Tackling the identity crisis delaying financial inclusion

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Steve Polsky, Founder and CEO of Juvo, addresses the unfulfilled promise of mobile financial services.

Ten years since the inception of mobile financial services, there are now over 500 million mobile money accounts globally. Moreover, with 277 live services in 92 countries, mobile money is available in 66% of low- and middle-income markets (GSMA, 2017). This is an extraordinary achievement, demonstrating the power of mobile to provide access to safe, secure, and affordable financial services.

While mobile is instrumental in unlocking access to financial services for the two billion unbanked individuals around the world (World Bank, 2016), there is a major problem: millions of people with a mobile phone, yet no access to a bank, aren’t using mobile money. And most of those that do register to use a mobile money service don’t remain active users for very long.

Based on the latest industry data only two in ten unbanked people with a mobile phone is using mobile money. If mobile is the panacea to banking the unbanked, what’s the problem?

The activation challenge

The problem is that too many services don’t retain active users. People sign up, but lose interest. Why is this?

According to the GSMA:

  • Customers are aware of the mobile money service, but do not understand how it could be beneficial to them
  • Customers get bogged down in the registration process and never try the product
  • Customers don’t understand the mechanics of performing transactions and are apprehensive to try something so novel
  • Customers don’t trust the operator’s brand or network and are hesitant to conduct financial services on the platform

These issues that range from the customer journey to marketing and product capabilities are difficult for mobile operators to address. However, one thing unites them: identity.

Unmasking anonymous subscribers

The principal barrier to mobile money adoption is that much of the world’s unbanked population lack any official way to identify themselves.

In particular, 80% of mobile subscribers around the world are prepaid and largely anonymous to mobile operators who dominate mobile financial services in emerging markets. Many of these prepaid customers are under-banked or unbanked, with either limited or no access to essential financial services.

These users need identity credentials, such as a valid birth certificate, passport or proof of residence, to fulfil traditional know-your-customer (KYC) procedures essential to registering for any mobile financial service. A lack of identification often leads to people transacting in inconvenient ways within an underground economy, which can be both costly and risky, as well as limiting socioeconomic development and access to public services like education or welfare.

Mobile operators understand that customers need a financial identity to sign up for a service as part of the KYC process. What most don’t realise is that they need to rethink their approach to financial identity. Existing mobile money services are one-size-fits all affairs and identity is simply a regulatory requirement. Identity can be more than this. By establishing a financial identity at the outset to build a richer picture of the subscribers’ financial life, mobile operators can build a relationship with the user, establish what services are best fit, and gently walk them up the path towards financial inclusion (overcoming regulatory hurdles as and when required).

How is this possible?

Digital footprints and data science

According to Ericsson, there will be three billion new smartphone users in emerging markets by 2020. Just like internet users, with search histories, cookies and IP records, mobile subscribers leave digital footprints as they interact with their mobile device. And between 2016 and 2022, data traffic generated by smartphones is expected to increase ten times (Ericsson, 2016).

Mobile operators already have innumerable customer data sets but they are disparate and unconnected. Thus, mobile operators only harness a tiny fraction of this data which means the majority of their customers in emerging markets are prepaid subscribers and largely anonymous.

To drive uptake, and boost financial inclusion, mobile operators need to harness these digital footprints to establish financial identities. The core strategy is to shift from an anonymous relationship based on a SIM card (or phone number) to an identity-based one. At the centre of this shift is data science.

By partnering with data science experts, mobile operators can dramatically change the nature of the relationship with their prepaid subscribers. They achieve this by deepening and personalising their interactions with each individual subscriber by using existing data, and new ways of uncovering customer data, to gain understanding and build insight. Through incentives and game mechanics more and more data is created to help them establish a financial identity.

By applying machine learning and credit algorithms to this data, operators can create financial identities for each individual subscriber which effectively translates into a personalised lending criteria. Once an identity is established and the user is engaged, users are able to request advances that are personalised to their unique situation, enabling and encouraging use of operator services and eliminating off network days to build loyalty and encourage further engagement.

As subscriber engagement grows, a virtuous circle is fuelled by progression through reward levels, such as being upgraded from ‘bronze’ to ‘silver’. The more the user engages, the more robust the score becomes and, in turn, the user is granted access to more sophisticated financial services.

Accelerating financial inclusion

The creation of financial identities using data science meets the aforementioned activation challenge:

  • Benefits: Rather than asking a subscriber to sign up for a mobile money account without an understanding of the benefits, they are asked to use a self-service application. The application has clear benefits – such as not walking to the shop to top-up – and services can be tailored to their requirements
  • Registration: Friction is removed because the mobile operator establishes a financial identity at the outset and additional credentials are only required when the user signs up for more advanced services
  • Transactions: These start small with a simple airtime credit extension product. As familiarity grows, game mechanics encourages experimentation, adoption, and critically, ongoing use of new services tailored to the user
  • Trust: By meeting the user where they are through the application rather than asking them to sign up to an out-of-the-box service with unclear benefits, operators build customer trust in their brand and the platform

As smartphone penetration continues to deepen across emerging markets, mobile operators’ reach places that put them in a unique position to drive financial inclusion. But unless they solve the identity crisis at the heart of the activation issue holding back mobile financial services, their financial inclusion efforts will continue to be delayed.

Mobile operators need to embrace data science, establish financial identities at the outset, and meet subscribers where they are to drive the ongoing use of mobile financial services to fulfil the promise of mobile money.


Steve Polsky Hi ResSteve Polsky is the CEO and Founder of Juvo. Steve founded Juvo with an overarching mission: to establish financial identities for the billions of people worldwide who are creditworthy, yet financially excluded. With over 20 years’ experience, Steve’s career has centred on founding, launching and managing early stage technology ventures across the mobile and consumer internet sectors where, prior to Juvo, he was most recently President and COO at Flixster/Rotten Tomatoes.

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