PFIP uses the financial innovation workstream to support the development of digital financial channels and services
for underbanked mass market customers in the Pacific Island countries. Over the past seven years, PFIP has funded over 20 service providers whose implementations have reached over 1.6 million Pacific Islanders with improved access to formal financial services in the region. These results represent the first generation of financial service providers who have developed digital channels and cash merchant networks and launched robust customer acquisition campaigns.
These new digital platforms have also enabled product innovation with financial services, including micro-insurance using mobile top-up, pay-as-you-go schemes for solar energy, low-cost domestic and international remittances, and low-cost transaction accounts with improved access in remote areas. These first generation efforts have launched a significant number of underbanked Pacific Islanders on a customer journey towards financial inclusion. PFIP’s demand side research documents stories of villagers in remote provinces using banking services for the first time, households saving significant amounts on international remittances, rural households acquiring solar power systems, and low-income customers purchasing the hospital and life insurance through digital payments. Importantly, over half the customers are women. However, most customers are still in the first step of experimenting with formal financial services. Adoption is early stage, and this is reflected in the business case of the providers, who have yet to achieve a level of customer adoption that is commercially scalable.
PFIP’s strategy has evolved as the markets have rolled out these first generation implementations. Moving forward, PFIP is focused on accelerating the innovation that will improve the customer experience and, ultimately, adoption of financial services. The Innovation Labs are PFIP’s core instrument for resourcing structured and focused design and innovation initiatives that leverage the digital platforms.
The goal of PFIP engagement with providers is to develop a service or product that inspires low income customers to use digital financial service channels. We believe that success will come from solutions that remove a pain point or substantially improve some aspect of the daily financial life of mass market customers. These customers will weigh any new solution against traditional cash-based practices they know. The solution will likely be low fidelity. It will be very inexpensive for the customer. It will be at the frontier of the digital world and the analog world that mass market customers live in.