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> Posted by Karen Firestone, President and CEO, Aureus Asset Management
The following post was originally published on the Harvard Business Review Blog Network.
Financial services firms want to reach more women; so I conclude from data presented by Pamela Grossman of Getty Images at SXSW this year. According to data collected by Getty, financial firms are buying 20 percent more stock photos of women today than they were five years ago. At the same time, the share of men shown in their advertising has declined.
Of course, we live in a wildly diverse world; we want to be inclusive and broad-minded ourselves; and we therefore want our providers of financial advice, energy, and technology to reflect those values. We prefer Morgan Stanley or Citigroup to be talking to all of us, showing us that they have transcended their traditional, mostly white and male clientele. According to Chris Edwards, former Group Creative Director for Arnold Worldwide, we also want visual evidence that the professionals at these firms are as diverse as the clientele they seek. Advertising images reinforce and extend these efforts.
Financial institutions portray women today as competent and self-confident, and often feature attractive, middle-aged advisers talking to couples in which the woman is similarly well dressed and clearly attentive. According to Dr. Emma Firestone, who has studied the audience perception and response to images and words in media and entertainment, from a cognitive perspective, “It makes sense for advertisers to present women as strong, well-educated consumers. This is appealing to women who see an attractive self-image reflected back at them, and to men, who are flattered by the idea that smart, self-possessed, and financially secure women are their own life partners.” Men are much more likely today, than decades ago, to be comfortable with and appreciate their spouses as full partners in their own financial decision-making – at the same time, imagery of supportive female financial advisers plays into comforting stereotypes of the woman-as-helpmeet, perhaps humanizing an industry consumers view as confusing or even threatening.
> Posted by V. McIntyre, Freelance Writer for the Harvard Kennedy School
The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.”
Enthusiasm for mobile money among the financial inclusion community is generally high, but like with most topics, when you pierce beyond the surface-level praises, the tone of the conversation becomes more mixed. As Harvard Business School professor Shawn Cole stated on day three of the HKS Executive Education course Rethinking Financial Inclusion, “Mobile money has been next year’s big thing for the last ten years.”
Comments on disappointing levels of mobile money services uptake are common, and are often paired with another dominant piece in the mobile money narrative: M-Pesa’s runaway success in Kenya. Since its introduction in 2007, M-Pesa has been taken up by 70 percent of the country’s population. And as the professors pointed out, of those who used M-Pesa in the last 12 months, 43 percent did not have formal bank accounts. This statistic exhibits how mobile money provides financial services to many who might not otherwise have them. The statistic also alludes to the question of whether the service is a good on-ramp to more financial services. Questions about on-ramps and services uptake are essential to the mobile money and financial inclusion conversations at the heart of discussions throughout the weeklong HKS program. Balancing such questions were conversations that illustrated clear, and perhaps surprising, benefits of mobile money.
Jenny Aker, a professor at Tufts University, cited a study that took place during a drought in Niger which showed that distributing government aid via mobile money versus cash not only cut costs, it increased diet diversity. In this case, when women received their government benefits through their phones, they had greater control over the use of the money, and this affected household decision-making. The study also demonstrated that with mobile money the distribution and receiving of funds was cheaper for government and the recipients.
In addition, mobile money helps users weather economic shocks. Tavneet Suri, MIT professor and scientific director of J-PAL Africa, presented the results of a study of several thousand Kenyans she conducted with William Jack of Georgetown University. It showed that M-Pesa users are better able to share risk through an increase in remittances received and a higher diversity of senders. A shock that reduces consumption of a non-user by 21 percent reduces consumption by M-Pesa users by only 11 percent. Mobile money dramatically increases the size and breadth of the user’s safety net: Suri estimates the insurance value of M-Pesa at around 3-4 percent of the user’s income.
> Posted by Amanda Lotz, Financial Inclusion 2020 Consultant, CFI
The Group of Twenty Finance Ministers and Central Bankers (G20) is targeting financial inclusion through the G20 Development Working Group (DWG), which is in the process of finalizing an agenda for its 2014 goals. The DWG focuses on developing an agenda for tackling development challenges, with the intent to remove constraints to sustainable growth and poverty alleviation. Recently, through our participation in InterAction’s G20/G8 Advocacy Alliance, CFI teamed up with other non-profits in the financial inclusion community to develop a set of recommendations for G20 leaders. While the Alliance and DWG span a diverse range of issues, our focus was, of course, on financial inclusion.
