BEHAVIOURAL APPLICATIONS TO DIGITAL FINANCE

Transcription

1 BEHAVIOURAL APPLICATIONS TO DIGITAL FINANCE The Busara Center for Behavioral Economics, CGAP, FSD-Tanzania, and the Global Insights Initiative (GINI) April 27, 2017

2 Disclaimer This work was funded in whole or in part by CGAP. Unlike CGAP's official publications, it has not been peer reviewed or edited by CGAP, and any conclusions or viewpoints expressed are those of the authors, and they may or may not reflect the views of CGAP staff.

3 ABOUT BUSARA The Busara Center for Behavioral Economics is a behavioral research and advisory firm that works to identify core behavioral biases and structure programs, products and policies around these barriers. Our mission is to work with researchers and organizations to advance and apply behavioral science in pursuit of poverty alleviation. RESEARCH ADVISORY Identifying new barriers and unpacking their mechanisms in emerging markets Applying behavioral evidence to answer organizational challenges Research Partners Advisory Partners 2

4 WHERE WE WORK Morocc o Tunisia Western Sahara Algeria Libya Egypt Senegal Gambia Guinea Bissau Sierra Leone Liberi a Mauritania Guinea Ivory Coast Mali Burkina Nigeri a Niger Cameroon Benin Ghan Equatorial a Togo Guinea Gabo n Congo Chad Zaire Central African Sudan Republic Uganda Rwanda Burund i Tanzania Ethiopia Kenya Eritrea Djibouti Somalia Busara works to understand the context of decision-making in new markets, with a strong focus in sub-saharan Africa. Busara operates permanent offices in Kenya, Uganda, and Ethiopia, but has worked on projects with partners across the continent. Permanent Presence Project Presence Angola Namibia Zambia Botswan a Malawi Zimbabwe Mozambiqu e Madagascar Swazilan d Lesoth o South Africa 3

5 ABOUT THE PROJECT: THREE OBJECTIVES 1 Apply behavioural insights and test interventions to better understand what drives uptake and usage for specific mobile money use cases. 2 Examine differences in behaviors relating to mobile money use cases by customer segment, including demographics, geography, and gender. 3 Identify optimal design elements and relevant target audiences to drive rapid scalability. 4

6 ABOUT THE PROJECT: THREE PHASES PHASE 1 In collaboration with Airtel, determined saving as the mobile money use case of choice. 5

7 ABOUT THE PROJECT: THREE PHASES PHASE 1 PHASE 2 In collaboration with Airtel, determined saving as the mobile money use case of choice. Conducted research across the country to understand trends and influencers in Tanzanian saving behaviors. 6

8 ABOUT THE PROJECT: THREE PHASES PHASE 1 PHASE 2 PHASE 3 In collaboration with Airtel, determined saving as the mobile money use case of choice. Conducted research across the country to understand trends and influencers in Tanzanian saving behaviors. Ran two experiments on a digital saving platform to understand how interventions influence saving behaviours. 7

9 RECAP: TRENDS AND INFLUENCERS IN TANZANIAN SAVING BEHAVIORS EXPERIMENTAL RESULTS: TESTING SMS NUDGES FOR MOBILE SAVING EXPERIMENTAL RESULTS: MEASURING PREFERENCES FOR PRODUCT FEATURES NEXT STEPS 8

10 HOW DO TANZANIANS SAVE? A RECAP OF FINDINGS FROM EXPLORATORY RESEARCH 9

11 THE APPROACH QUALITATIVE INTERVIEWS TIMELINE: August December, SAMPLE: ~150 participants. LOCATIONS: Dar es Salaam, Arusha, Dodoma, Lindi. FOCUS: Perceptions of saving on mobile accounts, behavioral insights in to mobile saving, triggers and barriers to mobile money use. METHODS: Focus group discussions, individual interviews, behavioral narratives. 10

