemoneyaccountholdersareurbanmaleslivingabovethepovertyline.

80%areac*veusers

20%arenotac*veusers

Ac=vemobilemoneyuse(Shown:percentageofBeninesemobilemoney

accountholders,n=232)

15

Approximately one in 10 adults use only informal financial services

16

5%

11%

84%

Useinformalandformalservices Formalusersandnonusersoffinancialservices

Onlyuseinformalfinancialservices

Useofinformalfinancialservices(Shown:PercentageofBenineseadults,N=3,042)

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

20%Financiallyincluded*

Profile:Informalusersdemographicsn=365

Above$2.50adaypovertyline 26%

Female 62%

Under35 37%

Rural 52%

Primaryeduca*onorless 82%

Employed 77%

Married 73%

Ownmobile 71%

Advancedphoneuser 36%

Financial inclusion currently reaches 20% of Beninese adults; 11% are digitally financially included.

31.8%ofBenineseadultsreportbeingwithin5KMofamobilemoneyagent,bankingagentorastoreorakioskwithover-the-countermobilemoneyservices

(30.3%ofwomen)

5.5%OfBenineseadultshaveusedsomeformofdigitalfinancialservices

(includingOTC)inthepast90daysbutdonothavearegisteredaccount

(5.5%ofwomen)

RateofBenineseadultswhohaveusedanaccountintheirnameforsomeformofdigitalfinancialservice

(e.g.bankaccountwithdigitalfeatures,e-walletservice,NBFIaccountwithdigital

features)

(6.9%ofwomen)

20%Financiallyincluded*

N=3,042

11.3%Digitallyfinanciallyincluded*

N=3,042

17

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Beninese women lag behind their counterpoints in every financial inclusion indicator

4%Havebankaccounts

9%HaveNBFIaccounts

6%Registered

mm

12%Havebankaccounts

9%HaveNBFIaccounts

12%Registered

mm

84%Financiallyexcluded

76%Financiallyexcluded

18

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

For comparison across Africa and Asia:

Kenya India Tanzania Bangladesh Uganda Nigeria Indonesia Benin Senegal Pakistan

Financialinclusion 69% 65% 62% 43% 39% 37% 24% 20% 15% 9%

Mobilemoney

ownership67% 65% 61% 9% 35% 1% 24% 9% 8% 1%

FullserviceNBFI

ownership11% 9% 1% 24% 6% 3% 3% 9% 4% 1%

FullserviceBank

ownership27% 63% 8% 19% 11% 37% 23% 8% 7% 7%

Sharedmarketdis*nguishesBeninfromothercountries,mostcloselyalignedwithSenegal

Somesimilari*eswithBangladeshbecauseallthreeformsofformalaccesshavereach

*Nigeria,Tanzania,Kenya,Indonesia,Uganda,Pakistan,IndiaandBangladeshsta*s*cscomefrom2015FinancialInclusionInsights 19

Howaredifferentfinancialins=tu=onsperceived?

Account holders describe making needs-based decisions on which financial mechanism to use

21

Someuseton*nesfordailysavingsandincomesmoothing,andanMFIforabusinessloan

Someusemobilemoneytoconducttransac*onsandanMFIforbusinessloans

Othercombina*onsexistsomerela*onshipsbecomedormantascapabili*esbegintooverlaporsavingsbecomedepleted

This progression gives consumers more than one financial mechanism, and a choice based on what suits them

22

Ton*ne Mostcommonfinancialtool.Tradi*onalforbuildingprosperityandcommunity

MFIAccustomedtoworkingingroups,borrowingasagroupwithMFIleveragesculturalnorms,buildssavingshabits

BankThosewhohavebuiltsteadysavingsandhealthybusinessesarecomfortableinbanks,wherebalancescanstaysafeandtransac*onsarefacilitated

MFIs help facilitate consumers businesses and provide savings accounts

23

WHATPARTICIPANTSBELIEVEMFIsDO Provideloanstostartand/orinvestinbusinesses

Providesavingsaccounts

POSITIVEPERCEPTIONS

Purposeistohelppeoplewithlessaccesstoresources! Areaswheretherearenobanks! Someareforwomenonly

