The opportunity for mobile money and other digital financial services in Peru is significant. Approval in 2013 of regulations allowing non-banks to issue e-money, combined with low levels of formal account ownership and high levels of mobile phone penetration amongst unbanked adults, has laid a foundation for the development and adoption of digital financial services in Peru. It is unsurprising Peru tops the ranks among the world’s most conducive markets for expanding access to finance, according to the Global Microscope 2014: The Enabling Environment for Financial Inclusion. However, the financial services needs of Peruvian consumers are still far from being met.
New qualitative research by InterMedia identifies specific pain points in the daily financial lives of consumers in Peru, and provides insights into the experiences of social payment beneficiaries of the Juntos programme, a conditional cash transfer initiative for mothers living in extreme poverty. Study participants represent a range of socio-economic groups from four diverse regions of the country (Lima, Junín, Cusco, and Piura). Collectively, the research findings provide a glimpse into the opportunity for mobile money in Peru, although providers should consider these insights only one potential input to their marketing and segmentation strategies.
In many ways, research findings echo what we have seen in other emerging markets that are heavily cash-based. For example, many banked consumers withdraw funds to transact in cash; bank maintenance fees deter account opening and usage; and rural segments tend to be underserved by the formal financial services sector.
Beyond these familiar insights, however, are other interesting findings unique to the Peruvian market. In particular, most consumers are already familiar and comfortable with transacting at banking agents, as is further discussed by recent CGAP research on agent networks in Peru. Bill payments, for example, occur very frequently and are made by a large proportion of the population through largely accessible payment locations. That said, a lack of liquidity and system instability can make it difficult to complete agent transactions. The existing agent network needs to be strengthened, particularly in rural areas. Mobile operators have an opportunity to supplement the existing network of cash-in and out points across the nation.
For participants in the Juntos programme, research findings indicate that all study participants have access to a mobile phone, either through direct ownership or shared household access. However, most do not regularly use SMS or value-added services on their phones, and children play an important role in teaching their parents how to use basic phone features. It is noteworthy that some programme participants allow balances to accumulate before withdrawing their benefit. This finding is somewhat contrary to what the industry hears of government-to-person payment programmes in which most beneficiaries withdraw their full payment immediately. Savings needs are reinforced by sporadic and seasonal incomes of this segment, as well as the finding that most respondents save informally at home rather than at a bank. Lastly, the direct and indirect costs of accessing funds are important pain points and are most acute for those that must travel to temporary access points or a Banco de la Nación branch.
While much more qualitative and quantitative research is needed to assess the true demand for mobile financial services in Peru, particularly with regards to person-to-person payments, this research can help existing and prospective providers inform their commercial strategies and develop strong value propositions for various segments of the population. Only then can the opportunity for financial inclusion in this market be realised.
The full report can be downloaded in English here, and in Spanish here.