Fostering Financial Inclusion is Trulioo’s exclusive series covering forward-thinking companies that are pushing the envelope for financial accessibility. In this series, you can expect to get a deeper look at some of the world’s leading socially responsible technology companies and learn about their initiatives in supporting those who are financially underserved.
Mobile Identity becomes Financial Identity
Juvo empowers and partners with mobile operators to deepen their relationships with subscribers and provide access to life-changing financial services. Using information provided by mobile network operators (MNOs), Juvo is able to string together subsequent mobile credit events to create a highly accessible financial identity for the underbanked. This method of identity scoring is able to give financially excluded individuals a second opportunity at loans, savings accounts and more—when they were initially overlooked by traditional vetting parameters.
Here to represent Juvo for our financial inclusion blog series is Leslie Nuccio, Head of Content. Leslie is a senior marketer and writer who loves the storytelling side of marketing. She is excited about the potential that the fintech world has to transform global economies at scale, and works at Juvo precisely toward that end.
Shortlisted as one of 60 companies recognized in World Economic Forum’s 2018 Technology Pioneer for potentially world-changing innovations and technologies, Juvo can speak volumes about the power of mobile identity when it comes to establishing financial inclusion.
Trulioo: On your website, one of your main headlines is Identity Changes Everything. Can you put this into perspective when it comes to reaching the financially underserved?
Leslie Nuccio: There are 1.7 billion people around the world who lack access to established financial systems like bank accounts and lines of credit. These people participate in what the Western world calls “informal economies”: a network of friends, pawn brokers, families, and cash stashed away for future use.
The problems with informal economies are tied to their informality, and one main issue is that they don’t provide participants with any formal proof of creditworthiness. What that means practically is that banks and other traditional credit institutions are unwilling to take a risk on these people, and in turn the financially underserved have no way to establish a formal financial identity… Until now.
Juvo takes on this problem by using a sophisticated data-science driven solution that, at its simplest, addresses people at their time of need: it initially takes the form of what’s commonly known as “airtime lending,” and gives them the change to have a small amount of airtime that they can pay back when it’s convenient. Those payments become credit events that lead to a handset financing opportunity, and with further commitment to payments, can start building their creditworthiness.
We are presenting people with the opportunity to stay connected without risk as we don’t charge fees or penalties. Once we have enough information about an individual’s creditworthiness, upstream financial services, like insurance or small business loans, are made possible.
Trulioo: What’s your take on the cashless paradigm? Do you think this has big implications on the progression of financial inclusion?
Leslie Nuccio: Technology is a faster mechanism to provide access to capital than anything physical possibly could be: the infrastructure of physical banking systems are prohibitive. For this reason, the GSMA, WEF, World Bank, etc. all have initiatives to drive mobile adoption in order to address the currently disenfranchised populations.
Trulioo: In your experience, what is the main driver for growth in financial services among developing markets? Are financial services growing differently in developing markets as opposed to developed markets? What's driving financial services to trend this way?
Leslie Nuccio: Developing markets don’t have the banking infrastructure that more established financial markets do, which leads to a lack of data: the unbanked are unbanked because the banks don’t exist in the way they do in more formalized economies. The people in these economies are leapfrogging things like traditional banking (and computers, for that matter) and going straight to the phone.
The problem is that so many people on the phone are pre-paid, and the pre-paid market is commoditized and, therefore, high-churn. What this means for the carrier is that these folks are still an unknown entity.
We create the credit events that both engage the prepaid users to stick around, and establish a financial identity that they can use to access upstream financial services.
Digital identity allows companies like Juvo to improve underwriting, remove risk and lower the cost of acquisition, distribution, repayment, engagement, etc.
Trulioo: What moment made a lasting impression that made you realize the meaningful impact of Juvo’s technology?
Leslie Nuccio: Watching the “Jackie” video.
Trulioo: Since Juvo works so closely with telephone companies (telcos), can you share with us how their technology is able to make an impact on the unbanked population? How does that influence Juvo's work on a daily basis?
Leslie Nuccio [Relevant Excerpt]: Engagement is what keeps customers around, and it’s what builds the relationships that lead to loyalty — which, ultimately, is what reduces churn long-term. Unfortunately, technology up to this point has severely limited a MNO’s ability to craft programs and services that foster engagement in their prepaid subscriber base, for one simple reason beyond the short stay: these customers are completely anonymous.
But the simplest problems aren’t always the easiest to solve.
Large telcos have untold amounts of customer data, but their systems weren’t put in place to use it toward an engagement end. Their prepaid data, in particular, isn’t organized or architected in a way that foster the kinds of engagement programs on which tech marketers like me are typically measured — making it a genuinely elephantine task to innovate.
This is why the GSMA, among others, are calling for partnerships between technology companies and telcos: tech companies have the nimbleness and the engineering power to both make sense of all this data and build a front-end user experience that fosters engagement (and accordingly gives the telco behavioral customer data), and the telcos have the data, the reach, and the scale to make a huge impact — both for the telco and for these consumers.
And this leads us to the biggest opportunity on the table: prepaid transformation. The vast majority of the mobile world is made up of prepaid subscribers who would have mobile purchasing power, if only they could access it. Forging partnerships that help migrate these unknown prepaid subscribers to known subscribers exhibiting post-paid behavior leads not only to improvement in all engagement metrics (most notably churn), but also makes revenue forecasting a lot easier. With that migration comes the customer loyalty that continued engagement fosters, and with that loyalty comes better acquisition and retention metrics.
Trulioo: What is the Juvo team looking forward to the most in 2019?
Leslie Nuccio: Our pilot handset financing program (a partnership with Samsung) will be putting smartphones into the hands of people for the very first time, and laddering them up the financial services/creditworthiness ladder. This is really exciting for all of us!