Securemeanstosavemoney! Savingsdoesntgetspent,destroyedor

stolen Createcommunity

! Manydescribeobtainingagrouploanwherebandsofwomengetaloantogether

NEGATIVEPERCEPTIONS

Notalwayseasytosetup,needrequirements

Mayneedini*alamounttoputinsavingsaccount

Transac*onshaveprotocol Havetosubmitforms

Canbedifficulttowithdrawmoney Restric*onsonhowmuchcanbe

withdrawn

Tontines can be perceived as untrustworthy but are often the only available option to consumers

24

WHATPARTICIPANTSBELIEVETONTINESDO Providesmallloanstomemberstohelpwithincomesmoothing,smallbusinessinvestments

Providesavingsop*onsforton*nemembers,poten*altogainmoney

POSITIVEPERCEPTIONS

Convenient! Ton*nesarelocallybased,madeupof

neighbors,friends Communitybuilding

! Ton*nemembersworktogethertoprovideaidinadversityaswellasgrowsavings

! Somedescribeplanningsavingsandincomestrategiestogether

Sourceofbonusincome! Well-runton*nesprovidememberswith

interestfromthesmallloans

NEGATIVEPERCEPTIONS

Untrustworthy Somedescribeton*nemanagersashaving

cheatedmembersandmisrepresentedprofits

Othersreportthatsomememberstakeloansandneverrepay,sosavingsarelost

Notgoodforlargeramounts Loanamountsareowennotenoughfor

significantbusinessinvestments

Banks enjoy respect and trust but are not accessible to everyone

25

WHATPARTICIPANTSBELIEVEBANKSDO Providesavingsaccountsandtransac*onalaccounts

Provideloans

POSITIVEPERCEPTIONS

Secureandtrustworthy! Keepsmoneysafefromthew,

destruc*on,tempta*ontospend Enabletransac*onsthroughoutBenin

! Merchantswithbusinessinterestsoutsideofvillagecantransactwithbusinessassociatesfurtheraway

Earninterestonlargeramounts! Savingscanprovideinterestincomeif

notwithdrawn

NEGATIVEPERCEPTIONS

Inconvenient Branchesmaynotexistinvillage

Longwaitsinlines Transac*onsrequirevisi*ngabranch,wai*ng

foravailablestaffatacounter Restric*ve

MusthavegovernmentissuedIDandini*aldepositamountstoopenanaccount

Networkconnec*onsgodown Manyreportthatbanksnetworksare

unreliable,makingtransac*ngwhendesiredunreliable

Even though it is a newer financial mechanism, the benefits of mobile money are known and attractive

26

WHATMOBILEMONEY(MM)DOES Providesatransac*onalaccounttosendandreceivemoney

ProvidesameanstosavemoneydailyPOSITIVEPERCEPTIONS

Widespreadinterest Secure

! ManydescribeMMasbeingjustassafeasbankandMFIaccounts

Fast! Transac*onsareinstantaneous

Convenient! Youcanperformtransac*onsfrom

whereveryouareandwhereveryourrecipientorsendermaybe

! YoucansavedailywithMM Noini*aldepositrequirement

! Youdonotneedmoneyonhandtoopenanaccount

NEGATIVEPERCEPTIONS

Norealobjec*onsornega*vitytowardMM:Nooneruleditout!

Somerecognizeditisinconvenientforthosenotlivinginareasservedbycurrentmobilemoneyproviders ManydescribethatMMhasnotarrived

intheirvillageyet,buttheyknowitsinneighboringareas

Someconcernoverfees Somecomplainedthefeesfor

conduc*ngindividualtransac*onsaretoohigh

Mobile money is not yet part of that progression and instead fulfills a different need

27

Ton*ne,MFI,bankaccounts:! Savingsandloans

! Liquidity

! Incomesmoothing

Mobilemoney:! Geyngmoneyfromoneplacetoanother

quickly,safelyandconveniently(bigdraw)

! Knowledgeofitsfunc*onasasavings

account,lowdepositrequirement

! ThisbodeswellforMFIs,LaPosteconsideringamobilemoneytransfer

Donthavetowaitinline. Itissecure. Allmysisterhastodoiscallme,andIcanjustsendanditgoesover. Neitherofushavetogetonabus.

Whatarethemainneedsandaspira=ons?

