Driving Fintech Adoption At The Bottom Of The Pyramid

How do you drive the adoption of a new device nobody has ever seen? That was the class assignment for some business school students. Jane Chen and her three classmates had developed a low-cost baby incubator. It is tailored to the needs of the developing world. For the market at the bottom of the pyramid.

It won the support of influencers in the field of health and innovation. The influencers recognised that the technology could transform the lives of the most vulnerable population. So, with the seal of approval from these opinion leaders, Chen and her colleagues turned their ground-breaking design into the standard of care. Today, the product has been distributed to almost 3,500 sites around the world. It has saved the lives of more than 50,000 infants.

In a Social Innovation Conversation with Jonathan Chang, Chen discussed the vision behind Embrace. She explained how a class assignment evolved into a multi-faceted social enterprise. It took more than a new product to make a lasting improvement in infant health. The newness of the technology presented a problem that is as tough as the school assignment: how to drive the adoption of a device no one had ever seen before.

In Serving the Bottom of the Pyramid, a Stanford Graduate School of Business Insights, Chen said it is often hard to reach the bottom of the pyramid market. This market is the major chunk of the population in developing countries. The people are at the bottom of the socioeconomic pyramid. They comprise the lower middle class. And below lower middle-class households. They are the poorest but largest group within capitalism. So how do you reach them?

On The One Hand

In banking, is that why banks have found it difficult to service this same market? The chief executive of Eversend, Stone Atwine explained that the banks are not designed to serve the bottom of the pyramid. The banks’ failure to serve the unbanked population has led to the meteoric rise of fintech startups. Instead of relying on metrics often used by traditional banks whether to open a new branch or not, a fintech startup such as Eversend is primed to serve even those without regular incomes.

The traditional banking systems are not optimised for serving people without massive incomes. There are reasons for this impasse. Some of these include the high cost of a branch setup. Compliance systems. High cost of a banking technology license. Limited efficiency. These challenges impede banks from serving the unbanked. “The economics do not make sense for a traditional bank to serve these customers. If a bank cannot earn a minimum amount of money from the customers, it makes no sense,” he explained in a media report.

Stone, a veteran banker, said the failure of large financial institutions has created two holes. One is an opportunity for fintech startups. The other is the yawning gap of financial exclusion. Promising fintech startups can serve the unbanked at a lower cost. But the promising fintech cannot drive the adoption of a new product at the bottom of the pyramid market. Startups like Eversend have tried to help their customers to increase their revenues. But it is not serving the bottom of the pyramid market.

On The Other Hand

In the pension space, the informal sector workers comprise 80 per cent of Nigeria’s labour force. They have no access to structured retirement savings. Because there is no infrastructure to reach the target market. But an Economist, Tunji Andrews, has launched a PensionTech startup. Awabah. A collaboration with a seasoned software engineer Tina Ajishebiyawo. It is a micro pension aggregator. It offers access to retirement savings. For the informal sector workers across Nigeria. It hopes to cater to the bottom of the pyramid.

It has over 12,000 customers. 250 agents’ network. It plans to attract 150,000 customers in 12 months. 5 million customers in 5 years. Awabah is in a new field. It faces stiff challenges. There is no established structure for the aged. It is dealing with the informal workers. How will Awabah drive the adoption of this new service?

In The Short Term

So, how will a fintech startup drive adoption at the bottom of the pyramid?

Serving the bottom of the pyramid market is hard. Chen said if the ultimate goal of an organization is to reach the most impoverished, it is better to experiment in an environment where things are not as difficult.

Should this pension startup move to Ghana?

Moving to Ghana is a possibility. However, if this startup secures government buy-in, it is a way to reach the bottom of the pyramid market. But it’s not the only way.

The failure of large financial institutions has created two holes. One is an opportunity for fintech startups. The other is the yawning gap of financial exclusion

What’s the other way?

If a startup finds venture capitalists ready to take a risk, it can move to Ghana. If the move would drive adoption.

I think the venture capitalists’ move will push the needle. If they are willing to take a risk on something new.

To find success, Chen integrated non-profit and for-profit strategies to ensure the product continue to serve all segments of the society.

That’s another way to go if a startup intends to serve the bottom of the pyramid market.

The third option is to change its business model.