The Early Adopters Are Not Who You Think They Are

Early Adopters have been referred to as the rare breed of people who have the insight to match emerging technology to a strategic opportunity. What does your mental picture of this visionary person look like? I doubt it is a single mother earning under $30k per year with no college education. Yet that is what the data tells us about early adopters of digital financial services in the U.S. The contrast is stark when you think about the profile of early adopters of internet technology; they are what you would expect: men, especially young, white, educated, and fairly affluent. One high-income early-adopter talked about how information and influence are his driving factors in gaining the newest technology. They want a breakthrough and are the least price sensitive, writes Geoffrey Moore in his book Crossing the Chasm. This is not true of low-income early adopters; so what is driving them to make the jump to digital financial services? They are motivated by their need for a technology that allows them to optimize two things they don’t tend to have a lot of: time and access. The convenience of alternative online  banking services eliminates the need to commute to a physical bank just to execute simple financial transactions, as well as the high fees charged by retail banks. But the resources that exist to guide them through their financial lives are disconnected from their day-to-day problems.

Innovative banking services–whether reloadable prepaid accounts or new mobile banking apps–are becoming available to the U.S. market, and it is surprising that the demographic among the first to adopt alternative online banking services has been African American mothers with no college and incomes below $30k. And Hispanic consumers are adopting smartphones at a higher rate than any other demographic group. A report in 2007 found that cell phone users are more likely to be found in groups that have generally lagged in internet adoption, such as senior citizens, blacks, and Latinos. A study in 2013 showed that 74% of African American cell phone owners are also cell internet users, as are 68% of Hispanic cell owners. In fact, 45% of cell internet users living in households with an annual income of less than $30k mostly use their phone to go online–rather than some other device such as a desktop or laptop computer, compared with only 27% of those living in households with an annual income of $75k or more. In fact, Latinos rely significantly more on their smartphones for digital access: they are more likely to bank online, check a balance, and download an app than any other demographic group. “Hispanic consumers are not only the fastest-growing demographic in the U.S., they’re also trendsetters in digital, leading the growth in device ownership and online usage” (Nielsen Digital Consumer Report 2014). But Hispanic consumers are also particularly likely to be underserved by the financial services industry. “Adoption of electronic banking services are typically motivated by goal achievement or rewards” (International Journal of Bank Marketing); and the rewards they are seeking are solutions to very tangible problems. However, the existing mobile banking apps with feature-rich designs can overwhelm users with information, demand for prioritization, and a focus on cash flows and scarcity. Services should be user-friendly–not just for those who have had previous experience with electronic systems. There is a great need for clear, timely, present-centered guidance in moving these users through their financial lives.

While low-income early adopters are visionaries in that they are opening mobile bank accounts, there are very high dormancy rates of these accounts. A study done by the International Review of Social Sciences on the barriers and adoption triggers of mobile banking services revealed that the use of these services is much lower than expected in both developed and developing countries. Why is mobile–such a simple and popular device–still underused for accessing banking services? The reasons are myriad. But there is an overall consumer perception that the use of these services is expensive, risky, and relatively complex to use, and relative advantage is questionable. Researchers found that adoption and usage of mobile banking will largely depend upon customers’ perception of its ease of use and usefulness. There is a need for a bridge between financial institutions and their customers to dispel the fears and false perceptions customers often have about digital financial services. Through short and simple messages sent directly to your phone, Juntos builds trust in the ease of use and usefulness of mobile banking. We offer a solution to not only help people feel confident to adopt mobile banking services, but also empowered to continue to use their accounts. Juntos is intimately connected to the day-to-day financial burdens facing our users and the challenge of using unfamiliar technologies and new financial products to ease those burdens.

The Technology Trade-Off

Mobile tech boosts financial access but limits engagement. Can it also help build banking relationships?

The first step of financial inclusion is basic access. And with mobile payments and mobile money opening the world of formal financial services to billions of lower-income people, this access is increasingly a reality. But this is not where financial inclusion ends.

This newly banked population is making the huge leap from paper money to digital money, and from informal systems for managing their finances to formal accounts. In the process, they are adopting new technologies and mastering new procedures – all at once. These transitions are psychologically and emotionally complex, and the statistics show a pervasive adoption and engagement problem. As of June 2012, only 20 percent of registered mobile money users were active in East Africa, with only 9 percent in West Africa.

Bank tellers may seem old-fashioned, but can mobile services replicate their human touch? Photo credit: German Federal Archives

The first step of financial inclusion may have been achieved – access to financial services is at an all-time high. But true financial inclusion will require major changes in financial habits by consumers. The newly banked have a particular need for post-account opening support to guide the process on how to use the full range of their new financial services.