28

Consumers have four main financial services needs:

Access to safe, reliable savings

Access to loans, credit

Ability to transfer money safely, securely, quickly

Ability to withdraw and deposit money at will

Factorsintoincomesmoothing,makingpayments,buildingbusinesses,convenientaccess

29

They are also largely dissatisfied with their current financial condition; creating an opportunity for financial services that mitigate that pain point

29%

Comfortablehavingsomedebtinordertoachieve

goals

15%

Havetoomuchdebtrightnow

14%

Buyfromseveralshopkeeperstoensurecreditavailability

Sa*sfied,22%

Neithersa*sfiednordissa*sfied,

19%

Notsa*sfied,59%

2015:Sa=sfac=onwithfinancialcondi=on(Shown:PercentageofBenineseadults,n=3,042)

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

15%

30

The main perceived benefit of saving is the ability to manage emergencies and unexpected expenses

31

Mostexplainthattheyusetheirsavingsmoreforcoveringsuddenillnesses,accidents,funeralexpenditures

Nothavingmoneyavailablefortheseunforeseeneventscancreatedisasterforthefamily

Someexplainthatsavingscanleadtoabeierfutureforthefamilyinthelongterm

Moreover Savingswillbuildstrongerbusinesses Savingscanfundeduca*on Savingscanbuylandandbuildhouses

For the purpose of saving, home building is a top goal

32 Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

1%

2%

2%

4%

6%

8%

8%

17%

21%

21%

Acquiringfurniture

Payingoffadebt

Takingcareofrela*ves

Acquiringsomekindofpersonalassest

Payingschoolfees

Buyingapieceofland

Inves*nginthefarm

Makemoremoney

Growingyourbusinessorafamilymember'sbusiness

Buildingorupgradingthehome

Mostimportantfinancialgoals(Shown:PercentageofBenineseadults,n=3,042)

Sta*cacrossmostdemographics

Separate from mobile money, many would also like to have digital access to tontine, MFI and bank accounts

33

Interestin

MovingmoneybetweenanMFIandbank/mobilemoneyaccount

Accessing MFI through mobile phone

AccessingMFIthroughATM,oronlineinterface

Makingdepositstoanyfinancialmechanismdigitally

Receivingpaycheckdigitally

Receivingpaymentsforservicesdigitally

Paying vendors/suppliers digitally

Note:digitalreferstotheconceptofaccessingcurrencyinaformotherthanactualcashinhand,includingmobilephones,ATMs,directdeposit,agent.Lackofknowledge/exposurelimitedobserva*onsoftruepreferenceduringthisexploratoryphase.

HowreadyisBeninforDFS?

Literacy, SMS experience limit DFS readiness, especially for women

75%

97%

32%

44%36%

99%

79%

98%

38%

51%42%

99%

71%

97%

25%

38%30%

99%

Accesstophone

ID Beyondprimaryschool

SMSsend Literate Numerate

Popula*on Men Women

FactorsthatcontributetoDFSReadiness(Shown:BenineseAdults,n=3042)

35 Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

and rural adults

75%

97%

32%

44%36%

99%

84%

99%

45%

57%52%

100%

64%

96%

20%

32%22%

99%

Accesstophone

ID Beyondprimaryschool

SMSsend Literate Numerate

Popula*on Urban Rural

FactorsthatcontributetoDFSReadiness(Shown:BeninseAdults,n=3042)

36

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

For comparison across Africa and Asia:

2015/16: Benin Senegal Indonesia Kenya Nigeria Pakistan India Tanzania Uganda Bangladesh

Accesstoaphone 75% 90% 79% 93% 93% 76% 90% 96% 85% 96%

Havena*onalID 97% 95% 94% 77% 32% 89% 82% 11% 41% 0.6%

Literacy 36% 35% 95% 83% 78% 65% 66% 84% 57% 60%

Numeracy 99% 97% 98% 98% 96% 95% 95% 96% 80% 98%

SMS 44% 64% 69% 75% 80% 40% 38% 78% 47% 37%

BeyondPrimarySchoolEduca*on 32% 29% 60% 47% 73% 46% 58% 24% 39% 49%

Literacy,loweduca*onaiainmentagreaterissueforBenin Accesstophonesrela*velylowcomparedtoothercountries

ElementsofDFSReadiness(Shown:Alladultsincountry)

*Nigeria,Tanzania,Kenya,Indonesia,Uganda,Pakistan,IndiaandBangladeshsta*s*cscomefrom2015FinancialInclusionInsights 37

