The following is a guest post we’re pleased to share by Valerie Rozycki, Head of Strategic Initiatives at mChek.
During the summer of 2009 , an extensive research initiative led by mChek was conducted amongst low-income urban and rural residents in Southern India. Its goal was to understand the processes of managing day-to-day costs in a cash-only environment, and investigate the degree to which branchless banking and mobile money could reduce transaction costs and improve livelihoods.
Some of the most interesting results of this study were the indirect lessons about the roles of men and women managing cash in the household and the unique needs and motivations that women have around use of secure electronic funds. By focusing on catering and delivering mobile money services to women, telecom operators, banks and service providers can use mobile money as a way to shrink the gender gap for mobile services in general.
Women represent a relatively untapped market opportunity for operators in markets like India with high growth and extreme price pressure. According to the GSMA Women & Mobile report (Feb 2010), in South Asia women are 37% less likely than men to own mobile phones. mChek’s research found that while 68% of households own one mobile, only 17% own two. The first is owned by the husband, and the second is more often kept by a son than the wife. This indicates that 37% gender gap is in fact quite conservative for some areas of India.
Even when women do own mobile phones, they are likely to generate less revenue than men customers as they have less earning power and less control over the household spending. mChek’s research found that men are 3 times more likely than women to control the household mobile expenses. If telecom operators want to increase revenue per customer from women, they must look outside of basic voice and data services and leverage value added services catered to underserved women.
Regardless of gender, the rationale that mobile money can help drive adoption, increase revenue, and decrease churn for mobile customers is well understood. However, the particular mobile money needs of women are not well understood. Findings from mChek’s research identify important benefits women see in mobile money and how these needs translate into product features, pricing, distribution strategies, and marketing campaigns.
Security of Money
Poor women have few options to save money securely. Through mChek’s research and additional mobile money pilots with microfinance institution Grameen Koota, women consistently report the benefits of secure savings, even from their husbands who commonly take their money for alcohol. Quotes such as “My husband can break the phone, but he’ll never get the money out of the SIM” indicate a level of security women do not have with cash. Women participants in the study suggested mobile money features such as keeping separate account balances and multiple PINs in order to keep secret the actual value in their accounts. This is similar to the way women cope with cash today, pinning rupee notes to different folds of their sari dresses to hide cash. Security is also particularly important for women to be able to save for long-term expenses that they are expected to manage such as school fees. In addition to keeping money securely at home, it is important to build merchant relationships with entities such as schools and hospitals to accept mobile money. If customers could make incremental micro-payments to these institutions over the mobile, then they would face less risk in keeping money on hand.
Gender-based Household Cash Flows
Budgeting behaviors differ between men and women, and across urban versus rural customers. Men are more likely to control individual expenses like mobile services and fuel for vehicles, but women control household expenditures. In rural areas where food shopping happens at greater distances, men buy food because they are more likely than women to travel. However, in urban areas where 23% of women are housewives (as opposed to the 9% housewives among rural families), women dominate food shopping. Understanding gender dynamics is critical for appropriately targeting branchless banking and mobile money marketing campaigns.
Privacy
When surveyed about willingness to pay for mobile money services, a surprising 6% of respondents said they would pay a fee to do mobile prepaid recharge from the phone directly rather than going to a nearby telecom retailer. Given the free and accessible channel at retailers, the research team assumed this was a mistake. Qualitative research explained the phenomenon. Women will pay a transaction fee to do prepaid recharge for privacy. Most often it is men who operate mobile retailers and other men hang around outside. Women and their husbands dislike visiting these locations, especially to read out their mobile numbers for prepaid recharge. With mobile money, women can stay at home and do prepaid recharge with privacy. Women’s willingness to pay is driven from more than just convenience and reducing transaction costs.
Distribution through Banking first, then Mobile
The GSMA Women & Mobile study reports why women do not own mobiles: 42% handset expense, 8% expense of service, 20% no need because all communicate is local. Underlying all of these responses is that a large number of women do not see enough benefit of communication services for the cost. However, while not having a willingness to pay for voice and data, it is likely that a subset of these women would actually value mobile money enough to pay for such services. Telecom operators should focus on acquiring these women customers through mobile banking and payments first and then eventually engage those customers for communication services. SIM based applications enable this strategy. In India, for example, a SIM costs less than 50 rupees ($1). Branchless banking agents can be equipped with shared mobile handsets, and the SIM card is all a customer needs to do banking with no customer handset needed. This strategy creates revenue generating mobile money customers who do not own handsets but who will eventually acquire handsets and adopt communication services. Telecom operators can acquire customers and create loyalty before a customer ever makes her first call.
There is a significant gender gap among customers of mobile services in the developing world, but this does not imply that branchless banking and mobile money should create the same gender gap. Telecom operators, banks and mobile money service providers can maximize their reach and revenue opportunity by closing this gap. All stakeholders should embrace the unique needs of women customers and offer mobile money as a value added service, targeting women with the product features, pricing, distribution models and marketing messaging that they demand.
As Head of Strategic Initiatives at mChek, Valerie Rozycki is responsible for building the company’s business around mobile payments and security for the Bottom of the Pyramid market segment of India and other countries. Valerie earned her B.A. in Public Policy and M.A. in Economic Sociology at Stanford University.
Special thanks to MicroSave, international research and consulting firm for microfinance, for support during the qualitative research phase of the project cited above. mChek has been one of MicroSave’s Action Research partners since March 2009.