Story:
DaviPlata: "Self-Service" Financial Inclusion

DaviPlata was born from an initial initiative to create savings accounts for the population at the bottom of the pyramid.  In true essence, DaviPlata was born without knowing exactly the scope of what we were about to embrace. We just had a dream in mind. But companies’ don´t bet on dreams, they bet on ROIs, facts, numbers and P&Ls.  How come an organization like Davivienda sometimes bets on just a dream?  Part of the answer to this question is found in the management practices and values mentioned before. Similarly, part of it has to do with our focus on creating a platform, product and service to an unknown, but very important client; the bottom of the pyramid.

When we asked ourselves the question: Are we moving and creating value as rapidly as the world around us? We faced the fact that we didn´t know exactly how fast the world was moving. Therefore, we had to bet on speed and ingenuity to try to get it right.  This bet was taken based on a previous analysis of where we see the business going, and where the world was going in terms of uses, trends, restrictions, etc.  The simple ROI analysis, which considers only the economic side of a product, is no longer our way of doing business.  We now also necessarily consider the Social and Environmental issues.

Moving from the single economic ROI to the integrated Economic, Social and Environmental approach, was not an easy task.  As a traditional financial organization, the analysis of the project could have been to forecast the revenues, allocate the resources, measure the costs and expect an estimated financial return.   Instead, what we considered when embarking this new project was to consciously analyze how big our social impact was going to be; establish if we were actually rolling out a real financial inclusion breakthrough, or improving the quality of life of the communities we will embrace; and finally, defining if this project was helping us to create a better and sustainable planet.  If those questions were responded properly, then we had created a very profitable project in terms of social and environmental return; and as well, a way to transfer wealth and life richness to the society. 

However, how did we do it? First, we used those questions above as the baseline to define the objectives.  Then, we tried to create a product aimed to fit into the answers to those questions.  Finally, we worked on solving the issue of how to turn it into a profitable economical product.

We initially had the task to create a new type of savings account for the very poor, as dictated by the banking authorities. Our first glance of the solution was to use the same accounts just changing some minor features such as cheaper monthly fees, fewer transactions and a different kind of communication strategy. Basically, it consisted in using the same strategy we has used before: branch enrollment, contact center, etc.  After our first analysis, we understood that to serve the bottom of the pyramid client these ideas didn´t make any sense.  The financial regulators wanted the banks to create an Electronic Savings Accounts for the less favored citizens, but the fact was it didn´t have anything truly innovative, and was not going to truly be “inclusive”. Both of their solutions to inclusion, and our current product breath, did not solve the necessity.

We decided that a true paradigm shift was needed. We realized, therefore, that the best course of action would be to utilize the innovation platform developed within the Bolivar Family, based on the SIT – Systematic Inventive Thinking methodology. SIT (www.sitsite.com) is a methodology, developed and applied globally in the past 17 years in 64 countries. The method, which has its origins in the Russian TRIZ approach, is widely used for new product development, problem solving, strategy, conflict resolution and marketing communications. It consists of a series of tools, principles, procedures and guidelines that enable the generation of ideas and their implementation, both on an individual and an organizational level, creating a culture and practice of innovation. The Bolivar Group adopted this method in 2007 as a key component in its drive to create an innovative organization. After a full year of piloting the method in various companies of the group and a variety of contexts, a full-blown three-year program was launched, with strong top-down commitment, which is considered absolutely crucial to the success of the effort. This commitment is expressed in (among other elements): a) an important economic investment in external professional support, b) many thousands of man-days spent on training, c) special budgets for developing and implementing new projects, d) sending employees abroad to expand their professional experience and personal horizons, e) dedicating the most important yearly and periodical company events to various aspects of innovation, and others. The Bolivar Group has since trained more than 600 "Innovation Coaches" of various types and sepcialties, as well as around 7000 employees, both in the company’s headquarters and in all of its regional offices, by giving them a set of tools for innovative thinking. We have also conducted several hundred specific innovation projects, with clearly defined goals and an extremely high level of implementation rates, of which the DaviPlata initiative is a leading example. In this case, the main innovation tool of choice was “Subtraction”. The idea behind this tool is to review all the components of a product, system or process, identify a component that appears to be totally essential, and subtract it. We reviewed our process of acquiring a new client and opening an account. Some possible components were:

• Branches
• Debit Card
• Forms
• Signatures and Fingerprints
• Paper
• Fees or any type of charge 

As anyone would imagine, the initial reaction to the thought of subtracting any of the above was surprising and received with rejection. Some of the reactions were: someone had lost their mind! This cannot be done! But that is, of course, part of any innovation process. Following the steps defined in the methodology, we continued with the process asking the team to suspend their disbelief for just a short while and instead asked them to consider only the benefits of each possible subtraction. Several strong benefits immediately came to mind, enough of them actually, to justify further exploration and move on to the next step – considering the challenges and problems, and identify possible solutions.

