Kenya Postbank Pilot Experience

YouthSave’s bank partners began creating their youth savings accounts in 2010, with extensive market research that obtained firsthand information about the savings habits, needs, and preferences of young people. But using these data to design the savings accounts was not enough. The resulting product prototypes still had to be “road-tested” in order to confirm that we had correctly a) interpreted the market research, b) translated it into product designs that met youths’ needs, and c) put in place the right marketing, back-office and sales systems, policies, and delivery channels. In three countries – Ghana, Kenya and Nepal – YouthSave’s bank partners did this through time-bound pilots in a limited number of branches.

Piloting was not easy, but was crucial in yielding valuable lessons that enabled these banks to successfully launch their youth savings products when they finally rolled out network-wide in 2012. Over the next few months, YouthSave will be sharing the experiences of these three partner banks through the Measure Twice Cut Once blog series, in advance of a comprehensive publication that will distill lessons learned across the pilots.

Kenya Postbank – a piloting veteran Piloting new products is not common practice in the highly competitive Kenyan banking sector, where speed to market is paramount. But Kenya Postbank’s experience with Bidii Savings, an account targeted at the mass adult market, helped convince the Bank of the value of pilot testing in getting new products right before launching them at scale. According to one senior staff member, pilot testing helped the bank correct errors before that product was rolled out at scale, resulting in its considerable success.

Still, when it came to piloting Postbank’s YouthSave-sponsored account, SMATA, project stakeholders were at odds on how long to conduct the pilot. Some argued for a shorter pilot in order to prevent other banks from rolling out a similar product before SMATA was officially unveiled. Others advocated for a longer pilot to allow enough time to both identify the challenges that would inevitably come with reaching a new client base, as well as test solutions. In the end, the team struck a compromise, scheduling the pilot for July through September 2011 with an option to extend through December if needed. The first step in preparing for the pilot test – establishing an energetic, committed pilot test team – proved to be the foundation for all the others outlined in Box 1. This team was able to drive the process and provide regular support to branches, which helped communicate that SMATA was part and parcel of the bank’s business, rather than an external project. The pilot test team also provided face-to-face training to pilot branch staff, which was particularly important in giving them better understanding of the product and achieving buy-in.

The proof in the pudding By December 2011, the pilot had yielded 679 accounts, or 71% of the target. The key objective of pilot testing is using feedback, both good and bad, as an opportunity to improve the product. In this regard the test revealed three main product refinement opportunity areas for SMATA.

1. Product Design

   • Documentation: Many low-income youth do not have a birth certificate, which the bank originally required to open an account in line with a strict interpretation of Kenyan Know-Your-Customer (KYC) requirements. Seeing how this limited uptake, the pilot test team, with legal guidance, expanded the list of acceptable identification documents for youth to include a birth notification, baptism card, or letter from the local administration.
   • Introduction of group accounts: SMATA was initially designed for individuals. However, during the testing period, the question of how to handle youth that wanted to open group accounts arose. In order to accommodate this aspect of client demand, Postbank incorporated certain features of existing group accounts into SMATA.
   • Access: During the pilot test, youth could only access their accounts through branches, but the limitations of this approach quickly became apparent as some youth lived too far away to make regular visits to branches practical. In fact, client interviews revealed that some youth had not been to a branch since opening their account, since that was done at their school. Based on these findings, the Bank confirmed their decision to connect SMATA to its other delivery channels – mobile phones and agents – at rollout.

2. Branch staff engagement

   • Proving youth response to SMATA during the pilot in turn helped engender the confidence of branch staff, which helps motivate their sales efforts. In fact, interviews conducted with branch staff during the pilot evaluation indicated that many believe SMATA is among the easiest Postbank products to sell, due largely to its client-friendly features.
   • However, the challenges of introducing a new product still resulted in a slow uptake in a number of branches at first. Four months into the pilot, the pilot test team therefore convened a meeting with the 12 pilot branch managers, where they reinforced understanding of the product and project (including the associated research processes), and brainstormed ways to increase product uptake. Apart from the practical information exchanged, the pilot test team felt that this meeting helped the pilot branch managers feel recognized and valued for their efforts. Within a month of this meeting, account numbers increased by 42%.
3. Marketing
   • Selling SMATA accounts through direct sales at schools and other community institutions proved time-consuming compared to more conventional forms of marketing. Successful branches distributed these responsibilities, with branch staff taking turns to visit schools, especially during less busy times. The pilot also underlined how important it was to find ways to access youth and adults together in order to open accounts. Staff therefore began to focus on attending strategic events like parent-teacher meetings.
   • Though this approach was labor-intensive, the pilot revealed some unexpected benefits of getting sales agents out into the community. In Busia county, for example, the branch manager reported that SMATA’s direct marketing approach had given his staff access to institutions and people that they would otherwise have not interacted with. The engagement of youth and their adult counterparts during SMATA outreach events served to boost the number of SMATA accounts opened – as well as the bank’s image.

A useful exercise – but a sustainable one?

Overall, Postbank staff are enthusiastic about the results of the pilot test and the opportunity for learning it provided. At the same time, many of them highlight financial support for the pilot as one of the key reasons for its success. The fact that the process was well-funded sustained the team’s commitment supporting the test, noted one pilot test team member.

The question then remains: will successfully piloting a youth savings product – or really any savings product aimed at low-balance customers – always require external support?