> Posted by Julia Arnold, Research Consultant
Embed from Getty ImagesA colleague recently shared a story about helping a friend’s housekeeper open a Jan Dhan Yojana account in India – a free bank account offered through India’s massive new financial inclusion scheme. After being stonewalled by the bank teller and yelled at by the assistant manager, who insisted the bank no longer offered the account, my colleague and the housekeeper were ushered into the bank manager’s office. The bank manager proceeded to ask the housekeeper for multiple forms of ID, none of which are required for the Jan Dhan Yojana account. Only when the bank manager recognized my colleague as a financial inclusion expert and author of a scathing newspaper article on the Indian banking sector, did he “make an exception”. When the housekeeper returned the following day to get her debit card, she was asked for payment. Luckily, she pointed to a copy of a pamphlet in the local language, which showed that she should be allowed to open the account without a deposit. Now, after all that, she is a member of the formal banking system of India.
What this story shows is that a decree that banks must offer a financial product to the unbanked is not enough. Educating frontline staff, shifting workplace culture, and strengthening consumer protection laws are all key changes needed to enable genuine inclusion.
So is advancing financial capability. Financial capability refers to a person’s knowledge, skills, attitudes, and behavior, as demonstrated in informed personal financial choices and outcomes. In this case, the housekeeper had access to a personal financial inclusion expert to help her navigate her relationship with the bank, but few people are so lucky.
Financial capability efforts are not only about information transfer, but also encompass enhancing a person’s ability to use financial services effectively to manage her economic life. For example, in my colleague’s story, an educated frontline staff who helped the housekeeper understand the appropriate use of the requested bank account would be an example of financial capability building. Or another financial capability intervention could encourage the use of the account during times when the housekeeper has money to deposit (e.g., tracking her deposits and using that data to send reminders at those intervals).
Inspired in part by stories like this, and building on FI2020’s Roadmap to Financial Inclusion, the Center for Financial Inclusion is investigating innovations in building financial capability. In this context, an innovation can refer to a new or new use of a delivery mechanism, product design, program idea or process. The purpose of the innovation must be to assist customers to gain greater financial capability. Over the course of this year, we are scouring the world to identify the best, most creative – and potentially replicable – efforts to build customer financial capability – starting right now!
Have you seen or been associated with any innovations in financial capability building that CFI can investigate? Please share them with us!
Below is a Google Form that asks you to briefly describe an innovation. The form is easy to use and should take less than five minutes of your time.
By contributing to our research, you are helping ensure we capture the full spectrum of innovations around the world. It will take all of us to make stories like the above a thing of the past. Thanks in advance for your help!
Have you read?
The Earnings Component of Financial Capability: Experts Exonerated from Ignorance
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March 24, 2015 at 4:05 pm
Chris Connolly
This is the sort of issue that we referred to, somewhat generously, as the need for more “training” in our recent blog post on the topic (http://mondato.com/blog/india-part-2). It also highlights the opportunities that Aadhar-linked mobile wallets will present in the future, when India’s BOTP consumers can open an account remotely and bypass the petty bureaucrats.
March 25, 2015 at 1:56 am
John Gitau
It is disheartening to realize that, in spite of our efforts to make the poor financially literate, they will still be manhandled when they seek formal financial services meant to enhance their financial capability. This anecdote reminds me of a visit to a local bank that pretends to serve the poor in my country. At the lobby was a group of motor vehicles mechanics numbering around fifteen who had come to open a self help group account. An accounts opening officer came, made the mechanics form a queue, then changed her mind and told them to form a circle. She then started counting them physically ( the way farmers count their chicken)and then shouted “all those who claim to be members of this group must be present. If one is missing, no account will be opened and you will all have to go and come another day”. Then followed the filling of forms and the shouting decibels from the officer increased. It was as if she was dealing with kindergarten kids. That was the most discourteous treatment of customers I ever witnessed in a bank hall; completely unwarranted. In my mind as a financial education teacher, the mechanics had come to seek financial inclusion. Someone in the background must have sensitized the group on the need to open a group bank account, an efforts that culminated to this visit. But here they were being treated like domestic animals being herded to a watering trough.
My conclusion was that the bank officers needed human treatment literacy if they were to even start helping the financial excluded through to financial inclusion. As long as the excluded are stonewalled at the point of contact with financial services access, we have a long way to go and FI2020 might as well be a pipe dream.