Rural Beninese are substantially more disadvantaged than their urban counterparts; all readiness components are lower among the rural population than urbanites

52%

Demographics/accesstofinance Ruraln=1,936

Urbann=1,106

Abovepoverty 14% 42%

Male 50% 49%

Over35 44% 47%

Primaryeduca*onorless 78% 54%

Involvedinagriculture(farmownerorlaborer)

62% 27%

Accessformalfinancialservices 17% 34%

Accessbank 3% 15%

AccessOTCservices 4% 10%

Accessmobilemoney 6% 18%

AccessNBFI 10% 11%

Rural(Shown:PercentageofBenineseadults,

n=3,042)

38

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Readiness becomes a top need for customer adoption

It is a pain point for consumers, because they are conscious of their own perceived limitations

It is a gap in the marketplace, because consumers do not know where to turn to get ready

It is a NEED because consumers feel it will prohibit their own ability to use financial services

This pertains to new customers, who wonder if they have what it takes to use the product

This pertains to prospective users, who have not yet opened an account

39

Reflecting the gender, rural lag for phone ownership, these groups also are less likely to use a phone for advanced purposes

40

2015:Advancedphoneusebydemographic(Shown:Percentageofsubgroups)

36%

useamobilephoneforadvanced

func=ons

Totalpopula=on(Shown:Beninesemobilephoneusers,

n=2,130)

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Urban(n=938)

44%

Rural(n=1,192)

26%

Female(n=1,004)

28%

Male(n=1,126)

43%

40

2015:Haveeversentatextmessage(SMS)(Shown:Percentageofmobilephoneusers,n=2,130)

33%financiallyincluded

59% 37%HavenotsentanSMS(SMSincapable)

HavesentanSMS(SMScapable,alladults)

14%financiallyincluded

*AsdefinedinFinancialInclusionsec*on

Consumers with greater mobile phone proficiency are more likely to have financial accounts, particularly mobile money accounts

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

41

Barriersandpainpoints

43

TangibleBarrierstoDFS

Costofmobilephones SMSexperience Distancetoformalfinancialpointsof

service(POS)

Barrierstomobilemoneyinclude:

NOTknowingwhereamobilemoneyagentis

NOTknowingenoughabouthowtousemobilemoney

NOTknowingenoughaboutproductrequirements,includingfeesandhowtheprocessworks

Forprospec*veusers,barriersareaboutawareness,notobjec*ontoservices

44

47%Awareofatleastonemobilemoneyprovider

11%Haveusedmobile

money

Awareness varies according to the region, with lows of 16% and 17% respectively in Atacora and Plateau

Region MobileMoneyAwareness

Alibori 40%

Atacora 16%

Atln*q 53%

Borgou 42%

Collnes 34%

Couffo 61%

Donga 30%

Liiorl 68%

Mono 61%

Oueme 63%

Plateau 17%

Zou 50%

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

[9%havemobilemoneyaccount]

45

Lack of knowledge is a key barrier to having a mobile money account

42%

17%14%

7%5%

2% 2%

Idonotknowwhatitis

Idonotneed,Idonotdo

transac*ons

Idonotknowhowtoopenone

Thereisnoofficeservice/orcaretaker,

Ineverhavemoneytocarryouttransac*on

Idonothaveana*onaliden*tycardorother

Idonotunderstandthatservice;IdonotknowwhatIpe

Reasonsfornothavingamobilemoneyaccount(Shown:thosewithoutamobilemoneyaccount,n=1151)

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

46

Barriers create imperatives for adoption

47

Barriers:Prospec*ve

userswouldliketousemobilemoney,but:

Therearenoagents/outletsintheirarea

Donotfullyunderstandhowinterac*onswork,even

thoughtheyliketheconcept

Areconcernedthatitwouldbecost-prohibi*ve,even

thoughtheyseethevalueinit

Areuncertaintheywillbeabletolearnhowtousemobile

money

"Needaccesspoints,andknowledgeofaccesspoints

"Needtodemys*fytheprocessofmakingatransac*ontobuildtrust

"Needinforma*ononfeestomakethisseemagoodvalue

"Requireassistanceinusingun*lcomfortable

Perceptions around fees: A barrier to customer adoption

48

Consumersareconsciousofthecostofusingfinancialmechanismsandwhatthe

mechanismyieldsthemforthecost(Bankshavehigherfeesanddepositrequirementstouse,butgiveyouaddedsafetyandsecurityforyourmoney)

