Small Businesses and Digital Financial Services – Predictive Modelling and Segmentation for Market Sizing and Product Design

April 14, 2019

Micro, Small, and Medium-Sized Enterprises are the backbone of vibrant and dynamic economies. But they are sometimes hard for financial institutions to identify because of the methods they use to conduct their transactions. This report discusses predictive data models to help a mobile network operator, identify MSMEs in its market and better understand how to serve them. Identification and segmentation of businesses that use mobile money services provides valuable information for product design and targeted marketing.

Multiple research components generated comprehensive insights into the MSME segment in the study country. Apart from analyzing mobile money usage patterns, the team also conducted a survey with MSMEs that was used to inform the development of an MSME identification model and to study and profile businesses. This report shows that MSMEs with an individual mobile money subscription can be identified based on their mobile money transaction behavior. A significant number of high-value customers on the digital channel are formal and informal businesses that transact using consumer-oriented products. Profiles and patterns emerge that help to even sub-segment MSMEs based on their usage of mobile money, their business characteristics, their financial needs, and current use of formal banking services.