1 JULY 2016

I’ve been in the financial services business for 20 years. About 17 of them have been in international markets. I’ve helped launch new products, improve existing products and taken pride in showing banks how their customers behave. I’ve also had the privilege of focusing my efforts in developing markets. And herein lies a cautionary, but very rewarding, tale.

For many banks, expanding into a developing nation offers an expanded audience for your products, higher margins and a less-crowded marketplace. However, it can be fraught with landmines if you aren’t careful. We are all familiar with the apocryphal story about the Chevy NOVA (“no va” means no go in Spanish, a poor choice for a car name) launch in Latin America. As I said, it’s a cautionary tale. No businessperson likes surprises. So when considering developing markets, I encourage you to take the following advice:“.

1. DON’T ASSUME THE BUSINESS GOALS YOU STARTED WITH WILL BE THE ONES YOU END WITH

When launching a new business or service in a developing country, it may seem obvious to assume that the goals by which you measure your business success and the way the end customer will use the product will be the same as in your home country. This is not always the case.

Example: a bank was issuing a new debit card in Djibouti and Somalia. MasterCard Advisors was called in to help drive activation and usage of the new portfolio. We established plans to help educate customers on how to use the card at point-of-sale and merchants. We “knew” that driving purchase activity was the best way to make the card product profitable for the bank and to meet their financial goals and ours.

We very quickly ran into customer complaints that this product did not meet their needs and the bank was concerned about the low usage. Upon investigation, we discovered that driving purchase activity was impractical. In Djibouti, the actual number of debit acceptance locations was below 100 in the entire country. Somalia, a war-zone for much of the country, was in the same situation. We had to find another value proposition for both the bank and the cardholder.

After discussions with the bank, we determined that the best resolution was to change the marketing materials to focus on driving debit use at ATMs. This went against MasterCard/Bank efforts in most other countries – where the goal is driving purchase activity. In Djibouti and Somalia, the lack of acceptance made this impossible. However, the business case to drive customers to the ATM was clear – it lowered costs for the bank by reducing need for extra tellers and bank staff, while it saved time for the cardholder. Our measurement of success became ATM activation and time/labor saved in the branches.

2. DON’T ASSUME TRADITIONAL TRAINING WILL WORK

Most employee training has traditionally been done using one of three channels: face-to-face, train the trainer (a form of face to face), or online. Face-to-face is extremely effective since it allows a strong interaction between the trainer and the employee and ensures the ability to answer questions. However, it is expensive and, in developing nations, travel to outlying areas can be difficult. Oftentimes branches are thinly staffed and pulling employees into a training session might be impractical. “Train the Trainer” offers a less-expensive alternative than face-to-face training since you bring one person from each region, train them, then send that person back to the branch/store to conduct more training.However, it still requires travel and expense that might be difficult for a small or new business. Webinars are a way of remotely delivering a “live” training session, but they demand a strong internet connection. Online training, is often chosen by big and small alike since it can be delivered on demand, rather than requiring a classroom setting, is much less expensive, and does not require travel or other support expenses. It also allows for quizzes and other knowledge testing to be embedded in the solution.

NO SURPRISES: STORIES FROM THE FRONT LINES IN DEVELOPING COUNTRIES

This document is proprietary to MasterCard and shall not be disclosed or passed on to any person or be reproduced, copied, distributed, referenced, disclosed, or published in whole or in part without the prior written consent of MasterCard. Any estimates, projections, and information contained herein have been obtained from public sources or are based upon estimates and projections and involve numerous and significant subjective determinations, and there is no assurance that such estimates and projections will be realized. No representation or warranty, express or implied, is made as to the accuracy and completeness of such information, and nothing contained herein is or shall be relied upon as a representation, whether as to the past, the present, or the future.

2 JULY 2016

When working with an issuer in Nigeria on a product conversion, our training experts recommended live online training and was ready to deliver the work. We quickly discovered that streaming of online training would not work in a country with poor quality internet access. We determined a way to use a more simple, less video-intensive training and using the bank’s intranet. The training was available on the intranet site to allow employees to train as time permitted (best practice would have a bank impose a deadline for training to be complete). The training was focused on features, benefits, and FAQs for customer questions. We included a quiz at the end of the training to ensure the employees had absorbed the materials. We were able to train employees in 900 branches across Nigeria in very short order. The conversion went smoothly with limited customer impact.

For those issuers for whom even intranet access is a challenge, we found a vendor who is able help us create low cost LCD training brochures. They are chargeable tablets that can be used anywhere with no need to have internet/intranet access. Staff are be able to share the electronic brochures, allowing each person to be trained on their own schedule. The brochure could be kept by the branch, allowing staff to refer to it for refresher training whenever needed. This solution is available for us to offer our clients as the need arises.

3. DON’T ASSUME THAT THE SAME VALUE PROPOSITION WILL RESONATE

When you develop a product that you are proud of and has proven successful, you naturally want to expand its access. You have a proven value proposition and you assume that it will resonate with others.

In developed nations, the benefit of debit and credit cards tend to be convenience and/or rewards. Customers appreciate the ability to save time and money by using a card. The broad acceptance, purchase protections, and ability to shop online. These benefits, while interesting to a sub-population are not the broad appeal of the product for most of the Sub-Saharan continent. We mentioned the lack of acceptance points above. Online shopping, while expanding in the region, is still limited in its reach and accessibility.

In Africa, safety and security are proving to be key value propositions, rather than convenience or rewards. Changing governments, political and financial instability and personal safety concerns are high on the list of issues for both businesses and consumers. By using a debit card, you are not required to carry large amounts of cash, until you are ready to use it. Cardholders can go to an ATM near the merchant that they will be purchasing from, reducing the risks of theft and loss. Africa, unlike the US, is almost entirely PIN-based access. This further protects cardholders from the risk of fraud or unauthorized withdrawals. Additional benefits such as loss/stolen insurances, limited liability, and card protection plans are strong supporters of the safety message.

Those are three surprises we have had here with our clients. They will not be the last. But knowing the consumer within the developing country turned out to be an essential set of information. Knowing as much about your customer as possible will avoid surprises in any market.

CONTACT US:

For more information contact Anne Horton, anne.horton@mastercard.com or please visit www.mastercardadvisors.com

ANNE HORTON - Senior Business Leader, Segment Solutions (International Markets)

Anne Horton has 20 years’ experience in the payments business across a variety of areas and is a lifecycle marketing expert. She started her career at Citibank, working in a variety of positions including launching the Citi AAdvantage card across Europe, managing the Spanish cobrand business, and launching the Home Depot cobrand. After Citi, Anne spent a year at Toyota where she was the chief marketing officer for their bank and payment cards business. She joined MasterCard Advisors in December 2006 as part of the Consulting team. She has spent significant time on international assignments, especially in Latin America. She moved into the Managed Services team working for the Segment Solutions team in August 2012 where she focuses on the international markets and supporting the credit unions business.

Anne went to Smith College, where she majored in government and economics. She completed her MBA at the University of Chicago.