Building an experimentation process model for financial institutions developing personal finance products for the bottom of the pyramid

Abstract

Traditional financial institutions in South Africa have experienced difficulty in trying to bring the benefits of the formal, first world economy to the unbanked and underbanked markets that constitute the bottom of the pyramid for the country. South African formal financial institutions - as a result of governmental pressure and recognising business opportunities at the bottom of the pyramid – have through innovation been exploring and expanding their personal finance product and service ranges to meet the requirements of the unbanked and underbanked markets. Innovative products and services developed through a process of experimentation can help financial institutions meet the needs of this lower end of the pyramid. Research conducted through ethnographic interviews was directed towards furthering understanding of the process, forms and strategic context of experimentation that South African financial institutions (both large and niche) undertake and operate within, when developing and implementing products for the bottom of the pyramid and the impact it has on the organisation. A model was developed, which is an enhancement of Stefan Thomke’s four step experimentation process, outlining an experimentation process that can be used by institutions innovating and experimenting within a developing economy and market such as South Africa’s.