The first stage was to imagine what people can really use, accept or interact with; what were their fears, desires, expectations, etc.  We took some “field trips” to some low income neighborhoods in the larger cities in Colombia: Sierra Morena – Bogotá, Aguablanca – Cali, Soledad – Cartagena, Santo Domingo – Medellin. For us, this was a different way to do market research. Usually, we have paid companies to run focus groups, in-depth interviews, etc.  As Steve Jobs said: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”  So we decide to go out and try to understand what people wanted, not by asking directly “what do you want”, but by trying to understand how people behave in real life without any kind of prejudice.  At that time the primary DaviPlata development team was a two person team, so they move for over a week to each location, they got involved in the everyday life, talking to the locals about anything but financial issues. We wanted to know what their worries were, how they interacted with other members of the community, who were the local trend-setters, what motivated them to do and to buy things, to change patterns.

Another activity we performed to do the “human” market research was to get involved with the distribution chain that supplies products to the “small merchants” within those communities. Here, we needed to understand how the people, not the companies involved, behave and think. The team actually got into the delivery trucks and did the round trips into the areas selected visiting and interacting with the owners of “small mom and pop shops with the “delivery crew”.  This activity also gave us an input into the acceptance side of the DaviPlata ecosystem.  In parallel, we studied the mobile banking initiatives related to Financial Inclusion in Africa, Asia, and Latin America.  And finally, we tried to understand what the regulatory framework would allow us to do.

DaviPlata came to life in April 2011. It was basically an M-Wallet that could be activated by any person using his/her SIM card on their cell phone.  The transactions allowed at that moment were:

• P2P (person to person) transfers (DaviPlata to DaviPlata or DaviPlata to Savings or Checking Accounts)
• Cash In – only from Daviviendas´ Saving or Checking Accounts, Bulk Payments
• Bill Payments – Public and Private
• Top-Ups
• Withdraw Money – ATM

Figure 1. DaviPlata Options Menu.

The language used in the Options Menu was one of the most radical risks we assume in the project.  It was the first time we decidedly changed the tone we use to communicate with our clients.  We went from technical and rigid words to a more colloquial and close to the client language.  Figure 1 shows the main options menu.

There were many innovations on the technical side, but the major innovations were on the ease of use and delivery of the service to the end user; it was free. 

First, the enrollment process: the problem to solve was how to enroll someone who is “faceless”, not using a branch office or the internet. In banking, “know your client” is everything. So, how do we enroll someone we don´t know, of whom we do not have any banking record, nor have any credit information available? The banking sector also needs to check if there is any drug related tie or conviction. So, how do we go about it? We actually did know how to get the info life and quickly. We solved the problem using the access that the banking industry has to central ID database controlled by the government. Through this database we could check whether the information delivered to us through the cell phones was in fact real data from a the government issued ID. That information was then crossed with the OFAC (Office of Foreign Assets Control) and other bank controls databases.  Nevertheless, the most important control is the control performed posterior to the enrollment. The key for this control is to know how the users behave, and identify which are typical or untypical transactions.  One of the most important decisions that took place during the project was to try to understand the end user from a completely different frame of mind than the one used in the traditional banking side.  Hence, DaviPlata has its own risk and compliance areas, which are specific teams that created a particular “risk model” for DaviPlata, based on the community behavior rather than the individuals’.  For example, we deal with two important communities; subsidy beneficiaries and armed forces personnel; the behaviors of these segments of the population are completely opposite. If the risk analysis were to be conducted using the enrollment information, we would have to turn back to the time and cost consuming process of forms to fill, physical identification, etc.  In this case, we build a set of patterns for each community and use it to control any type of “untypical” behavior.  This set of patterns is built by selecting a statistically significant sample, and creating an “usual” profile of the member of the community and then used it as the control reference.

DaviPlata was deployed as a completely independent unit within the bank, with its own areas of operations; projects, marketing, business, commercial, risk and AML (Anti Money Laundering), and even a area for human resources.  During an executive committee, where the timeline of the project was being analyzed, the Bank´s President made the following observation: “This is so different from what we usually do, so progressive; that I wonder If we should implement it within the actual organization. We should think a new and different structure to undertake this challenge.”   By having a separate management lab, we could try different approaches to management directives, without impacting the current structure set in the bank. 