12 THE APPROACH QUANTITATIVE SURVEYS TIMELINE: August October, SAMPLE: ~500 participants. LOCATIONS: Dar es Salaam, Arusha, Dodoma. FOCUS: Summary statistics on: (i) saving habits, (ii) saving preferences, (iii) willingness to take risks, (iv) patience, (v) financial literacy. 11

13 GLOBAL THEMES Saving to Mitigate Risk Getting Trustworthy Information Conceptuali -zing Risk Myths and Misconceptio n's Trends Locus of Control Trust and Risk Aspirational thinking Women s Financial Status Agency Social Influence Social Norms Household Dynamics Mental Accounting Social networks Goal based saving Saving for emergencies 12

14 GLOBAL THEMES Saving to Mitigate Risk Locus of Control Getting Trustworthy Information Conceptuali -zing Risk Trust and Trust and Risk Myths and Misconceptio n's Aspirational thinking Trends Women s Financial Status Agency and Control Agency Social Influence Social Influences Social Norms Household Dynamics Mental Accounting Mental Accounting Goal based saving Social networks Saving for emergencies 13

15 PRIORITY THEMES Trust and Risk Agency Social Influences Mental Accounting

16 MENTAL ACCOUNTING Peoples preferred savings medium are associated with their reason for saving. Individuals typically use different channels to save depending on whether it is for a specific goal or for keeping excess money for emergencies. Relative Popularity for Saving Reason by Savings Medium REASONS TO SAVE BY PREFERRED SAVINGS MEDIUM 50% 40% 30% 20% 10% 0% Bank Mobile Money Kibubu Savings Medium Start/Improve Business Education for Children Medical Emergency 15

17 AGENCY An individual s perceptions of the agency and control they have over events seem to be associated with their preferred medium for saving. Perceptions of control vary by gender. % of Respondents per Preferred Savings Medium Internal Locus of Control By Gender 60% 50% 40% 30% 20% 10% 0% 70% 60% 50% 40% 30% 20% 10% 0% PERCEPTION OF CONTROL BY PREFERRED SAVINGS MEDIUM Bank Mobile Money Kibubu Savings Medium Low Mid High INTERNAL LOCUS OF CONTROL BY GENDER Low Mid High Locus of Control Male Female Busara

18 TRUST AND RISK [Saving in the bank is safest] because when someone takes the phone and the password is known then the money can be stolen." Male respondent, Dodoma environs There is no saving medium that is universally considered the most trustworthy. Individuals express trust in whichever saving medium they use most actively. [Mobile money is] one of the best ways to save money and it is a safe method to keep money. In case you lose your phone...you can get your money after renewing the line. Male respondent, Arusha environs [The safest money is that which is] saved under the mattresses, when sleep you [are] sure that your money is under you but MPESA you never know may be someone has noted your passwords. Male respondent, Arusha environs Busara

19 SOCIAL INFLUENCES Social norms, networks and trends seems to influence people s savings behaviors and the channels they use to save. Rich people or people with high income [save on mobile money platforms]. Poor people save under mattresses. Male respondent, Arusha environs In Dodoma and Arusha, mobile money (as primary savings channel) is largely associated with people with little or no formal education, whereas saving through formal banking channels is associated with higher education. Saving is for rich people, since I do not have money I cannot save. Male respondent, Dar es salaam 18

20 TWO EXPERIMENTS 1. TESTING SMS NUDGES FOR MOBILE SAVING 550 participants. Measured the impact of various SMS reminders on mobile saving rates. Applications to SMS messaging approaches for encouraging customer engagement. 2. MEASURING PREFERENCES FOR PRODUCT FEATURES 200 participants. Measured the impact of varying product features on customer preferences for products. Applications to marketing strategies for mobile saving products.? vs. 19

