Report: Community Engagement Key to Financial Inclusion Target

By Oluchi Chibuzor

One of the key findings of the customer segmentation study executed by the Lagos Business School (LBS) is that broader community engagement, including with religious institutions and informal social groups, is essential to driving financial inclusion in Nigeria.

The study which was launched in Lagos recently, also identified the need for unconventional approaches to on-boarding financially excluded persons such as the use of livestock ownership as collateral for financing, amongst others.

This report was launched in partnership with Dalberg and the Bill and Melinda Gates Foundation.

In the new report by the Sustainable and Inclusive Digital Financial Services initiative (SIDFS) of the LBS, which was launched alongside an art exhibition, six customer segments of financially excluded persons were identified.

These were the vulnerable believers, which formed 12 per cent of the population; resilient savers, which form 21 per cent of the population; dependent individualists, 22 per cent of the population; digital youth, 19 per cent of the population; confident optimists, 14per cent of the population and lastly, those the report described as the sceptical cultivators which form 12 per cent of the population.

An Academic Director and Senior Fellow at the LBS, Dr Olayinka David-West, who also leads the Sustainable and Inclusive Digital Financial Services initiative said, “one of the many challenges of financial service providers (FSPs) is limited knowledge of customers, and as a result they often overlook high potential customers or misidentify their needs and invest in products and channels that sometimes miss the mark.

“The customer segments presented in this study provide insights into the behavioural and attitudinal traits of the Bottom of the Pyramid (BoP) population, currently estimated at 75per cent of Nigeria’s population (about 135 million persons), with a view to providing FSPs with correct information to create fit-for-use, segment-aligned digital financial products.” she added.

On her part, a Partner and Nigeria Director, Dalberg, Nneka Eze said, “As part of our work to define a novel, globally applicable approach to segmentation, we conducted deep research in six countries across Africa and Asia.

“As with all the countries, the Nigeria report introduces a novel approach to segmentation that integrates contextual, behavioural, and psychometric variables that is useful in identifying patterns, highlighting nuances and differences between people that may not be clear from their contexts alone.

“Overlaying a segmentation using behavioural and psychometric approaches with FSPs’ existing segmentation strategies, we identified opportunities to drive market share— reaching people that a broad demographic approach to the market may not reach or energise.”

In addition, the report proffered principles on engaging with the last mile customers based on motivation.

“For instance, in dealing with the vulnerable believers; people who are mostly lower middle-class to poor, religious, predominantly rural, with limited education, use financial services infrequently and struggle to pay bills; the report says the task is figuring out how FSPs, government or development organisations can leverage religious institutions as a channel for financial information and support and also how to develop agricultural programs that allow this group to take control of their financial lives.

“More so, for sceptical cultivators, who draw on more people than average for support during emergencies, yet face difficulty raising emergency funds and distrust people in their communities, the task is how to encourage mobile network operators (MNOs) to incentivise and facilitate greater phone ownership and usage by the segment, to improve access to services, provide daily liquidity, support financial planning and disciplined savings, build financial confidence and autonomy, and foster financial connections and access to emergency support.”