The core culture and management aspects of the Davivienda model were kept: principles and values, the importance of believing in each employee, our innovation culture, and the approach to balanced economic, social and environmental results. The desired changes were: less hierarchy, more result driven management, rather than supervised management; a “democracy of ideas” environment, less bureaucracy, and a more efficient control of costs.  In order to accomplish this, DaviPlata was staffed with a total of 46 employees, managed by an Executive Director and an Executive Committee.  Today, the unit structure has 4 “functional clusters” and 3 “staff areas”.  The 4 clusters are: Business, Commercial, Experience and Projects, and the 3 staff areas are:  Risk, Compliance, Human Resources and Corporate Social Responsibility.  In each cluster, we have employees with different talents and experiences that work toward a specific goal, without a direct dependency between one another, no matter the hierarchical position. All employees can equally postulate ideas, perform the tasks and present them.

The “Initiative Committee” is a monthly meeting where any employee that has an idea can present it, explain its impact (Our Work, Family, Community, Planet or Personal Higher Purpose), and become part of the team that is going to undertake the task.

DaviPlata, as a separate unit, can generate big levels of specialization and independence.  Even though, as a Davivienda´s business unit, it can establish and take advantage from the synergies from other departments within the actual structure.

DaviPlata is at the moment making some changes in the way people get evaluated, and how this will directly impact their salary scheme.  For instance, as part of the evaluation process, completing milestones for its own personal higher purpose is a must, which will be shown in their “DaviPlata Performance Chart”.  The “DaviPlata Performance Chart”, is an evaluation tool that will reflect how our people balance these five aspects, and how they perform in each one of them:

We are searching for individuals that can impact other people´s lives by acting as a role model, not only on a professional level, but in all aspects of what we consider principles and values worth enough to live for.

From the service side, two great innovations were to take place: First: can we deliver a great product with a high added value? And, Secondly, can it be done in a substantially more cost efficient way?  To achieve this, we decided to outsource the clients’ contact center to lower costs and lower time to market for new features or tool deployments.  Our product provides service only to cell phone users; thus, the contact numbers are a short code 80888, and a toll free #688. Both, the short code and the toll free, are answered using, as a first layer, automated responses. The short code that manages the SMS queries is answered by an artificial intelligence platform named Blue Messaging. The toll free works with an IVR entrance and then, depending on the user inquiries, we can put him/her through to a call center agent or give him/her a call back.

Another of our main concerns within the project was how to convert the electronic/virtual money into real one if we could not use any kind of debit or prepaid card to withdraw the money from an ATM.  At this point, we developed a transaction into our ATMs that allows DaviPlata users request for money from any Davivienda’s ATM using an OTP (One Time Password) which was given by the DaviPlata menu.  This transaction was a major innovation, it was the first time that a massive e-money platform uses this kind of technology, and actually allowed us to enter a niche market that was not initially considered. Through this invention, we had the capacity to change the money remittance model.   For domestic remittances, the OTP originate withdraw money transactions was to be used, not only by the DaviPlata owner, but for any kind of beneficiary anywhere in the country.

In this second phase, after working directly with the government, specifically with the Treasury department, Ministry of TIC ( communications and information technologies ), Banca de las Oportunidades (banking for the poor), and the Banking Association; the regulatory framework for Electronic Deposit was reorganized and established in December 2011.  This gave us the possibility to enhance the innovations available for the DaviPlata platform.  Right now DaviPlata can be “fed” not only from the saving or checking accounts in Davivienda, but also we have allowed our competitors to participate in this product through their accounts, credit cards and direct cash deposit in a Davivienda branch or an NBC (Non-Banking Correspondents). One of the most recent breakthroughs is related to the international remittance business, whereby a DaviPlata user can receive remittances directly to its DaviPlata account (in his/her cell phone). 

DaviPlata Ecosystem

A big part of the DaviPlata Ecosystem is the acceptance side, and here, once again DaviPlata plays an important role in helping the country get into the discussion about economic formality of small merchants as they will be playing an important role in the acceptance side of the ecosystem. Currently, in Colombia 55% of all retail sales taken place with small merchants. Also, differing from the tendencies seen elsewhere, when we compare traditional channel distributors (mom and pop stores) vs. more modern channel distributors (large retail and supermarket chains); the mom and pops are growing faster.

Keeping in mind that this is not a non-profit organization, but an actual business, the economics are still important for the success and sustainability of the project.  We believe that a financial transactional service can be deployed as a two-sided market, where the user is able to access a sound and secure platform to perform most of its monetary transactions for free; and other users group is willing to pay to get involved with the ecosystem created around the platform.  Here is where the pricing model is totally redefined. As a key rule of a two-sided network pricing model, the more price sensitive side is subsidized (the user of the platform) by the side who wants these users to interact with them (bulk payments, utilities companies, collection departments, government subsidy disbursements, Telco and other provider top-ups, etc.).  DaviPlata´s vision in the medium term also considers the use of the platform as a way to deploy other products and services to the population.  shows more clearly this approach.

 The following video provides a short overview of DaviPlata.