Account dormancy rates for the newly banked range from 60-90 percent, depending on the market. To take just one example, even though India’s widely heralded Jan Dhan Yojana financial inclusion program has opened over 100 million new bank accounts, a large majority of those accounts have zero balance. The reasons for dormancy are varied and complex, and have not been easily solved by one-way marketing campaigns designed to educate and motivate. This unbanked and newly banked emerging middle class represents such a significant portion of any developing market’s customer base that finding a way to deeply engage with them is critical to success. Banks are trying to leverage technology to drive down costs, allowing customers to save time by making transactions directly from the comfort of their cars, their living rooms or from the palms of their hands. However, the bank no longer has a relationship with the customer, and accounts remain unused.

So what can be done? Financial services providers are taking a number of different approaches. For instance, a mobile money deployment in East Africa had success creating an outbound call center to connect with customers directly over the phone, to discuss their onboarding questions and concerns, build trust and drive usage. This worked, but at the incredible cost of hiring, training and retaining good call center employees. Some voices in the industry insist that we are at a crossroads in financial inclusion: Is the future of financial services highly scalable, technology-driven and distant? Or is it highly relational, high-touch and high-cost? It appears as though there’s a trade-off to be made: services can be cost-effective and scalable, or they can be trust-building and relational, driving deep engagement.

But by reframing the issues, we come to a new question that avoids this tradeoff: How can we harness technology to build relationships with customers in an affordable and effective way?

At Juntos Finanzas, we believe that customers can be brought into the financial system by engaging with them directly in new ways. To achieve this, we’ve developed a turnkey, text message-based platform that deepens bank and MFI clients’ engagement, and increases their usage of accounts. Through this platform, we have succeeded in conducting mass-customized, automated, two-way SMS conversations with a financial services provider’s new customers. These conversations build trust and relationships, ease issues related to onboarding or complicated technology, and solve customer service questions. The automated SMS platform makes this solution both cost effective and scalable. Juntos conversations are formulated through a user-centric iterative design process, starting with qualitative deep-dive, ethnographic research. We develop conversations that are guided by the user’s interests, leading to unexpected insights that short-answer survey questions would not produce. The engagement generated by these conversations has been impressive: In a partnership in Colombia, Juntos users had a 50 percent increase in average account balances compared to the control group, and the Juntos group had a 33 percent higher active client rate compared to the control.

Our own experience and research make us sure that the financial institutions that will consistently win in this digital age will be those that manage to leverage technology – not just to drive down costs, but also to develop deep and meaningful relationships with their customers. Through these relationships, customers feel supported in their financial lives, develop deep loyalty to their providers and increase engagement with their valuable financial services.

 

This post originally appears here on Next Billion.

 

Co-written by Katie Nienow and Rebecca Wise

 

The Power of Short SMS

Constraints have the ability to “make us more than we were, rather than less than we could be.” A Beautiful Constraint , the new book by Mark Barden and Adam Morgan, calls our attention to this truth. Larry Page, one of Google’s founders, created the search engine’s home page with such simplicity because that was the extent of his coding abilities. However, that was what set Google apart from its cluttered competitors. They harnessed the power of their constraints and benefitted from it.

At Juntos, we took the limitations of a text message—160 characters—and turned it into an opportunity: a powerful personal financial tool. But based on further user research, we learned that even a 160 character message was too long. We watched a video of one of our users reading aloud these first messages and learned that it took them over 20 seconds to read aloud a single message. This feedback helped recenter us around the needs of our users. We then had the challenge of shortening our messages even further. However, shorter proved to be more effective (The Challenge of Simplicity). Accessible on any mobile phone via SMS, our products help families increase their savings and feel financial confidence and control. We believe that everyone should have the opportunity to reap the benefits that formal financial services offer, not just the wealthy. 89 percent of the developing world has an active SIM card, which makes SMS a reliable and effective delivery platform to mobile phone users all over the world. By working through a delivery channel that is accessible on any phone in the world — SMS, and recentering our design around what users need — shorter messages, we have developed a product with incredible results empowering users to change their financial habits. Constraints that at first appear limiting to product development have forced us to solutions that instead make us “more than we were.”

 

How A Text Message Can Help You Feel Different About Your Money #SpotlightOnChange

A few months ago, American Express sponsored a documentary called Spent: Looking for Change, in order to help improve financial inclusion in the U.S. The movie has sparked a lot of encouraging dialogue around this issue. American Express also created short films in their Spotlight on Change series about companies involved in innovative solutions for financial inclusion. We are thrilled to be part of this series, and you can watch our video below.

People want to create a connection, and Juntos Finanzas helps consumers do that. Accessible on any mobile phone via SMS, Juntos works with families to increase their savings and financial confidence.

User-experience Design: The Link Between Design and Engineering

This is a guest post written by Cristina Gorrino, who, as a user-experience designer, serves as the link between our design and engineering teams.