Theycurrentlytalkaboutcostsofusingfinancialservices(ton*nes,MFIs)

conceptually,insteadofinmonetaryunits(CFA) Forinstance:Imake30depositsintoaTon*neandget29back.Ipayinfor3

monthsandthefourthmonthIcanwithdraw

Theyarealsoconsciousoftheliabilityofthegroup(ifsomeoneelseinthegroupofaTon*neorMFIdefaults,itcouldhaveimpactonthem).Thisfactorsintotheirconsidera*onofcost

Consumerslikefortheirmoneytoworkforthem,soanypricingcouldbeevaluatedaswhatamIgeyngforthis?

Thecostisthereforecalculatedbyconsideringnotonlythefeesoftheservice,butalsothepossiblerisksandthelackofbenefitscomparedtootherservices.Thisiswhypreservingfinancialalterna*vesiscrucial.

There are five hurdles on the path to digital financial services adoption; Technology and Education, in particular, form basis for DFS readiness

AWARENESS HowawareamIofDFS? Whatcommunica*on

channelsareavailabletoreachme?

TECHNOLOGY DoIownaphone? AmIcomfortablewith

tex*ng?

TRUST HowmuchdoItrustthe

providersoftheseservices?

HowmuchdoINOTtrusttheotherservices?

EDUCATION AmIcomfortableenough

readingwordsandnumberstobeabletousetheservice?

Howmucheffortwillittaketolearnhowtouseit?

NEEDS Howsa*sfiedamIwiththe

statusquoofmanagingmymoney?

HowwellservedamIwithcurrentfinancialproviderstowhichIhaveaccess?

[Hurdlesarefluidandmayfollowadifferentorder] 49

Addressingbarriers,speakingtoneedsbuildstrust

Consumers:

Mightbeunsureofwhethertotrustmobile

money

Donotknowenoughaboutmobilemoney

touse

S*llhaveneedsthatcanbe

sa*sfiedbymobilemoney

50

What is the Role of Social Networks?

51

Financial education and knowledge primarily comes from friends and family

52

2%

1%

1%

30%

31%

35%

Allother(excludingDK/refuse)

MFI

Bank

Myself

Spouse

Family,friends,neighbors

Whodoyoudependonforfinancialadvice?(Shown:PercentageofBenineseadults,N=3,042)

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Prospective users can envision learning about DFS through a friend or family member, or number of different socially-oriented channels

53

AfriendorfamilymemberwhoiscurrentlyusingitintroducesthemtoitMostcommonlymen=onedchannels: Massmedia Town-hallstylemee*ngs Church,thecommunityandleaders Themayororcommunitychief,butnotthegovernment/authori*es

Offereduplessfrequently: Door-to-doorbyacommunity-memberproviderrepresenta*ve Employers Schools Electricitycompanies

The significance of social networks in financial practices suggests that various types of mobile money/DFS agents, rooted within the community, can play a key role to build awareness

54

Mobile,mobilemoney/DFSagent! Bus,vanorsomeformofmobileunitthatcomestoanarearegularlyforcash-in/cash-outorbill-pay! EspeciallyrelevantinAguegue

Postofficeasanagent! Knownen*tyinthecommunity

Shopkeepersservingasagents! Shopkeepersoffercredit,informalsavingsop*onsusingmerchandiseascredit! Couldbenaturalsynergies

Billcollectors,moneylenders,ton*neadministratorsservingasagents! Digi*zingtherela*onshipandpoten*allyaddingmoretransparencyintotheprocess/lessconcern

aboutmoneybeingstolen/lost

MFIadministratorsasagents! Exis*ngsa*sfac*onwithMFIs,digitalaccesscouldextendtheiru*lity

U*litycompaniesasagentsorchannelsintoanaccount! Alreadycollec*ngmoneyforservicesthatareessen*alforindividuals

What are the main financial needs?

