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#Digital Currency Ecosystem

CBDCs: 12 aspects of a successful adoption

7 Mins.

CBDCs are still new to most people, and have been introduced as official means of payment in relatively few countries. There is advice available, however, for central bankers interested in rolling out a national CBDC. We’ve collected a few below, based on our expertise, projects, and conversations with central banks worldwide.

The successful adoption of a central bank digital currency (CBDC) relies upon finding the proper balance between pain points, motivations, and opportunities for all stakeholders in that particular ecosystem. An innovative use case – one that solves one or more of those pain points – must be introduced to the market; it could also offer an opportunity that was previously unavailable. The stakeholders in the ecosystem being addressed – consumers, financial service providers (FSPs), merchants, and central banks – should feel that their interests are kept in mind. Finally, it is helpful to remember that CBDC is not intended to be just a solution to a particular problem in itself, but rather, it is also intended to provide a platform for innovation that enables new business models.

The list below provides some background, with a few aspects of what might constitute a successful CBDC adoption strategy. While not exhaustive, it can drive the conversation around what is still a relatively unexplored topic.

1. Prepare a rollout plan

A user adoption strategy would be part of a broader go-to-market strategy for a particular CBDC. In general terms, a go-to-market strategy is a tactical plan that includes and summarizes all your moves in order to hit the mark in a new market when you’re launching a new product – such as CBDC.1 

2. Analyze before launch

It is important to conduct a comprehensive analysis of the current payment landscape when considering the strategy for CBDC adoption and its development in a local market. 

In a market with low penetration by retail digital instruments and a high level of cash payments, CBDC would complement cash, and increase the level of digital financial inclusion. 

In a market with low cash usage and high retail-digital-instrument usage, on the other hand, a CBDC would to a large extent be a public alternative to private digital payment offerings, which include e-money (in particular mobile money), debit/credit cards, and instant payment systems. They may share similar user segments and business niches.

There is a third case: in certain markets, cash and digital instruments both see high usage. In such a situation, users would benefit from the new services and business models that CBDCs enable.

3. Understand the audience

Segmenting and understanding the market is crucial for the design of targeted and personalized use cases and user experiences. Big retail chain or a small merchant? An unbanked person, or a tech-savvy initiate? Going after one smaller segment at a time gives you the ability to appeal more directly to the audience, while committing fewer resources. Having found success in a few different niches, it is easier to address the rest of the market.

4. Order your road maps in different sizes

One potential strategy may be to immediately release CBDC to everyone; in other words, a “hard launch.” This entails all-inclusive access to CBDC from the beginning. Another possible strategy, a “soft launch,” would start with a small cohort of users (salaries of public workers or government welfare payments, for example) and then scale up. While this approach doesn’t reach everyone immediately, the insights gained from this small-scale release can be used to further improve the value proposition for further use cases. 

5. Define the value proposition

What makes a CBDC unique and different from payment methods that are already on the market? These propositions need to be communicated to stakeholders. Appealing features and a seamless user experience could be key for widespread adoption. “Killer use cases” like new programmability, privacy, and digital identity are all examples of new offerings enabled by CBDCs. (Note: These would depend on the payment landscape of a particular country.)

“As practice shows, successful CBDC should be driven by incentives rather than through administrative pressure.“
Roman Hartinger
Senior Business Analyst CBDC, G+D
6. Price it right

People are very stubborn when it comes to their payment habits.2 Convincing them to use a new payment method is tricky. Ideally, there should be technological incentives such as ease of use, faster payments, and convenience compared with existing alternatives – as well as financial incentives, like the fact that the fees for CBDC usage are more engaging than for other (digital) payment methods. The appropriate fee structure should be taken into account by the central bank as a crucial instrument to influence the audience’s decision regarding CBDC use.

7. Integrate the private financial sector

Commercial banks, mobile money operators, special deposit-taking institutions, and other non-bank financial institutions play a crucial role in the CBDC ecosystem. On the one hand, they are an integral part of the “two-tier” CBDC architecture as service providers. On the other, they can increase user uptake by making CBDCs more attractive through their value-added services, which are offered on top of the core CBDC infrastructure.

However, clear incentives are necessary for them to participate. The basis for these incentives is an efficient business model that solves real market needs, as well as a fee model that benefits players in the private sector.

8. Involve the merchants

Prior experience in payments shows that successful adoption of CBDC largely depends on universal acceptance by merchants. Consumer adoption is crucial, but it is clear that even the most committed user will be frustrated by poor acceptance of a payment method. In this context, it is key to make the merchants feel that adding CBDCs to their existing payment landscape would be beneficial to them. Intermediaries will also play a key role in merchant acquisition by bringing their existing merchant networks to CBDC acceptance. Also, the legal tender status might be important to drive adoption by smaller merchants.

Woman pays with her smartphone
All smiles: CBDCs make payments easy
9. Educate and promote

CBDCs are still relatively new, and there isn’t great awareness among the general public. A clear strategy is required to successfully promote it in the market.

  • Once FSPs are motivated to participate in the CBDC ecosystem (See 7 and 8), they can tailor their existing promotions to push them.
  • Marketing should include a lot of different tools to approach different user groups. These could include mass and social media or other innovative vehicles, for example discounts tied to marketing anchors, such as festivals.3  
  • Promote CBDC use within government.4

This can be a crucial part of boosting end-user acceptance and adoption of CBDCs, as part of a go-to-market strategy.

10. Monitor user adoption

Measuring the effectiveness of the user adoption strategy is very important, to derive insights on potential improvements and refinements. The metrics used can include the number of active wallets, value and volume of payment transactions, and change in payment habits within that society. It is possible to calculate the level of efficiency gains from these.

In the long term, the impact of a successful CBDC implementation can also be measured by economic metrics. Some research has shown that the introduction of CBDC can have a positive impact on gross domestic product.5

11. Learn from other projects

There are still very few countries that have rolled out retail CBDCs, so experience within the area is invaluable. Previous CBDC implementations or pilot projects in other countries should be studied and the insights, both positive and negative, applied.

12. Strike the right balance

CBDCs should be attractive enough for users and businesses to adopt them. At the same time, uptake shouldn’t be so high that there is a disintermediation in the banking system, and a crowding out of private payment solutions.6 CBDC should be a complement to cash, and provide a public way to pay digitally. Central banks should search for this balance when looking to drive the adoption of CBDCs.

  1. “7 GTM strategy examples to inspire yours,” The Product Company, 2023

  2. “Ensuring adoption of central bank digital currencies – An easy task or a Gordian knot?” – European Central Bank, 2022

  3. “China’s CBDC spending surpasses 100 billion yuan,” Central Banking, 2022

  4. “Strategies for achieving high CBDC adoption,” Cizmic Consulting, 2021

  5. “The macroeconomics of central bank issued digital currencies,” Barrdear and Kumhof/Bank of England, 2016

  6. “CBDC – The acceptance and adoption challenge: Keynote speech at the virtual European Payments Conference ‘Key Trends in the European Payments Landscape,’”Burkhard Balz, Deutsche Bundesbank, 2022

Published: 28/03/2023

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