At Thursday’s debate on “high-tech” versus “high-touch” financial services at European Microfinance Week, Dorcas Thorpe of Nigeria’s LAPO Microfinance Bank argued that customers in rural areas are more likely to access financial services via high-touch channels such as branches and agents rather than mobile money because they have – on average – lower levels of digital literacy and trust in digital financial services. Gregoire Lecomte of Symplifi, a UK-based buy-now-pay-later service active in Africa, responded that embedded finance increases access to services because it allows users to perform multiple tasks within an app that is familiar to them and that they find trustworthy. Ms Thorpe countered that in-person services are more flexible and thus give an institution access to a wider audience, leaving fewer potential clients behind. She also argued that high-touch models – such as those that include financial education – boost trust, which is good for repayment rates and thus for keeping costs lower.
Fatma Nasujo of Wasoko explained how her platform helps small-scale retailers in six African countries restock online with delivery within a day, thus reducing lost sales from closing the shop to restock in-person. Wasoko also offers embedded finance, allowing store owners to pay for goods after delivery. Ms Nasujo says this boosts the rate at which store owners try new products to offer their customers. Ten percent of the company’s revenue is from buy-now-pay-later sales. Ms Nasujo added that her firm’s datasets have many advantages, for example in helping wholesalers know where their products are performing less well, so they can adjust their marketing in those areas. On the question of trust, Ms Nasujo argued that new players can do well to build on well-known apps such as the M-Pesa mobile money service, thus leveraging the trust and usability of the established service.
Steven Duchatelle of the French microfinance network Advans argued that digitizing microfinance institutions is difficult because it requires a change in staff culture. It is also high-risk, in that investing a large amount of money in technology can backfire if the institution chooses the wrong technology provider. That said, he believes high-tech and high-touch is the way of the future of microfinance.
Among the services of Mr Lecomte noted that his firm gives more options to users by offering those who are declined a loan the option to have a person in the UK or US put down a deposit for them.
This feature is part of a sponsored series on European Microfinance Week, which took place in Luxembourg and online from November 16 through November 18. MicroCapital has been engaged to report on the conference each year since 2012.
Additional Resources
European Microfinance Week 2022
https://emw2022.eu
Symplifi diaspora-backed lending
https://www.symplifi.co/
MicroCapital coverage of European Microfinance Week since 2012, including the European Microfinance Award
https://www.microcapital.org/category/european-microfinance-week/
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