3rd BoP Global Network Summit “NEW STRATEGIES FOR BUILDING BoP ECOSYSTEMS”: Banks, Telcos, SHS distributors: PayGo as pivot to customer identity?
April 19, 2018 at 3:30 pm IST, India Habitat Centre, New Delhi, India
This session, moderated by Hystra, will be a follow up to the previous day’s session moderated by Sattva, ‘A platform integrating identity, mobile access and financial inclusion to transform development for millions at the BoP’. It will consider the issue from the applied case and perspective of a specific industry, pay-as-you-go solar home systems (PAYGO SHS).
Since the early 2010s, PAYGO business models for SHS have been growing rapidly (e.g. $160m funding raised in 2015). Enabling customers to buy durable goods on credit is meeting enthusiastic demand. Sector leaders such as M-Kopa in East Africa, Lumos in Nigeria, or Simpa Networks in India, have enabled hundreds of thousands of rural people to access solar electricity. The benefits of SHS have been widely documented (comfort and quality, savings over kerosene, environmental benefits, etc.)
For customers, going for PAYGO is yet not only about buying an SHS. All the data collected throughout the customer journey (credit vetting, digital payments, interactions with customer service, etc.) is enabling SHS distributors, banks and telcos to collaborate in building and using enriched and accurate customer identities:
· SHS distributors are using customer data to offer tailored products/services add-ons, to improve their portfolio management strategies and/or to generate revenues from selling data to partners
· Banks are reaching new low-income rural markets, building credit ratings on previously unbanked households, and creating new risk profiles
· Telco operators are converting customers to digital payments, a powerful source of data which can be added to their existing records (customer profiles, airtime)
For customers to get the most benefits from those developments, some conditions will yet have to be met, which are asking a number of questions:
1. Successful cooperation in distribution: Banks and telcos are large organizations with ingrained distribution methods and customer handling processes: how to make these processes fit with the agile mindset of young and small SHS distributors? Specifically, what are the bottlenecks and best practices re: customer profiling?
2. Fair value sharing: How to share the value created between customers, distributors and partners? Should the government play a role in regulating prices? How to do so while the value proposition of PAYGO is oftentimes a bundle of energy provision, services, and credit? How to define a fair price between customer baseline (e.g. rural families pay ~$0.20 for a phone charge, roughly equivalent to $40/kWh) and the price of public services (e.g. grid tariffs below $0.30 CFA/kWh in most countries)?
3. Ethical handling of data: For most PAYGO SHS distributors and their investors, the expected future cash flows from customer data is at the core of their business model. But how to make sure that it will be handled ethically? Between distributors and partners, who owns what? When should the government step in?
To address these questions, François Lepicard, Partner with Hystra and co-author of 2017 report ‘Reaching Scale in Access to Energy’, will moderate a working group together with SHS distributors and their partner banks and/or telcos.
Find details on the summit here.