55

Havetakenloan,19%

Havenottakenloan,77%

Dontknoworrefuse

3%

5%

16%

16%

17%

19%

32%

38%

Largepurchase(e.g.TV)

Bills

Rou*nepurchases,suchasgroceries

Boostbusiness

Medicalpayments

Educa*onalexpenses/schoolfees

Emergencyexpenses

Investment

Borrowing money is primarily for investment and growth, sometimes for emergencies and routine expenses

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Havetakenaloaninthepast12months(Shown:PercentageofBenineseadultsn=3,042)

Reasonsfortakingaloan(Shown:Percentageofthathavetakenaloanin

thepast12monthsn=527)

56

Consumers have mostly informal lending options at their disposal

Haveyoutakenaloanfromthefollowingins=tu=ons?(Shown:AllBenineseAdults,n=3,042)

Percentageoftotalpopula=on

Familyorfriends 10%

MFI 5%

ASCA/lendinggroup 1%

Informalmoneylender 1%

Bank 1%

SACCO 1%

Shopkeeperletsyoutakecredit 0.22%

Buyerofcrops/harvest 0.16%

Governmentins*tu*on 0.14%

Employer 0.12%

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Formalop*onshalfascommonasinformalop*ons

57

Savings is driven by long term oriented investment and protecting family needs

1%

2%

6%

8%

11%

11%

13%

29%

28%

50%

Givebacktocommunity

Buildchildren'sfriendforwedding

Buildchildren'sfundforeduca*on

Getreadyforre*rement

Buyexpensiveitems

Educa*onforyourself

Protectbelongings

Makeendsmeet

Protectfamilyfrompoverty/crime

Start/expandyourbusiness

Reasonsforsaving(Shown:percentageofsavingadults)

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

58

Financial goals are primarily oriented around investing in future growth or prosperity

1%

2%

2%

4%

6%

8%

8%

17%

21%

21%

Acquiringfurniture

Payingoffadebt

Takingcareofrela*ves

Acquiringsomekindofpersonalassest

Payingschoolfees

Buyingapieceofland

Inves*nginthefarm

Makemoremoney

Growingyourbusinessorafamilymember'sbusiness

Buildingorupgradingthehome

Mostimportantfinancialgoals(Shown:AllBenineseAdults,n=3,042)

Sta*cacrossmostdemographics

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

59

60

LimitedinclusiondoesNOTmeanlimitedfinancialinterest

There is also significant interest in mechanisms that help pay for school fees, and bundled products

2015:Interestinfinancialproducts(Shown:Percentageofadults,N=3,042)

19%

19%

21%

25%

30%

36%

36%

37%

23%

24%

25%

32%

35%

31%

31%

31%

Pre-paidcardforreceivingincome

Pre-paidcardtomakepayments

Mobilemoneyaccountthatcamewithasmartphone

Loanthatcamewithaninsuranceplan

Loanthatcamewithamobilemoneyaccount

Loanthatcamewithabankaccount

Creditplanforschoolfees

Layawayplanforschoolfees

Veryimportant Somewhatimportant

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Schoolfees

Bundledproducts

61

Additionally, women tend to exhibit less demand for financial services, save for a desire to obtain business loans

54%

66%

74%

73%

66%

88%

50%

61%

65%

66%

71%

87%

Bankaccount

Insurance

Savingsaccount

Mobilemoneyaccount

Businessloans

Mobilephone

Women Men

Demandforfinancialservices,mobilephonesamongthosewithout(Shown:Percentageofadults,bygenderandsubgroup)

Theprimaryreasonfornothavingeachoftheseitemsisdonothaveenoughmoney,regardlessofgender.

62 Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Rural Beninese are not resigned to this gap, though, as they place great importance on financial tools

42%

38%

33%

34%

41%

77%

38%

38%

40%

40%

47%

72%

Bankaccount

Insurance

Loanthatcamewithabankaccount

Layawayplanforschoolfees

Loanforyourbusiness

Mobilephone

Rural(n=1,936) Urban(n=1,106)

Veryimportanttoolsforhouseholds(Shown:Percentageofurban,ruraladults)

52%

Rural(Shown:PercentageofBenineseadults,

n=3,042)

63 Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+).

Consumers have significant needs when it comes to managing money

64

Focusonhelpinmanagingdailytransac=ons,sendingandreceivingmoney,helpingtosavethroughsmallamounts

Allowsmall,incremental,and/orinfrequentsavingsdepositsthatmatchthewayinwhichaconsumercansave

Lowfeesornofeesformalaccountsseemunapproachableiffeestaketoolargeachunkofconsumersfunds

Convenienceiskeypeoplewanttotransactwheretheyare,whenevertheyneedto

Keepmoneysafefromcheaters,thieves,accidentsandthetempta*ontospendthrougheasysavingofsmallamounts

BuildingaDFSvalueproposi=onWhatdoesDFSneedtoconveyandtowhom?

