Zambia, a country rich in natural resources, holds the potential to be a hotbed for digital financial service growth. The macroeconomics bring challenges to all of its citizens as inflation, currency fluctuation, and changing energy prices are having immediate impacts on consumer’s daily lives.

These challenges could mean it is even more imperative for consumers to equip themselves with formal financial mechanisms. All indications suggest that existing consumer interest and desire for formal financial services make the market ripe with opportunity, and this openness to formal financial services is best captured now, before difficulties obtaining those services steal from their appeal.

Building toward financial inclusion demands that actors not only compete within an ecosystem but also cooperate – called “coopetition” by the United Nations Capital Development Fund Mobile Money for the Poor Program (UNCDF MM4P). “Coopetition” comes from offering some compelling reason for cooperation to emerge, and this requires research and understanding the market.

In conjunction with Financial Sector Deepening Zambia (FSDZ), MM4P embarked on a year-long consumer discovery mission with InterMedia, a global research consultancy recognized for its expertise in financial inclusion. The mission leveraged both qualitative and quantitative research as it sought to collect then synthesize as many learnings as possible about consumer lifestyle and behaviors, financial practices and preferences, aspirations and intentions. It especially leveraged the quantitative findings of the FinScope 2015 research.

Stakeholder engagement was critical, in this mission, therefore, the research process included input from members of the DFS community in Zambia at several junctures. MM4P’s outreach with policy makers, regulators, mobile money service providers and others in the digital finance ecosystem showed a consistent drumbeat of requests around understanding Zambian wants, needs and aspirations, as well as how to build financial products to meet those needs through all of MM4P’s engagements with. Even in the most recent January launch of the UNCDF commissioned Helix Agent Network Accelerator Survey, stakeholders across the room asked again and again for more information about Zambian customer financial needs.

Perhaps the most important ‒ and most heartening ‒, research findings in the study are that Zambians truly want to use formal financial services, and they want to engage with their financial accounts digitally. In fact, most Zambians say they are ready to learn a new technology (86%), and a near majority do not like to carry cash (47%). Moreover, those who are aware of mobile money want to be able to use their phone to pay their utility bills (69%), pay for goods or services (68%) and put money away (65%). Consumers also tell us they think they would be better off with a formal digital account versus an informal one, but are not enabled to obtain a formal account.

Consumer attitude and behavior is positively poised, making these consumers an attractive market segment for providers looking to grow their market share. For instance, the Zambian population is predisposed to saving money whenever they can. Consumers tell us it is savings that helps them through rough patches, and can enable them to attain plans for their future. Seven in 10 (70%) save for specific purchases, almost as many (68%) forgo purchases to save money. They also tell us that budgeting is an essential part of household management. Even if they have to stray from their budgets, they start with a plan for how they should spend their money that week or month. Nearly nine in 10 (87%) adjust their monthly expenses according to their available funds. Six in 10 (60%) keep track of what they spend and receive. Consumers may struggle to keep up with expenses, but only a mere 2% will say they fall completely behind.

The research and our experience shows us time and time again, that there is vast unleveraged potential in the Zambian market. If only providers and the entire financial inclusion ecosystem really get to “know and love their customers”.

Amidst this conducive environment, the research points to three significant‒ but surmountable ‒ challenges to the uptake of digital financial services.

Challenge 1: Convert the user who is familiar with brands but not the product

The first centers on a lack of meaningful consumer knowledge of mobile money as a product. In 2015, only 53% of Zambians had heard of mobile money. Of those, three-quarters had NOT used it. They know the particular brand, or term “mobile money” but have not used it because they didn’t know enough about the service, didn’t think it was for them, or, felt that they were ill-equipped. Further, there was some fear of losing money during transactions and/or if the phone was stolen. In short, mobile money’s value proposition is still fairly hidden within a population that could very well embrace its functionality.

Challenge 2: Create new awareness where it does not currently exist

The second barrier is a broader extension of the first, and focuses on a lack of general awareness among the population. Simply put, more people need to know that mobile money exists. Only 53% know of mobile money. That leaves 47% in the dark. With only 53% of Zambians aware of mobile money, the market will have to create new awareness where it currently does not exist if it’s going to move into expansion. This finding is further substantiated by the research from the Helix Institute, as well as concerns voiced by the Bank of Zambia as well as service providers.

Challenge 3: Bring access into the palm of a consumer’s hands

Third is an equipment, or tools, issue. Close to four-in-ten Zambians do not own a mobile phone, a critical tool for mobile money adoption. And, many do not have access to the required ID for opening a financial account. For the market to reach maturity, it will need to increase incidence of mobile phone ownership, as well as accessible, reliable identification.

The lack of inclusion does not appear to signal a consumer aversion to the use of DFS, and should NOT signal a market aversion to formal DFS products. If anything, the three barriers suggest limitations to use that are surmountable, especially given a population that might very well be ready to embrace DFS use.

Research and insights point to four strategies for customer adoption:

1. The next customer is a new customer. With just 25% having or using a bank account, and 14% having or using a mobile money account, providers can select their target consumer and chart a course for recruitment.
2. The customer needs to be equipped with mobile handsets and national IDs so that they can get and maintain digital accounts
3. The customer needs meaningful knowledge about financial products. This includes relevant uses, applications, and virtues of the product that relate to a consumer’s life and position the product as a means to a consumer’s end goals (savings, education payments, and others).
4. There is room for everyone. In fact, providers will be more successful if they work together to bring about greater adoption, and collaboratively contribute to equipping consumers with handsets and introducing them to the virtues behind mobile money. It’s a mammoth task for just one or two providers and regulators, but three or four can cause a sea of change that results in more customers all around.

MM4P’s platform can support Zambian regulators, mobile money providers and other critical actors act on that spark of inspiration from these findings and recommendations, bringing some of these insights into action.

Access here the research highlight and here the Intermedia full report