21 TWO EXPERIMENTS: STUDY PARTICIPANT PROFILE GENDER 60% 50% 40% 30% 20% 10% AGE Male Female Male: 47% Female: 53% 0%

22 TWO EXPERIMENTS: STUDY PARTICIPANT PROFILE 60% 50% 40% EDUCATION 35% 30% 25% FREQUENCY OF MOBILE MONEY USAGE 30% 20% 10% 0% Primary and Below Secondary College and Above 20% 15% 10% 5% 0% Multiple times a day Once a day 2-6 days per week Once in a week Once in a month Once in 3 months 21

23 TWO EXPERIMENTS: LOCATIONS OF RECRUITMENT 22

24 HOW TO ENCOURAGE MOBILE SAVING? TESTING SMS NUDGES ON SAVING BEHAVIOURS 23

25 EXPERIMENT 1 APPROACH QUESTION:! How does varying SMS-based communication influence mobile saving behaviors?! 24

26 EXPERIMENT 1 APPROACH 1. OVERVIEW: Using their mobile phones, Participants interact with an SMS message system over 14 days. 25

27 EXPERIMENT 1 APPROACH 2. OVERVIEW: Each day participant are required to send an SMS message at a particular time in order to earn income. 26

28 EXPERIMENT 1 APPROACH 3. OVERVIEW: Once they earn income, the system asks how much they would like to deposit in to a digital saving account that would earn them interest.? 27

29 EXPERIMENT 1 APPROACH 4. OVERVIEW: Participants are randomly allocated to five groups. Four of the groups are sent reminder SMSs at 4 points throughout the 14 day period reminding them to save. One group (pure control) does not. SMS SMS SMS SMS 28

30 EXPERIMENT 1 APPROACH 5. OVERVIEW: We measured their saving behaviours over the 14-day period.????? 29

31 EXPERIMENT 1 INTERVENTION DESIGN PURE CONTROL GROUP: NO SMS MESSAGES 4 INTERVENTION GROUPS: VARIATIONS OF SMS MESSAGES 30

32 EXPERIMENT 1 INTERVENTION DESIGN Trust and Risk Agency Social Influence Social Influences Mental Accounting The interventions included a control SMS, and three variations of the SMS that were inspired by behavioral themes found during our exploratory data collection exercise. 31

33 EXPERIMENT 1 INTERVENTION DESIGN: INTERVENTION 1 Agency Trust Hi. and Remember Risk to save today with your Busara account! Mental Accounting Social Influence Social Influences Control SMS 32

34 EXPERIMENT 1 INTERVENTION DESIGN: INTERVENTION 2 Agency Trust and Risk Mental Accounting Hi.!Save!more! and!have!greater! control!over! your!money!and! your!life!! Social Remember!to! Influences Social Influence save!today!with! your!busara! account!! Agency SMS 33

35 EXPERIMENT 1 INTERVENTION DESIGN: INTERVENTION 3 Hi.!Remember!to! save!for!{!}!!today! with!your!busara! {!}!account!!every! shilling!saved! gets!you!closer!to! your!goal!!! Agency Trust and Risk Mental Accounting Social Influence Social Influences Mental Accounting SMS 34

36 EXPERIMENT 1 INTERVENTION DESIGN: INTERVENTION 4 Hi.!The! successful!savers! in!your!group! have!a!savings! balance!of!%!! Remember!to! save!today!with! your!busara! account!! Agency Trust and Risk Mental Accounting Social Influence Social Influences Social Influences SMS 35

37 WHICH INTERVENTION WAS THE MOST EFFECTIVE? 36

38 RESULTS: 1. Participants nudged with SMS messages emphasizing saving balances of strong savers within their group saved at a higher rate compared to the control. 2. Participants nudged with SMS messages emphasizing a sense of agency saved at a lower rate compared to the control. 37

39 EXPERIMENT 1 RESULTS: DATA AND VISUALIZATION Hi. The successful savers in your group have a savings balance of %! Remember to save today with your Busara account! VS. Hi. Save more and have greater control over your money and your life! Remember to save today with your Busara account! 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% % AVERAGE AVAILABLE MONEY SAVED PER DAY 10.0% SOCIAL INFLUENCE MESSAGE AGENCY MESSAGE 0.0% Agency Control SMS Pure Control Mental Accounting Social Influence 38