Building readiness is key to capitalizing on consumer interest in the marketplace

Readyandinterested,

13% Readyandnot

interested,1%

Notreadyandinterested,

70%

Notreadyandnot

interested,16%

ReadinessandInterestacrossBeninamongtheun-included(shown:noformalaccount)

ManyBeninesearenotyetreadyforDFS,lackingcri*calcomponentsforuptake.

Atthesame*me,thereisinterestinmanyofthefunc*onsofDFS,eventhoughformalfinancialaccountownershipisrela*velylowandconsumersdonotconnectformalaccountswithameaningfulvalueproposi*on

Tobestiden*fybroad-basedgroupstargetgroupsforbuildingavalueproposi*on,wecombinedreadinessfactorswithinterest:

Readinessfactors:basedoffofhavingsomecombina*onofmobilephone,SMSability,na*onalID,literacyandnumeracy

Interestfactors:basedoffofques*onposi*veresponsestosomecombina*onof:wouldyouliketouseyourphoneto:paybills,makepurchases,save,takeloans

Thisshowsthatupto83%areinterestedinthecorefunc*onsthatDFScanoffer,eventhough70%lackvariouscomponentsofreadiness.

Source:InterMediaBeninFinancialInclusionInsightsforMM4P,December2015-February2016(N=3,042,15+). 66

There is DFS opportunity in the gap between what existing financial products offer, and what consumers need or want

67

Exis*ngproductsmostlyoffer:

Placetosave Placetogetaloan

Limita*onsonwithdrawals

Requirementsondepositamounts

ConsumersALSOneed:

Waytotransfermoneysafely,securely,affordably

Op*onsformakingsmallerdepositsandwithdrawals

Accountswithfees/requirementsthatmatchtheirbudget

ConsumerswouldLIKE:

Waystotransfermoneydigitally

Waystopaybillsdigitally

Waystomakepurchasesdigitally

Shopkeepers:Waystoacceptpaymentdigitally

!Opportunity

Digital financial services may also address current pain points in financial management

68

PAINPOINT DFSUSECASEDailyincomeistypicallyunstableand

unpredictableDigitalaccountsconnectedtosavingscan

facilitateincomesmoothing

Itisdifficulttosavesmallamountsconsistentlyover*me

DFSpar*cularlysuitedtodailysavingsofsmallamounts

Smallbusinessesneedcashinfusionstogrowandprovidemoreincome

DFSconnectedtoMFIloansmakeaccesseasierandconvenient

Schoolfeescanbedifficulttopayon*meandconsistently

DFSmakespayingforeducaQonwithouthavingtophysicallydeliverpayments,andpoten*allywithasavingsmechanismfor

affordingthefees

Cashsavingsarenotsecurefromthew,destruc*onandtempta*on

DFSprovideinherentlysecuresavingsmechanisms

Savingswithgroupsrequiresrelianceonpoten*allyuntrustworthyindividuals DFSprovidestrustworthytransac*ons

Needtoquickly,easilytransactwithindividualsinotherareasofBenin

DFSfurnishesfasttransac*onstosend/receivemoneytoanyone,anywhere

This suggests five* important elements for a consumer-facing value proposition:

Easy to use ! Even with limited digital experience

Facilitates budgeting ! Which addresses a pain point

Facilitates saving ! Which addresses a need

Helps support financial stability ! Which is a pain point

Is meant for people like you ! To bridge the gap between financial mechanism and perception of

needing it

*Addi*onalmodesofresearchmayexpandthislisttoincludeoverfiveimportantelementsand/orrefinementsonthislist 69

There are specific gender-based challenges for women when it comes to financial management and financial services

70

! Herpersonal*meandmoneyarelimited;thisnecessitatesthatshedependonotherpeopleand/orbecomequiteresourcefulinplanning

! Herhouseholddynamicsmayrequirethatsheonlypar*cipatejointlyinfinancialac*vi*es,orberestricted

! Ifshehasanaccount,shemightstruggletokeepitprivatefrommeninthehome,anditmaybecomevulnerabletoamanshouseholddebt

