The following post, written by Jeanette Thomas, was originally published on the CGAP Microfinance Blog. It reinforces the importance of appropriate product design in achieving full financial inclusion. The Smart Campaign, which is about to launch its Client Protection Certification Program, includes a Client Protection Principle for appropriate product design and delivery as informed by client characteristics, needs, and feedback. 

Twenty-two million households in Mexico are middle or low income, and only half of them have a bank account. It’s not that they lack access. Most have had a bank account, but closed it after fees and commissions drained their balances. They are not so much “unbanked” as “de-banked”—they have voluntarily opted out of having a bank account because the banks don’t offer what they need.

Earlier this year CGAP, in partnership with Bancomer, commissioned IDEO.org, the non-profit arm of the California firm known for its human-centered design methodology, to create a savings product that would meet the needs of low income Mexicans. Bancomer, a large Mexican bank, wants to reach more people by offering products that will work for the low income market. This video tells the story of how the team developed products that meet the needs of poor clients, while also making the business case for the bank.

The team set out to re-bank the de-banked. But to do so they had to come up with a product that was better than the informal alternatives. “How do you beat the mattress?” asks IDEO.org consultant Karen Greiner. “What would bring them back?”

People associate the bank with a commission. Magali Crux, a detergent seller in Chalco, a migrant town on the southwestern outskirts of Mexico City, says “To tell you the truth, I don’t really trust banks.”

“She has such a negative experience of the bank,” explains IDEO.org’s business designer Chava Zepeda, “that she doesn’t want to get a bank account.”

Poor and low income Mexicans have found ingenious ways to “bank” themselves through informal mechanisms and social networks of family, friends, and neighbors.

They separate their savings into different containers as a way to manage their money, and to prioritize what can be spent. They stash savings into separate cans, or Tupperware that they hide in the kitchen, as a way to save themselves from temptation.

They use tandas—informal savings and loans groups— as a means to borrow and save. Almost everyone the team met during the research was either in a tanda or organized tandas.

Finding a way for the bank to provide additional value for low income customers that goes beyond the informal alternatives was key for the success of the project.

To read the rest of the post, and to watch the above mentioned video, visit the CGAP Microfinance Blog.

Image credit: CGAP

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