40 EXPERIMENT 1 RESULTS: DATA AND VISUALIZATION Hi. The successful savers in your group have a savings balance of %! Remember to save today with your Busara account! VS. Hi. Save more and have greater control over your money and your life! Remember to save today with your Busara account! 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% % AVERAGE AVAILABLE MONEY SAVED PER DAY 10.0% SOCIAL INFLUENCE MESSAGE AGENCY MESSAGE 0.0% Agency Control SMS Pure Control Mental Accounting Social Influence 39

41 EXPERIMENT 1 RESULTS: DATA AND VISUALIZATION Hi. The successful savers in your group have a savings balance of %! Remember to save today with your Busara account! VS. Hi. Save more and have greater control over your money and your life! Remember to save today with your Busara account! 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% % AVERAGE AVAILABLE MONEY SAVED PER DAY 10.0% SOCIAL INFLUENCE MESSAGE AGENCY MESSAGE 0.0% Agency Control SMS Pure Control Mental Accounting Social Influence 40

42 EXPERIMENT 1 RESULTS: DATA AND VISUALIZATION If a pair of individuals had 4000 TSh of excess cash a day, the individual who received the Social Influences intervention would save 12,000 TSh more per month than the individual who didn t receive an intervention SMS. 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% % AVERAGE AVAILABLE MONEY SAVED PER DAY 0.0% Agency Control SMS Pure Control Mental Accounting Social Influence 41

43 EXPERIMENT 1 RESULTS: IMPLICATIONS Comparing customers savings balance with others in a social group may increase mobile saving. The wrong message can be worse than no message. Always test with a small sample before scaling up. 42

44 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS Comparing customers savings balance with others in a social group may increase mobile saving. STEP 1! STEP 2! STEP 3! 43

45 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS Comparing customers savings balance with others in a social group may increase mobile saving. STEP 1! STEP 2! STEP 3! Generate customer profiles using transaction and other administrative data. 44

46 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS Comparing customers savings balance with others in a social group may increase mobile saving. STEP 1! STEP 2! STEP 3! Craft messaging that draws on typical behaviors exhibited by that customer profile. 45

47 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS Comparing customers savings balance with others in a social group may increase mobile saving. STEP 1! STEP 2! STEP 3! Roll out SMS communication at key points, i.e., one week after first deposit is made / before customer has made first saving transaction / if saving balance is at a relatively low point. 46

48 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS: TWO APPROACHES Hi! Did you know that other Airtel Money users like you are saving an average of x TSh a week? Don t lag behind the group. Remember to save. SOCIAL INFLUENCE MESSAGE 47

49 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS: TWO APPROACHES Identify existing groups amongst customers. 1. Use transaction data to construct 2. groups amongst customers. 48

50 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS: IDENTIFY EXISTING GROUPS Hi! Did you know that other Airtel Money users in your district save an average of x TSh a week? Don t lag behind the group. Remember to save. Hi! Did you know that other Airtel Money users who use your agent save an average of x TSh a week? Don t lag behind the group. Remember to save. LOCATION-BASED GROUPING: Rural Customers Urban Customers 49

51 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS: IDENTIFY EXISTING GROUPS Hi! Did you know that other Airtel Money users who registered at the same time as you save an average of x TSh a week? Don t lag behind the group. TIMING-BASED GROUPING: Timing of opening account 50

52 EXPERIMENT 1 LEVERAGING SOCIAL GROUPS: USE DATA TO CONSTRUCT GROUPS Hi! Did you know that other Top Savers like you save an average of x TSh a week? Don t lag behind the group. Remember to save. Hi! Did you know that other Premium Users like you save an average of x TSh a week? Don t lag behind the group. Remember to save. Use transaction data to construct group identities and encourage a sense of belonging. Top Savers : >10,000TSh maintained for 2 weeks Premium Users : >2 transactions a week 51

