Does digital finance really address low-income customers’ needs?

Maha Khan

Last month, we made our first foray into sharing, collaborating and cross promoting with the wider ecosystem as Next Billion published a piece we wrote on on whether digital finance is really addressing the needs of low-income customers.

The numbers don’t lie: Digital finance has gained remarkable traction globally, with over 170 million active mobile money accounts in more than 90 countries. And this has translated to noticeable changes on the ground. Strolling through the markets of Kenya or Pakistan, one often hears “M-Pesa me,” or “Easypaisa kara lo! (Send me Easypaisa),” illustrating the success of digitizing person-to-person (P2P) money transfer services. Yet over the past 10 years, the digital finance community has endeavored unsuccessfully to design products, beyond money transfer and payments, that are relevant to the needs of low-income customers. As a result, usage is still infrequent.

The blog post, draws on our recent review of research in the space, and highlights some of the successes and struggles in digital commercial offerings over the past decade. We discuss how the advent of data, generated through mobile phones, is steadily helping providers build products around their customers’ behaviors, exemplified by Pay As You Go (PAYG) energy providers in East Africa. These tailored, niche products have the potential to reduce the gap between adoption and usage of digital finance products and thus meet the financial needs of low-income customers.

We are excited about the future of digital finance. We invite you to join the conversation, and to read the full article here.