The Changing Customer Experience in The Microfinance Sector

By Carolyne Gathuru

The microfinance industry in Kenya has indeed undergone a revolution. A revolution because things have turned around, they have been spinning and gone full circle. The same could be said but possibly postulating that it isn’t a revolution but an evolution, given that there has been development, advancement, growth and unfolding, witnessed over time. Whatever the case, there has been significant change witnessed with more disruption predicted to come.

The microfinance sector has shifted from its original ‘space’ with its accompanying brand as a source of financial support and delivery for the poor or financially challenged sector with pro poor messaging being the hook,  the themes around gender, age, cause driven or economically indigent. This has since changed with the sector becoming highly profitable, often performing competitively when pitted against mainstream financial institutions, up to and including its expansion to redefine its space outside of the ‘poor’ arena.

With this changing landscape and with microfinance rapidly occupying the position of being the go-to accessible and affordable financial solution in the country, what are some of the changes in customer experience excellence that the industry must be cognisant of for a sustainable outlook?

The changes experienced in the past ten years have seen a more empowered customer, ready to take on social, technological, economic, legal and environmental awareness and to challenge the status quo. The changes in these factors both specific to the sector  or otherwise, has seen the emergence of a more enlightened customer that all the players in the microfinance sector  need to profile, and be ready to serve.

Customers have very high expectations

To raise the levels of customer experience excellence, organisations in the microfinance space need to create the stimulus to go beyond service delivery and anticipate, meet and exceed customer expectations. There needs to be a shift from service to experience excellence. Customer expectations continue to escalate, with the desire for both their functional and emotional needs to be met. Organisations therefore need to know and understand what customers need and to strive to deliver this. A satisfied customer is no longer something organisations should deign to be excited about.

Customer satisfaction has become the standard baseline that must be achieved. Once done and dusted with this, which should be very early in the organisation’s priority list, then moving on to customer retention and loyalty would be the goal. Customer satisfaction is based on merely meeting customer expectations which are on the rise by the hour especially in the digital age, whilst exceeding these expectations leads to the return of and self-propelled recruitment of others.

To attempt to exceed customer expectations would require that these expectations are not only identified and documented for clarity, but also reviewed against the scale that tips towards providing more value. Expectations will differ including the financial services needs for the microfinance client. The responding requirement would therefore be to fully understand the customer and what underlying need that may not be expressed, is in place. The default stance to assume that loans are suitable for everyone may need to be readdressed with clients served and attended to, based on their different situations.

The so called ‘poor’ more than ever need to receive service that is positive and unexpected, and their loyalty and commitment to the process will be unprecedented. Amongst the target group, access to finances is deemed to be the preserve of greater beings that in essence is a myth that needs to be busted. The common view that financing is a long and arduous process also requires to be shot down by exceptional service that turns around this narrative. Happy customers bring other customers.

In the microfinance space, that is heavily customer based, the pipeline of customer referrals needs to be fanned continuously as inspired by service excellence. By exceeding customer expectations, and understanding that customer delight stems from this, microfinance players will be taking an important step in their strategic outlook for the future.

Customers have very high awareness of their rights

To say that the current customers are very discerning about their rights is to put it quite mildly. Unlike in the past when the microfinance customer was classified as one who is self-employed, inexperienced entrepreneur and start – up types with small businesses centered on provision of social services, crafts and minor agricultural set ups operating on the brink of the poverty threshold; the profile of the current customer has since changed. Transformed actually. And with the changing customer demographic in terms of social and economic status, has emerged the microfinance customer who has a heightened awareness of what is due to him or her  and the promises ( both overt and covert) that the microfinance institution has pledged. Hinged on this awareness track, are the opportunities that abound for customers to channel their communication.

As with mainstream finance institutions upon which the microfinance sector tends to map processes, systems and structures, communication channels are published to customers and the general public on how to access and reach out for different services. With the advent of the more digitised customer, whether communication is in person or by proxy, the opportunity to speak to the provider offers an avenue for reaching out. The nature of the communication flow is determined by the microfinance organisation’s dedication to customer engagement. Where at the tap of a keyboard organisations of high repute have in the past gone down faster than they would have ever imagined, the microfinance sector is not immune to the same treatment.

The financial service sector in the region has taken over prime space in the customers’ mind field as the sector from whom much more is demanded in terms of service delivery and delight. As such, demands are getting higher by the day, and delivery on these demands are awaited in high anticipation. Any diversion or deviance from the imagined service offering, then constitutes an anomaly from which turnaround is an uphill task.

Whether written or assumed, when handling customer finances, the expectations of communication, responsiveness and solution provision are at the fore, much more so than other industries where money is not involved. It is the customers’ expectation that their money and money matters will be handled with the highest level of professionalism and diligence, and that what is covered in both fine print and otherwise will be adhered to. The need for immediate feedback should there be any matters touching on customer financing  or affecting products or services signed up for, occupies a rung high on the microfinance ladder.

Institutions should in no way minimise or downplay the risk of legal ramifications from unhappy customers who feel aggrieved in one way or the other. The region is continuously breeding a litigatious lot, and the finance sector is bearing the brunt of loopholes and grey areas from the customer perspective.

The need to move with swiftness to deal with customer issues and to ensure that feedback received is handled in a way that leaves the customer feeling their rights have been upheld is paramount, and should form the focus of any customer focused microfinance player. That the Consumer Protection Act, in this country, leans very heavily towards the customer to the extent that where written agreements may be passed over for assumed obligation, should be the driver for organisations in this space to handle every customer with utmost diligence and care.

Target market

The ultimate change stemming from the world continually becoming a global village vide bridging the technological divide, is that the target consumer market for microfinance players has unrestricted access to global options. Whereas economists harp on and recommend the use of domestic sources of financing and the need to localize finance options for  Africa, based on anticipated risk of volatility, vulnerability and potential limitations to adherence, there is an observed increase in the positioning and pitching by entrepreneurs and startups alike, for external funding.

The advantages of geographical accessibility, response time, and the ease of finance mobilization, are increasingly overtaken by the promise keeping nature of finance players from across the globe. Where services are delivered and efficiency is at an all-time high, then the attraction to look externally is magnetic. Many an institution weary from knocking on local microfinance doors, and adhering to numerous requirements not designed for customer convenience but towards satisfying internal check boxes,  have rejigged and repackaged their appeal and locked onto funding from grants, seed financing providers, investors and lenders across wider geographies.

The microfinance industry therefore should not rest on its laurels with regards to the need for adaptability to change. And as Heraclitus of Ephesus(535 BC – 475 BC) the Greek philosopher, known for his doctrine of change being central to the universe, so aptly postulated “The only thing that is constant in life is change”. Microfinance players need to anchor their strategies on this age old wisdom that remains true through the years.