53 BRAINSTORM What social patterns do we have access to? What do we think would be part of customer's identity? Source: Icon by Bernice Beltran, The Noun Project 52

54 HOW TO ENCOURAGE MOBILE SAVING? MEASURING PREFERENCES FOR SAVINGS PRODUCT FEATURES 53

55 EXPERIMENT 2 MOTIVATION Trust and Risk Agency Social Influence Social Influences Mental Accounting 54

56 EXPERIMENT 2 MOTIVATION Trust and Risk Agency Social Influence Social Influences Mental Accounting During our exploratory data collection, we found that there is no saving medium that is universally considered the most trustworthy. Individuals express trust in whichever saving medium they use most actively. 55

57 EXPERIMENT 2 MOTIVATION Trust and Risk Agency Social Influence Social Influences Mental Accounting This suggests that choice of saving product may not always reflect true preference for the product, but rather the information most readily available and accessible about the product. 56

58 EXPERIMENT 2 APPROACH vs. vs. QUESTIONS:! 1. How do customers value common features of saving products? 2. Are customers more likely to prefer a wrong savings product when presented with a complex choice?! 57

59 EXPERIMENT 2 APPROACH vs. vs. 1. OVERVIEW: Participants are presented with a list of eight features of savings products: Security Interest Accessibility Check Balance Privacy Fees Convenience Language 58

60 EXPERIMENT 2 APPROACH vs. vs OVERVIEW: They are asked to rank these product features against each other and provide a weighting for each: Security 2. Interest 5. Accessibility 3. Check Balance 7. Privacy 8. Fees 4. Convenience 6. Language 59

61 EXPERIMENT 2 APPROACH vs. vs. 3. OVERVIEW: We used these weightings to create variations of savings products for each participant vs

62 EXPERIMENT 2 APPROACH vs. vs. 4. OVERVIEW: We varied the complexity of the choices to see whether the selection best matched their preferences vs

63 RESULTS 1. Participants valued the feature of Privacy the most. They valued Security the least. 2. Participants were able to understand product features and place value on them. Even so, they generally struggled to make the choice that matched their preferences. 3. The more features participants had to compare, the more likely they made an active choice between product options. However, they were also more likely to make a sub-optimal choice. 62

64 EXPERIMENT 2 RESULT 1: DATA AND VISUALIZATION RESULT: Participants valued the feature of Privacy the most. They valued Security the least. 16% 14% 12% 10% 8% 6% 4% 2% 0% AVERAGE % OF POINTS ALLOCATED 63

65 EXPERIMENT 2 RESULT 1: DATA AND VISUALIZATION PRIVACY: Only you and Busara will know about the money in this account. vs. Selected family and friends will be informed about the amount of money in this account. SECURITY: 3 out of every 100 people will lose half of their money. 16% 14% 12% 10% 8% 6% 4% 2% 0% AVERAGE % OF POINTS ALLOCATED vs. 2 out of every 100 people will lose half of their money. 64

66 EXPERIMENT 2 RESULT 2&3: DATA AND VISUALIZATION RESULTS: Participants were able to understand product features and place value on them. Even so, they generally struggled to make the correct choice for themselves. 40% 30% 20% 10% 0% RANDOM CHOICE 2 Features 5 Features 8 Features The more features participants had to compare, the more likely they made an active choice between product options. However, they were also more likely to have made a sub-optimal choice. 40% 35% 30% SUBOPTIMAL CHOICE 2 Features 5 Features 8 Features 65

67 EXPERIMENT 2 RESULTS: IMPLICATIONS Help customers make the right choice by highlighting specific differences between your products and rival products.! Emphasizing differences between a higher number of features may engage customers, but may not support their ability to choose a product that reflects their preferences.! 66

