Impact Investor Omidyar Network Shows Fintech must be more User Friendly

India is adopting fintech pretty fast, but it will be that much faster if digital financial solutions were easier to use, finds out Omidyar Network in their latest findings

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Omidyar Network is studying India to make more investments. The impact investment fund finds India the best region to make such investments outside the US according to a partner at Omidyar, Tilman Ehrbeck. Investments that will contribute towards financial inclusion, (read: fintech) are the apple of their eye. But the fund with a billion dollars dedicated to for-profit investments, isn’t having much luck this year (Omidyar was in the top 5 active investors among India’s offline solutions last year). Contrary to popular belief India is actually slow to adopt fintech.

The report by Omidyar Network titled, "Currency of Trust: Consumer Behaviors and Attitudes Toward Digital Financial Services in India," focuses on understanding the current context and behaviors of a diverse sample of Indian consumers regarding their digital consumption and readiness for digital financial services on key issues, such as ease of use, trust, and social collaboration. It also offers providers a practical set of recommendations to better reach financially underserved consumers in the country with digital financial offerings.

"India has made tremendous progress in building infrastructure and regulatory frameworks that encourage digital innovation in financial services, but adoption and usage of new offerings have been slow to take hold and scale," said Tilman Ehrbeck, partner at Omidyar Network. "We believe that a deeper understanding of consumers' behaviors and aspirations is at the crux of unlocking higher usage and providing services that are more relevant to consumers' real needs."

The report findings come as a result of in-depth interviews and human-centered design prototyping sessions with consumers across 30 communities in Nagaland, Bihar, Maharashtra, Karnataka, and Telangana, covering a mix of rural, semi-urban, and urban areas.

There were a few behavioral insights that stood out:

Even though smartphone adoption is expected to reach a projected 54 percent of the Indian market in the next three years, a large portion of surveyed consumers—especially those in rural areas—indicated they are comfortable with keeping their basic feature phones. This is primarily due to the greater resilience and longer battery life of lower-end phones, but also because internet access is not seen as a priority for these consumers. This means digital financial services providers will need to cater to both technologies in their offerings in order to broaden their customer base.

Adoption of mobile apps is driven by data efficiency and usage within consumers' social networks. The survey found that Indian consumers are frugal when it comes to data usage and look for creative ways to save data, such as constantly alternating between 2G and 3G depending on the function in use or pooling resources to set up shared Wi-Fi hot spots. Consumer adoption is also influenced by the number of individuals in their social network who use the same app. This means digital financial services apps need to be lean in data usage and leverage pervasive platforms, such as WhatsApp or UCBrowser.

Consumers are willing to leapfrog traditional financial services and adopt digital if they find convenience, relevance, and alignment with socio-cultural norms. Despite the low comfort level and lack of familiarity with digital financial services, through prototyping sessions, many surveyed consumers expressed a willingness to start using such apps if the technology addresses unmet needs, offers convenience, and doesn't challenge socio-cultural norms. To shift consumers from existing informal cash–based financial solutions to formal digital financial products, solutions need to capture their full relationship and experience with money, such as allowing consumers to create partitions or "virtual jars" within an account, and offer them tools that can help with cash flow management of micro- and small businesses or household expenditures.

Current digital financial offerings are seen as overly complex even by savvy consumers. Surveyed consumers consider those who use financial service apps to have a specialized skill and cite difficulty grasping financial jargon in on product offerings and legal terms and conditions. According to the research, consumers' lack of trust in their own abilities is one of the biggest hurdles today for adoption of digital financial services.

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omidyar network financial inclusion

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