! Ins*tu*onsmayrequirethatamancosignanaccount! Shemightfeelshehaslimitedfinancialop*onsbecauseofwhatisavailableinher

area,aswellasfeelingcomfortableusingaproductotherthananMFIorton*ne! Communi*esofwomenusingaton*neorMFIcreateasisterhoodthatcanbe

verypersuasiveandcomfortableforwomen,makingitdifficultforthemtoprogresstoanotherfinancialproduct

! Shewillexpectandrequiremoreperson-to-personinterac*ontoopenanewaccountandlearnhowtouseit

Imperatives that address challenges associated with fostering greater DFS among women:

71

Gender-basedchallenge Impera=ve

1:Difficultymanaging*meandfinances Appealtoawomansneeds,illustra*nghowDFShelpsinlife.Remember,oneMFIwascreditedwithhelpingmakewomenslivesbeier.

2:Threepersonasoffinancialmanagement;independent,co-decide,restricted

Donotassumeallwomenarerestrictedfromaccessingfinancialmechanisms

3and4.Keepingaccountsprivateinthehome,keepingamountinaccountsprivateathome

Equipherwithprivacy-protec*ngelementsonheraccount(biometrics,KYCrequirements)

5.Accountpoliciesthatrequireaguarantor Fosterresponsiblepoliciesandproceduresthatconsideralterna*veguarantors,orofferabenefittothemaleforbeingaguarantor

6.Limitedop*onsbeyondton*nes,MFIs Womenknowthatmicrofinancehelpsthemspecificallyinwaysthatotherfinancialtoolsmaynot

Considerdigitalaccesstoton*nes,MFIsasawaytobringherintodigitaltransac*onsusingafinancialmechanismwithwhichsheiscomfortable

Buildexposuretootherformalfinancialservicesbyillustra*ngthatshecanaccessthese,andthattheyareforher

7.Womenexpectahigh-touchrela*onshipwithherfinancialproduct

Emanaterecruitment,interac*onofton*nes,MFIswithwomen

Insights and implications What does this mean for next steps?

72

Seven key components will drive recruiting new consumers into DFS accountholders

1. BepreparedtofosterDFSreadiness;manyconsumerslacktherequiredbasicskills

2. DevelopDFSinterfacesthatarecomfortablewiththosewithlowliteracy,numeracy,orwhoaredevelopingreadiness

3. Offerone-on-onesupportthatmirrorsanagent-consumerrela*onshiptopromoteuserskillsandcomfortwithusinganaccount

4. Posi*onaccountsasatoolforkeepingmoneysafeandsecurebuts*llaccessibleforhouseholdneeds

5. Employtargetaudienceplansthataccommodatehardertoreach,typicallyfinanciallyexcludedpopula*ons,suchaslowerincome,ruralresidentsandwomen

6. Cul*vatetheyouthsothattheyenterthefinancialecosystemwithafull-service,digitalaccount

7. Facilitateorevenu*lizemoreformalcommunica*onschannelsfordissemina*onofmessagesaboutaccounts

73

A way forward

74

However,consumersdonotyetassociateDFSasarelevantmechanismfortheirlives.! Interestintheac*vi*esthatcanbeperformedwithDFS,andinterestinloanand

savingsproducts,issubstan*al(between57%and68%).Atthesame*me,mobilemoney,acoreDFStool,ismostlyunknownorconsideredtobenotneededintheeyesofconsumers(42%dontknowwhatitis,17%feeltheydontneedit).

! Thissuggeststhatconsumersdonotyetrecognizeacorevalueproposi*onforDFS.

! Italsosuggeststhatbuildingoutthedigitalecosystemandinnova*ngonbillpay,merchantpaymentsandsavingsproductswillhavesomerealtrac*ononceconsumersarereadytoadoptDFS.

Thepoten*alvalueproposi*oncouldpromptadop*onofreadinesselements,suchasphonesandSMS.! Knowingofatoolthatfacilitateslifegoalsorday-to-dayneedsmightbeanudge

towardmobilephoneacquisi*on,SMScapabili*esorIDacquisi*on.! Othercomponents,suchasliteracy,educa*onandnumeracy,willneedtobe

addressedthroughformandfunc*onofspecificDFS,op*mizedforlowliteracy,educa*onlevels.

For more information, contact: Colleen Learch

LearchC@InterMedia.org