68 BRAINSTORM Drawing on existing Airtel Money marketing strategies, how could these two findings apply? ReBphrase!this! Source: Icon by Bernice Beltran, The Noun Project 67

69 NEXT STEPS 68

70 NEXT STEPS Source: Icon by John Winowiecki, The Noun Project 69

71 ? 70 QUESTIONS

72 THANK YOU 71

73 APPENDIX: FURTHER DETAIL ON EXPERIMENT 2 72

74 FULL DESCRIPTION OF EXPERIMENT 2 1. Participants are presented with a list of eight features of saving products: vs. vs. Security Interest Accessibility Check Balance Privacy Fees Convenience Language 73

75 FULL DESCRIPTION OF EXPERIMENT 2 2. They are asked to make a preference between two options for each of the product features: vs. vs. Security + vs. -? Accessibility + vs. -? Privacy + vs. -? Convenience + vs. -? 74

76 FULL DESCRIPTION OF EXPERIMENT 2 3. They are asked to rank preferred versions of the product features against each other: vs. vs. 1. Security 2. Interest 5. Accessibility 3. Check Balance 7. Privacy 8. Fees 4. Convenience 6. Language 75

77 FULL DESCRIPTION OF EXPERIMENT 2 vs. vs. 4. They are presented with three pairs of saving products, where each product is described using a combination of the product features. They are asked to choose which they would prefer for each pair. If they choose not to make a decision, they have the option to skip x vs

78 FULL DESCRIPTION OF EXPERIMENT 2 vs. vs. 5. The pairs of saving products are described in such a way that it is relatively easy to make a choice for one pair, relatively difficult for the second pair, and somewhere in-between for the third pair x vs

79 FULL DESCRIPTION OF EXPERIMENT 2 vs. vs. 6. Level of difficulty is determined by how many of the product features the participant is required to consider whilst making their decision x vs

80 FULL DESCRIPTION OF EXPERIMENT 2 vs. vs. 7. The easiest product pairing are described almost identically, with variations in description between only two of the product features. EASY vs

81 FULL DESCRIPTION OF EXPERIMENT 2 8. The most difficult product pairing are described entirely discrepantly. vs. vs. DIFFICULT vs

82 FULL DESCRIPTION OF EXPERIMENT 2 vs. vs. 9. Given their initial valuations of the product features, we measured the rate at which participants made the wrong choice between the options as they had to consider more and more features ? vs

83 DESCRIPTIONS OF PRODUCT FEATURES USED IN EXPERIMENT 2 Dominant Dominated Security Accesibility Privacy Convenience Interest Check Balance Fees Language 3 people out of every 100 people that save in this device will lose half of their money. 2 people out of every 100 people that save in this device will lose their money. There is a period of seven days in which you cannot touch your money, but once the waiting period is over you can withdraw the money at any time between 8 am to 5 pm Monday to Friday. Nobody but the participant and Busara will be aware that you earned money which is held in one of our devices. Selected family and There is a period of friends will be called seven days in which you by Busara staff and cannot touch your notified that the money, but once the participant has waiting period is over partaken in an you can withdraw the experiemnt, where money at any time she earned TZS X, between 8 am to 12 pm which she has stored Monday to Friday. in a device with us. After the waiting period is over we send the money to your mobile money account, or any other mobile money account that you request to send us. After the waiting period is over we canonly send the money to your mobile money account. 4 people out of every 5 will get paid 4% daily until the they decide to withdraw the money from the savings device. The participant will get paid 2% daily until the they decide to withdraw the money from the savings device. Participants can check their balance once a day between 8 am and 5 pm during the time frame that we keep the money. Participants can check their balance once a day between 8 am and 12 pm during the time frame that we keep the money. There is a 2% fee that will be charged when you withdraw your money. There is a 4% fee that will be charged when you withdraw your money. All the messages and conversations revolving around this savings device should be in Swahili. All the messages and conversations revolving around this savings device should be in English. 82