Things are always moving forward at Juntos. From our earliest attempts at creating our messages, the focus has been on iterative design based on feedback from our users . Although this philosophy extends across all parts of the company, the core remains with the development of our products. For us, this means a deep connection and collaboration between engineering and design.

On a weekly basis our designers set the course, detailing which new SMS experiences we want to test, and which existing ones need to be re-designed or removed. Their vision of how users will receive and interact with our text messages then gets queued up, ready to be integrated with our software.

In most cases, the new experience is scheduled to go live within a week. By the time it goes live, the design team will have the next iteration ready to be queued up and integrated. These quick iterations fed by the data we collect from our users are essential for finding the best way to talk with our users and to create content that engages them with information they can truly use.

To maintain agility in creating these experiences we’ve designed a process that does not require an enormous commitment of resources from our software engineers. Instead, they have built a highly flexible and configurable framework that can accommodate any design. My work as a user experience (UX) engineer consists of translating each design into this framework, and using the available building blocks to bring the designer’s vision to life.

The addition of an extra step in between design and engineering benefits both teams. The designers are free to create complex experiences and to run frequent tests without having to wait a long time for a finished product. And the software engineers are able to focus on keeping the framework working well and to develop new capabilities. If the data tells us that a set of messages doesn’t work, then we can remove them without feeling like resources were misspent.

Working within a flexible framework to continuously improve our products makes communication and connection between the teams essential. The point where a design reaches configuration is where all the “what if” questions get answered.  All the paths that the users can take through our messages get defined here, which often means several rounds of questions and comments back and forth between the UX engineer and the designer.

The idea is to create a product that is easy for the user to have a conversation with, so that the user’s responses will dynamically shape the experience they receive. Ultimately, it is the user who shapes our products and shows us the way to design the Juntos experience.  Their part in the feedback process gives us our cue to refine our products and gives us insight into new ideas we can explore.

Technology for Storytelling

Storytelling is as old as language itself, but some people fear that storytelling is dying in the digital age. The argument that storytelling is becoming a lost art usually focuses on how technology has shrunk our attention span to the extent that we are now bored by any soundbite that cannot be summarized in 140 characters.

At Juntos, we believe that storytelling is actually one of the best applications of technology. The power of technology boils down to three things: 1) communication, 2) automation, and 3) scalability. Basically, technology allows you to connect with lots of people, over and over again. Despite being simple, those are really powerful tools when you’re trying to tell a story.

Many financial institutions use technology to try to tell their institution’s story to customers. What sets Juntos apart is that we offer our partner financial institutions technology that creates a space where customers can tell their own stories and feel that their financial institution is listening.

We do this through a messaging platform that takes advantage of technology’s strengths. Juntos facilitates communication with customers by allowing for SMS conversations that are personalized and two-way. Thanks to automation, our partners can do this type of high-touch customer engagement on a large scale for low cost compared to alternatives.

Our use of technology to enable customers to tell their own stories to their financial institutions helps our partners better meet the wants of their customers. A recent survey by the CGI Group indicated that a majority of financial consumers want their financial institutions to “see me as a person,” “provide me with wealth-building advice,” and “tell me what I am spending money on and how I can save.”

By creating a space where customers can tell their stories and feel that their financial institution is listening, Juntos helps our partners’ customers feel seen, feel known as a person. What’s more, because Juntos allows for a two-way conversation, we help our partners to provide personalized advice, even to their low-income customers.

Just as old as storytelling is the human desire to have our stories validated. At Juntos, we use technology to provide our partner financial institutions with a powerful new way to meet this age-old need.

 

Software Engineering, Legos and Car Cannons: An Interview with CTO and Co-Founder Dante Cassanego

As Chief Technical Officer (CTO), Juntos Co-Founder Dante Cassanego feels his job is to be able to tell the rest of the team, “Yes, we can do that”–whatever “that” may be. We asked him to tell us more about why he loves being a software engineer. Our interview captured the commitments to creativity, big thinking and iterative design that are central to Juntos.

“To me, software engineering is like spending all day playing with Legos. I have a set of building blocks that I’m pretty familiar with–I know how they all fit together, I know how they work.

Each time I start a new project, in my mind or on a whiteboard, I draw a picture of the thing that I want to build and then I go about the task of building that thing, that picture that I want.

I particularly like software engineering as a discipline because it’s such a flexible engineering discipline. I’ll draw a metaphor that I use to help describe what I mean by that.

For types of engineering that have to do with the physical world, there are very important fundamental rules that you need to follow. For example, let’s say there’s a river you need to cross. If you were a structural engineer, you would probably build a bridge, starting with the pylons and the structure from the bottom. You need to put some fundamental things in place, you’ve got to check these things and make sure they work.

