Page 14 - FIGI - Use of telecommunications data for digital financial inclusion

Nevertheless, a very large proportion of the World’s across devices and the customer journeys. Linking
population is not only unbanked but has not used offline CRM data with online cookies and mobile
digital credit or even mobile money and still does devices enables operators to maintain customer
not have access to smart phones or use many mobile experience. Customers can be identified across mul-
apps. In addition, new customers with no finan- tiple devices and screens to follow their customer
cial history will continue to grow into adulthood. journey and improve their experience as they interact
For these reasons, telecommunications data can with the operator’s brand, including through target-
be expected to remain a vital means of identifying ed advertising and transactions.
customers and de-risking loans and so lowering their
cost for some time to come. 4�2 Credit scoring
There are several areas in which telecommunica- One of the major impediments to further inclusion
tions data are used for digital financial services: and deepening is the absence of reliable credit and
other information on individuals and enterprises
• customer engagement, i.e., attracting them to that have not traditionally used banking and insur-
the service; ance services. Telecommunications data can be
• credit scoring, i.e., to assess risk of default; used to improve access to such services by bridg-
• asset and risk management; ing the information gap between traditional credit
• prevention of fraudulent transactions; and information and the data generated by consumers
• customer identification and anti-money laun- and entrepreneurs. These use their phones not only
dering and countering the financing of terrorism to make calls and access data, but also to manage
(AML/CFT). their finances, purchase products and services and,
increasingly, generate digital data trails.

4�1 Customer engagement 4.2.1 Post-paid accounts as a form of credit
Telecommunications data is useful to identify and Telecommunications data is a useful part of such
attract potential customers for digital financial data trails. To begin with, the switch from a pre-paid
services, even basic ones such as mobile money. to a post-paid account is a transition to a rolling
Mobile operators seeking to launch and grow a credit account. Telecommunications data is not only
mobile money business need to understand their useful for assessing a customer’s creditworthiness, it
customers, how to prioritise them and market to is used by the operators themselves for such assess-
them. Data scientists have found a significant rela- ments when considering upgrading a customer from
tionship between mobile telephone usage and the a prepaid account to a post-paid account. Post-paid
propensity to use mobile money. Analytics firms accounts depend upon the customer to pay his or
develop algorithms and identify generic patterns of her debts at the end of each billing period and so
behaviour and variables that are predictive for iden- the upgrade is effectively a decision to extend cred-
tifying users likely to adopt the service. Customers’ it. Telecommunications operators, such as Claro in
CDR and CRM data is then calibrated in relation to Brazil, are able to use machine learning to analyse
those models, enabling the mobile operator to target the telecommunications data they hold on their
its advertising and bring customers on board. In customers to make better upgrade decisions, and so
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Uganda, for example, Cignifi partnered with tele- less customers with defaults on post-paid accounts
com operator Airtel Uganda to use CDRs and mobile and so more profitable results. As shown below, the
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money data to identify potential customers that had use of telecommunications data reduced Claro’s bad
not registered for lending services. 2 debts as a percentage of net revenue by 13%, and
Analysis of the telecommunications data enables enabled a 5% increase in net additions to post-paid
operators to recognize and understand customers mobile accounts.

12 Use of telecommunications data for digital financial inclusion