When you have more than 25 million customers using M-PESA, a lot of data is generated. This data can inform key business decisions based on customer insights, which is what happened when Safaricom’s Financial Services and Big Data teams took a closer look at the data flowing through the mobile money transfer and payments platform. They noticed something interesting: although there were numerous transactions cancelled every day because of insufficient funds, 58 per cent are completed within two days. This eureka moment became the beginning of Kenya’s first – and only – mobile overdraft service, Fuliza.
Just six weeks after the product hit the market, Fuliza has become more than a financial service; it’s the newest Kenyan buzzword. Sitoyo Lopokoiyit, Chief Financial Services Officer at Safaricom, tells us more.
What is Fuliza anyway?
It is a product that we developed together with our partners KCB and CBA, and what it does is provide an overdraft facility with M-PESA that allows customers to complete their transactions.
Fuliza is a Swahili word meaning ‘continuously flowing’. (It comes from the word) “mfululizo.” When we came up with that name, there was quite an interesting debate here. Most people wanted to call it Okoa M-PESA or something like that and having lived in Tanzania, when we got the name Fuliza, it just fitted well.
Why not call it Fululiza then?
Fuliza is short. If we called it “Mfululizo” it would’ve been a bit of a tongue twister. Fuliza is Kiswahili sanifu and resonates with all age groups…it is a very unique word. It’s the same way we got M-Shwari, from the phrase “niko shwari”, meaning “I am alright.” Fuliza is now another Kenyan buzzword.
You already have KCB M-PESA and M-Shwari, so why add Fuliza?
Before we develop a product, we get a lot of customer insights. We’ve had KCB M-PESA for four years, M-Shwari for seven. Over the years, we have gotten a lot of insight from customers on what they want.
What this product provides is short-term credit to complete a transaction that you would have done later on. M-Shwari and KCB M-PESA are term loans. You take a loan and pay within 30 days. For Fuliza, it’s an overdraft that you take for that particular need and when funds come into your M-PESA wallet, it reinstates your balance and reinstates your overdraft.
These services complement each other. Over the past six weeks, we have not seen any difference or erosion. They are both growing.
What role did big data and analytics play in the development of Fuliza?
Safaricom has invested millions of dollars in the technology that we have for M-PESA. We have invested a lot in systems that actually enable us to understand what our customers want. We also do a lot of research to find out what our customers want, and get a lot of feedback from the other products we have. That is what has enabled us develop a product that has resonated very well with Kenyans. It’s been six weeks and the growth has been phenomenal. Using big data, we’ve been able to deliver a product that Kenyans wanted.
What was the data saying?
We’ve got millions of transactions that are cancelled every day because of insufficient funds. Say you wanted to send KES 10,000 and you have got KES 9,500, so you can’t complete the transaction. The research and the big data showed us that providing a facility that will enable the transaction to be completed is something that was needed.
We began testing this product in October last year. We went live on January 5th this year after testing the product for three months with 50,000 customers. We had gotten a lot of insights after analysing our big data to understand what the customer wants, and we’ve been fine-tuning the product since then.
You disbursed KES 6.2 billion in a month. What was your reaction when the numbers started coming in?
To be honest, it’s good to see that we hit the right tone in terms of the product with our customers. But the numbers are not the only thing that’s important to us. It’s also about whether we are transforming lives. Is Fuliza helping solve a need for our customers? We have shown that we are actually solving a need.
What do you think that says about the Kenyan market?
We have a very vibrant FinTech space. Today, we have 3,500 organizations that have already connected to M-PESA through our Daraja API. We also have over 16,000 developers that are registered and using the platform, and over 200 FinTechs that have partnered with us.
Kenya is a hotbed of innovation and technology and there is no other place in Africa that is as vibrant as Kenya in FinTech. We’re encouraging more FinTechs to partner with us as we open up our APIs and do roadshows to show how they work, and how these businesses can integrate with M-PESA to grow.
What does the evolution in FinTech in Kenya mean for M-PESA’s growth as a payments solution?
M-PESA is almost an open platform, and we work with many partners including those in the financial services sector, because that’s key to our growth through innovation in new products and services.
What would you say about Fuliza’s interest rate?
Fuliza comes from the insights that we have about our customers, and what they want, so we developed a product that is of relevance to them. When it comes to the interest rate, it’s actually much cheaper than other products in the market.
There are over 60 organisations providing credit in Kenya and if you look at the way Fuliza has been designed as an overdraft, the fee is actually quite small when you look at how quickly someone pays. So it’s not a loan. We are listening to our customers, and we think it’s priced right.
What feedback are you getting from the market?
We have received good feedback on how to improve the product, even though customers are generally happy with it. There are certain things that we have started changing based on the feedback that we have been getting, but we are still in the early days. This is a product that will take another 12 months or so to be fully mature, as we get more feedback from our customers and insights from the data we collect.
It’s important to note that Fuliza is a contextual payment. It is not a loan that you can take and withdraw: it is a contextual payment within that transaction. It’s a drawdown, so you don’t have to use the full value of your overdraft. It could be that you want to complete the transaction of 50 shillings; you can do that and have a balance in your overdraft.
How we look at it is, Fuliza is not about increasing the appetite for credit by Kenyans. This is about helping somebody who is trying to fulfill a transaction, so it has a very different context compared to the different loan products we have in our ecosystem.
What do you see in Fuliza’s future?
I think we’ve done a lot for the savings and credit propositions, as well as deepening financial inclusion for our customers. I think one area in which we are still behind is driving the same for the SME sector in Kenya: how does Mama Mboga grow her business? How does a small SME in Gikomba grow their business? How do they access credit? Their type of credit is different from what an individual wants. Fuliza will be looking at how we grow the SME sector and provide financial services to that sector. There are over a million SMEs in Kenya that we see as a potential target. We want to address that and it is very much in line with our mission of transforming lives.
How does that fit into Safaricom’s plans to take M-PESA global?
What we’ve also done with Fuliza is looked at it not just from a Kenyan perspective, but with our sister company Vodacom. There are seven countries in Africa that run M-PESA and we’ll be looking into taking Fuliza to those markets first. It’s in line with the idea to take other products and services we have developed in Kenya into other markets.