Payments in Pakistan (Part II): The Fix

Taking cue from the previous post (See: Payments in Pakistan), everyone is asking themselves what is missing? Why aren’t we well on the road towards digital and mobile payments?

The tl;dr version is simple in many ways… Data (or lack thereof).

Data Drives Decisions – you simply cannot argue that fact, and data is something that is missing in great numbers when it comes to banking, payments, e-commerce/m-commerce and mobile payments in Pakistan.

If you subscribe to that there is nothing wrong with what I have mentioned, then it is okay. You have a write to your own opinion. In which case I would urge you detach yourself from the environment and then look at the problem(s). The perspective you will get, is one, I can guarantee is not available from where you sit right now.

The Vendor Element

For what I am about to write, will irk many vendors (and friends), but it is no secret, that solutions in Pakistan are primarily driven by vendors. This is what in turn drives banks to implement them and in turn, force users to use them.

The vendor element is a classical case of a solution in search of a problem.

Have no doubt, finding a problem to solve is not rocket science. Solving the problem is rocket science.

Anyone from the industry will tell you how the products come to bear fruit in the industry (this is not an exaggerated summary)

  • Banks share with their vendors, what they are thinking of as far as service offerings are.
  • Vendors sometimes showcase their product offering to banks and get the excitement going.
  • The point of contact within banks, then searches for an internal sponsor (in some cases the point of contact becomes the sponsor)
  • An internal product document is authored and the case is presented.
  • Approval is gained.
  • Vendors are short-listed and a vendor is finally chosen (guess which one?)
  • Product is launched.
  • Additional warranty, and post-sales services are sold by the vendor.
  • Vendor meets Quota.
  • Banker gets a checkmark (sometimes Dollars too)
  • User gets to experience a product that is not 100% compatible with their needs or the requirements on-ground.

No untold effort is spent in really understanding the problem. Pakistani consumers need an e-wallet. Great. Vendor showcases their wallet, discussions are held on features, integration and pricing, budget, marketing budget, launch ceremony, ribbon cutting, etc.

The consumer? Well we will get to them! It’s a bank product! Surely we can’t be wrong. We know what we are doing?

Many will argue (and perhaps rightfully so) that banks have tons and tons of internal data/analytics on which they can determine the viability of a product/service they wish to launch. The data must be validating something.

The answer is two fold:

  • If the service is a basic necessity that others are too offering, then the data will validate. It’s a no brainer. For example, if the bank wants to launch bill payment, the data will suggest there is a demand. Basic service. Nothing fancy here.
  • If the bank wants to launch internet banking, there is no data that the bank can generate from a historic perspective that would validate this across the board. There is just a heuristic sense that internet banking is something that needs to be done. Right or wrong, it just needs to be offered.

And with the latter, herein lies the screw ups or ignoring some very basic fundamentals. The jump to market goes without talking to consumers, in detail, as a neutral party.

What should be considered is putting into play a series of data and requirement gathering questions that serve as the fundamental elements of what the problem is, and then achieving a consensus that it is indeed a problem as viewed by others.

Clearly products driven by the vendors, lipstick application by the marketing department, implemented by IT and users are left using something that is inherently non-efficient. As subtle as it may look, it is the missing nucleus.

Why the need for research?

Before delving in to what type of data & research needs to be conducted, I feel it is important to argue the case of why.

Research & Data Gathering

A lot of macro/micro data does exist for Pakistan’s Banking, Financial Inclusion, Internet and Economic sectors, there is a vacuum of information when it comes to the Payments, Banking and E/M-Commerce sectors that can be used as a basis for either product/services development, investment or both. Micro or drilled down data is almost non-existent.

Many payment processors like PayPal, AliPay, Qiwi, WorldPay, Adyen, et. al. who have had exploratory look and missions in Pakistan, have complained that the missing data is the missing link to bridge the gap.

So what is missing? I think I could speak on this for days, however, I will attempt to list the missing elements (in a broader sense) here.

The Important Verticals

There are five verticals which have data missing:

  • Mobile Payments
  • E-Commerce
  • M-Commerce
  • Banking
  • Payments (in general – online/offline, etc.)

You cannot develop a product, even heuristically, without having unbiased data to back it up. This is unfortunately an area where very little weight and attention is given by bankers.

There seems to be a lot of emphasis on pushing out a solution, soliciting feedback and hopefully redefining the product/service. Reality is, a half-baked solution is pushed and nothing changes after that.