But in software engineering, there are no rules like that. If you just want to cross the river–forget the bridge–you can start by getting a big car cannon and shooting cars across the river. You can just try things. And then you can later learn what is ‘necessary.’

So software engineering is this really fungible medium that allows you to just try things and then iteratively arrive at stronger and deeper solutions.”

 

The Challenge of Simplicity

The spread of smartphones seems inexorable. Already, a quarter of the world’s population uses smartphones and eMarketer expects that share to increase to a third by 2017. There is a flip-side, however, which is often lost in all the buzz about smartphones. Even three years from now, half of mobile phone users worldwide will still be using simple phones.

Although we have developed a native Android application as part of the FinCapDev competition, our core product still relies on SMS messaging. We designed this core product that can turn any phone in the world into a financial coach because those with basic phones often lead complex financial lives.

When designing messages for this core product we are limited to 160 characters. As we have blogged about before, we employ a user-centric design process that is informed by preliminary user research. Since our process is iterative, however, we seek feedback from users not just at the beginning but throughout our process.

When we were drafting these messages for our initial deployment in Colombia, we tried to maximize each message by making them as close to 160 characters as we could. We wanted to provide our users with as much information as possible that would help them better understand their new mobile bank account.

When we watched a video of one of our users reading aloud these first messages, we were shocked. It took her over 20 seconds to read a single message. She read haltingly, painfully slow.

This feedback helped recenter us around the needs of our users who are often not only new to banking but also relatively new to mobile phones. We realized the truth contained in the quote from Blaise Pascal, “If I had more time, I would have written a shorter letter.” Keeping our messages simple proved to be more of a challenge than maximizing 160 characters. However, simple proved to be effective. Those who received messages from Juntos were much more likely to have active accounts and saw a significant increase in account balances compared to a control group.

 

 

The Cost of Counting the Cost

This is a guest post written by Kent Blake who interned with our engineering team during the summer of 2014.

Congressman Pat Schroeder once said “You can’t wring your hands and roll up your sleeves at the same time.” A 2013 study published in the journal Science indicates that poverty leads to handwringing rather than sleeve rolling.  In the study, participants were divided by household income and asked to consider a hypothetical scenario about how to pay for car repairs while completing various tests of fluid intelligence.

While the rich and poor participants scored almost identically on the intelligence tests when the hypothetical repairs were relatively inexpensive ($150), the poor participants performed significantly worse than their rich counterparts when the repairs required a larger financial sacrifice ($1500).  Simply requiring poor participants to contemplate a difficult hypothetical financial situation caused a drop in their cognitive function equal in magnitude to the effect of being deprived of a full night’s sleep or being a chronic alcoholic.

The takeaway?  The more people worry about their finances, the less cognitive resources they are left with to manage them effectively.

At Juntos, we seek to create tools to reduce handwringing.  By providing the right information in measured doses at the right time, we empower people to spend less time worrying and more time taking action.  From assistance with basic tasks like depositing and withdrawing funds to savings reminders and budgeting tips, our resources enable to people stop wringing their hands and start rolling up their sleeves and working to achieve their financial goals.

User-centric Design for Behavior Change

Juntos provides our partners with a customer engagement platform that, unlike traditional forms of customer support, proactively transforms client behavior and drives engagement at massive scale. We blogged recently about the difficulty of changing behavior, especially financial habits.

Critical to the success of our products in changing financial behavior is our user-centric design process that allows us to understand how our users feel about their money.

Understanding emotions is crucial to changing habits. As Charles Duhigg writes in The Power of Habit, MIT researchers discovered a neurological loop at the core of every habit. This loop is made up of a cue, a routine and a reward. Attempts to change habits will fail if we try to change the routine without understanding the cue for that routine and the reward it produces.

Understanding cues and rewards is especially difficult when they are emotional in nature. To empower our partner’s clients to change their financial habits, we need to understand the emotions that accompany spending and saving money. The “deep-dive” interviews we conduct with potential users as part of our user research process allow us to capture the emotional aspects of users’ financial experiences.

In an interview with a taxi driver in his 30s in Mexico City, we learned that when he was in his taxi he kept his money out of sight until the end of the day. He was afraid that if he counted his money, he would be tempted to spend it on snacks or to go home early. When he was at home, however, he counted the all of his cash savings every day. Feeling his money in his hands motivated him to save more.

The deep-dive method allowed us to understand that the context where he counted his money mattered. In his taxi, he was surrounded by temptations to spend; at home with his family, he was surrounded by reasons to save. Understanding how the same cue can lead to completely different routines and rewards depending on the time of day is critical in reinforcing good habits and quitting bad ones.

We are able to transform the financial behavior of our users without interacting with their money because we understand their emotional cues and rewards. By providing our users with the right information at the right time, we nudge them to deepen their engagement with their accounts and empower them to realize their financial goals.