Stories from the Field: Diverse usage patterns of Digital Financial Services in Laos

Authors: Salika Onsy, Daovy Kongmanila, Vilaythieng Sisouvong, Yeng Lee, Saengduean Oulayseng, Isaac Lyne, Erin Taylor, and Heather Horst 

 In December 2024, members of our research team conducted interviews and focus groups in Luang Prabang Province in northern Lao PDR. In one of the villages where we carried out research previously, a significant number of farmers had switched from growing rice to egg plant and broccoli. This resulted in much higher returns in profit from the city traders who travel there to sell vegetables.  The change in crops also corresponded with a broader infrastructural change where digital financial services were mad available. As a result, farming households in the village commonly used BCEL ONE to both receive and make payments related to their farming.  

 However, we found that the use of the service is quite diverse. For instance, while some people used the BCEL ONE wallet fully, some integrated it with cash, for instance by giving a relative cash to deposit at the BCEL bank for them in the city which they then move into their wallet.  Other households used digital financial services to pay for inputs in advance of the farming season rather than going physically to purchase these items. Many households who engaged in this practice valued the receipt of digital payments as a way to save money for the next farming season.   

  Yet there are other factors to consider when trying to understand how and why people engage in specific practices. For instance, Ms. Fasay, a woman in her fifties explained that she goes to Luang Prabang city every month with her husband. During these visits, the couple visit a bank branch to repay a loan that she took out to cover a loan from her credit circle, after borrowing from there to fund her children’s education and finding herself unable repay her credit circle after a flood destroyed her crops. While they do use digital financial services in other aspects of their lives, they were reluctant to change the way they pay the bank. This is because their trip to the city is part of a routine and means that they can take advantage of their time to visit their son who lives there. In other words, maintaining kinship and family ties take precedence over speed, convenience and other incentives to use DFS.   

  While not all households have the same opportunities to maintain ties, these are important factors in shaping the everyday adoption of digital financial services.