It is crucial to understand the following four elements:

  • What the perception of a particular product/service in the market is?
  • What should the perception of a particular product/service in the market be?
  • What is holding it back?
  • What needs to be done to course-correct it?

A detailed Survey is the need of the hour

A detailed Internet Survey for Payments, Banking & E/M-Commerce can be conducted to answer these questions (to which no one really has an answer to):

Conduct a survey to understand the anatomy of a banked user in Pakistan. The survey would focus specifically to understand existing behavioral aspects of how a user in Pakistan interfaces with banking, payments and e/m-commerce.

This part of the survey would be conducted online and would divided into two sections:

  • Short Survey, which can be completed in under 60-90 seconds
  • Detailed Survey, which would typically take between 4-7 minutes to fill out The goal would be to get a weighted average picture of a user in Pakistan.

Some sample information collected would be Sex, Age, Marital Statues, Education, Income Bracket, how many times do they invoke digital payments, whom do they typically pay, do they shop online? If yes, frequency? amount? If not, why not? what are the hurdles? etc.

The detailed survey would cover the above, but also drill down on some specific information that is not included in the short survey. Some sample questions are; how many cards do you carry? How many are debit and how many are credit? What is the credit limit on your card? Which bank do you bank with? Do you send money abroad? Do you do CNP transactions? etc.

The run schedule for this would be approximately eight weeks to get a decent sample size of 1,500-2,000 people.

In addition to the online survey, an In-person Survey for Payments, Banking & E/M-Commerce

The objective of this would be to conduct group discussions and surveys in Karachi, Lahore and Islamabad. Various cross-segments groups would be invited to have discussions on the current conditions for payments, banking & e/m-commerce.

Discussions would then gravitate to what their perception of the above-mentioned three areas are and what features/services would they like to see for payments, banking and e/m-commerce.

Each group participation would be limited to 20 people for easier management and would include 3-4 groups a day. Each group session is expected to last 2 hours.

Group activities would be broken down as follows:

  • General survey (about 30-50 questions lasting 30-45 minutes)
  • View previous Kanban board entries
  • Kanban Board themed discussion of ideas (30-45 minutes)
  • Includes individual opinions and ideas on existing products/services
  • Includes individual opinions and ideas on future product/services
  • Random sample of users and their snapshots of their phone screens, apps installed, number of screens, most used apps, local apps, internet banking, phone make & OS, number of phones, internet spending habits, etc.
  • Take the short online survey for the anatomy of an e/m-commerce user and payments.
  • Any additional feedback.
  • All sessions will be recorded (audio/video) and photographed.

Session in each city will run for 3 to 4 working days. They will on premise and on- location sessions (schools/universities, etc.)

It is important to note, these are 3 different sessions, one for payments, one for banking and one for e/m-commerce payments that are conducted everyday).

The in-person survey would most likely result in a 50-80 page report on the industry and will be segmented into various section. Though we have a question base of about 200+ question, we would have to assign priority to what data/questions needs to be answered most urgently, not to mention we will probably be obtaining questions from the sponsor of the survey as well.

One of the most important aspects of the survey would be to understand the spending personas of each individual. Without understanding the spending personas of your users, developing a product around their needs is almost impossible. I’ve personally seen banks say they have this data extracted from their big data / business intelligence, but it cannot accurately determine the spending pattern or why a person spends the way he/she does.

In-person Discussions

The Kanban discussions brings up the unstructured elements that are not posed as questions, such include:

  • Pain points
  • Perception
  • Requirements
  • Gaps between what is available and what is required
  • Technology understanding (what phones they are using, what Apps they are using, screenshots of the apps, local vs international apps, messengers, most and least used apps, etc.)
  • Social Sharing
  • Opinion on local payment systems at present
  • Opinion on local payment problems
  • Opinion on local e-commerce, and
  • Opinion on local banking

Even going to look at the contents of their physical wallet/purse. The screenshots of their mobile phone’s main screen and accompanying screen (an excellent source of intelligence as to what apps are being used, both local and international). Cash vs Digital Cash (how much cash they have and how much digital cash), Spending Velocity, etc.

There are many ways to execute such a market gathering survey, but because none has been done, the need for one has never been more demanding.

Ideally, the results of the survey would be open-source, so the entire industry can benefit, but if an organization wants to conduct and pay for itself and not share the results, that would be their prerogative.

Those who are dubious about what a survey does, it can be summed up as follows: A survey provides visibility like never seen before. Rather than second guessing your customer, you know know exactly what they want. The guess work is taken out of the equation.

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