Tweaking a digital finance agent network to sustainably reach last-mile customers in Fiji

January 11, 2020

© UNCDF 2019 John Rae

by Naomi de Groot and Bram Peters

In ensuring access and usage to financial services, unlocking an effective last-mile delivery channel is crucial. In order to do so, financial service providers all over the world have been designing, testing and expanding delivery through agent networks. This typically consists of a network of small retail merchants. Most often these merchants sell items such as food, drinks and basic household products and in addition to these products they provide services on behalf of mobile network operators, banks and other financial service providers.

Vodafone Fiji, the second largest mobile network operator in the country, has in the last years, with support from the Pacific Financial Inclusion Programme redesigned its agent network in order to improve the financial performance and thus the value proposition for these agents, as well as the services they deliver. Insights gathered during this revamping process, are shared in this case study. This publication examines the Vodafone Fiji agent network in rural areas, their so-called Mobile Village Agents, by looking at key components of an agent network as identified by GSMA in their publication on the future of mobile money agent networks.

While these Vodafone insights were gathered by us, CGAP published in November last year a technical guide for Agent Networks at the Last Mile which suggests six principles for inclusive rural agent networks.

Using the insights gathered and published in our case study we can assess how Vodafone Fiji’s Mobile Village Agent network stacks against the six principles as suggested in CGAP’s technical guide:

1. Enable rural agents to generate more revenue streams

According to CGAP, “Rural agents have only a few customers in their service area, therefore these agents tend to make few transactions. New agent models that aggregate different types of transactions, from financial and non-financial services, at the agent level create more revenue streams per customer and provide a stronger incentive for people in rural areas to become agents.”

This is in line with what Vodafone Fiji has been doing and continues to do as it increased the number of use cases to their suite of services beyond basic cash-in cash-out services. During the review of the product mix on their M-PAiSA platform Vodafone’s Innovation Lab determined that the availability of utility payments on their M-PAiSA product added real value to remotely located customers, as besides using a bank transfer there are only very few physical points to pay for water and electricity.

An additional use case relevant to mention in the country context are international remittances. In a country where many people regularly receive remittances from family and friends living overseas this is a service that increases the value proposition for customers as well as agents.

2. Make agents more accessible to rural customers

According to CGAP, “When rural, low-income customers personally know and live close to their agents, they are more likely to sign up for and use DFS. How close do agents need to be to make a difference? The answer depends on many factors, including population density, existing infrastructure, and the type of transactions made by rural clients.”

Although not a key focus point during the pilot by Vodafone, this principle has been an important contributor in the revamping of its rural agent network, starting with the adjusted business case for rural agents. While customers still combine visits to larger towns with “doing their banking”, the selection of the village agent as someone that is trusted in his or her community ensures that clients visit the agent more regularly.

3. Expand the range of people who can serve as agents

According to CGAP, “Most countries require agents to be a registered business and have a physical address, but few businesses in rural areas meet these requirements. These types of requirements can limit the reach of DFS. Regulators, policy makers, and DFS providers should support the recruitment of new types of agents in rural areas, while they ensure that risks are adequately managed.”

While regulation has not been much of a constraint, the improvements in the selection process of the rural agents is considered a critical element of the success of the agent network model in Fiji.

Prior to the agent network revamp, the selection and onboarding of new agents took place in a very ad hoc and informal way. Personal connections and word of mouth determined which merchants were recruited as agents. In this process no standardized selection criteria were applied.

With information from the Fiji Bureau of Statistics and the Reserve Bank of Fiji, villages and settlements in Fiji were identified and listed according to their population size. Larger villages were prioritized as areas where new agents needed to be recruited.

Next, canteen shops and larger merchant shops were scored using three to four other criteria, depending on the type of merchant. Only potential agents with a sufficient score were selected. This approach ensures selection of agents on objective criteria, rather than an informal way. Once an agent is selected, they can be activated within a five-to-seven-day period, during which Vodafone will register the agent at the Fiji Bureau of Statistics, deliver the necessary business tools and provide the new agent with branding materials.

4. Identify and manage consumer protection and other risks posed by rural agents without stopping innovation

According to CGAP, “Rural customers can sometimes be more vulnerable to agent abuse than their urban counterparts, given their lower access to information and lower literacy levels. Customer protection regulations should first identify risks that are unique to new rural agent models and then respond in ways that do not hamper innovation.

Trust of customers in the agent is a key element of the entire system and it is therefore in the agent’s interest, as well as the mobile network operator that potential risks are minimized. Through applying strict agent selection criteria, combined with training and close monitoring Vodafone ensures rural agents follow their guidelines to ensure compliance with consumer protection principles beyond those imposed by regulation.

Furthermore, Vodafone Fiji is a very active member of the Reserve Bank of Fiji’s National Financial Inclusion Taskforce and has shown to be a strong advocate of consumer empowerment: Consumer education is also crucial and agents are very valuable in advising and guiding the consumer on the usage of mobile money. Agents can act as ambassadors and educators for consumers. The NFIT Secretariat in close collaboration with Vodafone Fiji Limited (VFL) will train the agents to drive consumer education at the village level.”

5. Develop a data-driven strategy to close the gender gap in access and usage of agents

According to CGAP, “The variance in the global gender gap in women’s access to financial services suggests that women face different constraints in different countries. To create networks that are more inclusive of women, it is important first to understand the experiences of women and men as customers and agents.”

As mentioned by CGAP on page 12 of their technical guide, “global emerging lessons suggest that to reduce the gender gap, it is important to first develop a strategy to collect sex-disaggregated data on consumer and agent transaction and then to use it to identify specific gender constraints”.

Vodafone already collects gender disaggregated data from the mobile village agents, and uses data analytics to gather insights on liquidity management and to improve the general performance of their agents. And whilst in the past months, the focus has been on revamping the rural agent network, efforts can now be redirected to closing the gender gap. A focus that will result in an improved experience for Vodafone’s women agents as well as their customers.

6. Expand public and private partnerships that share agent networks

According to CGAP, “Building rural networks at the scale necessary to add value for customers is too big a job for any one provider or government entity. Public and private sectors will need to leverage each other’s comparative advantages and build open networks that function as a shared platform.”

This particular principle is where there is room for improvement in the Fiji country context, to build more open networks and shared platforms. And this is also where the UNCDF Pacific Financial Inclusion Programme comes in to play in a role as a “broker”, mediating between government stakeholders and private sector players to promote improved access and increase usage of services in those networks.

PFIP continues to engage with stakeholders across the Pacific to ensure the right regulation and policies are in place, support innovative solutions, whilst safeguarding customers with the required skills to understand these services and products. A recent example of one such initiative is the support it provided to the successful collaboration between the Central Bank, the Provident Fund and the two mobile network operators in Solomon Islands to launch youSave LoMobile, allowing Solomon Islanders working in the informal sector to put money aside for their pension using airtime credit on their mobile phone.