Our recommendations to the G20 were developed in coordination with CARE International UK, the Grameen Foundation, the Cherie Blair Foundation for Women, HelpAge USA, and the Microcredit Summit Campaign, among others. They urge governments to implement national strategies for financial capability and client protection, ensuring that these strategies and targets address a full suite of financial services and include underserved groups. You can read the full set of recommendations and contributing organizations here.
Last week we had the opportunity to discuss our recommendations with senior leadership from the Australian G20 presidency. As you may know, the G20 Presidency rotates each year, and this is Australia’s year. Each presidency takes a lead in setting the agenda and priorities, which are then discussed and (ideally) implemented by all G20 members.
The G20 Australian presidency issued a global development agenda, which was supported by the DWG. It highlighted two major outcomes for 2014 related to financial inclusion and remittances. We were happy to see an expressed desire to move beyond a focus on cost reduction for remittances, where there has been a great deal of progress, to maximizing the potential of remittances to increase financial inclusion.
During the meeting, our financial inclusion team brought three key points to the conversation: Read the rest of this entry »
Kate McKee, Senior Advisor at CGAP, reflects on key issues raised during the FI2020 Global Forum’s panel discussion on ‘Why Financial Inclusion is More Important Than We Ever Knew,’ ending with an exciting prediction market from the panelists.
In this panel, which began with an emphasis on behavioral economics opened by Sendhil Mullainathan, co-author of the recently-published book Scarcity (reviewed on this blog by CFI’s Sonja Kelly here), who focused on how the reality of scarcity translates into a “bandwidth tax” on people who constantly live in poverty. Research by Sendhil and others has documented how the constant worry and distraction of living with too little – what Sendhil and his co-author Eldar Shafir refer to as “tunneling,” with its intense focus on making ends meet day-to-day – ultimately, affects poor people’s ability to make good decisions. Basically, this growing body of research shows that when people are in a situation of scarcity, they are not as smart, not as able to resist temptation, and are less likely to be able to make and stick to a plan, as compared to themselves in a time of less scarcity.
This scarcity framework and evidence has potentially powerful consequences for financial inclusion. The panel that followed focused on how scarcity, the bandwidth tax, and tunneling affect the relevance, uptake, and usage of financial services by lower-income people. Tine Wollebekk (Vice President of Telenor Financial Services and Board Chair of Tameer Microfinance Bank, the sponsor of Easypaisa in Pakistan) and Kamal Quadir (Managing Director of bKash in Bangladesh) reflected on the experience of these two fast-growing mobile money service deployments, including insights about customers’ underlying demands and how the mobile wallets and other services are designed to meet them, how to make the offerings intuitive and simple, and how to earn trust from customers new to formal finance. Bill Gajda (Global Head of Strategic Partnerships, Visa) rounded out the panel by bringing in findings from deep consumer research that Visa has supported in additional developing countries, as well as experience with different business models and customer interfaces including cards.
Entry products need to be ‘in the tunnel’
One of the key insights was that the entry product needs to meet a really immediate need. It needs to be ‘in the tunnel’ of what the customer is focused on to meet their day-to-day needs. Obviously mobile telephony is firmly in the tunnel virtually everywhere in the developing world. Person-to-person money transfer has also passed the “tunnel test” of rapid uptake in an increasing number of markets – Kamal noted that he felt the company had reached an important tipping point when “bKash” had become a verb commonly used across Bangladesh. Tine made the point of needing excellent execution and recruiting the right kind of agents that customers will trust, in order for customers not to have extraneous worries that would prevent them from really being able to make decisions.
Innocent Ephraim, M-PESA Product Manager, Vodacom, discusses some of the main concerns shared on the FI2020 Global Forum’s panel ‘Building Infrastructure & Spurring Innovation’, along with an overview of the challenges faced in rolling-out M-PESA’s product success in Kenya to Tanzania and South Africa.
Financial inclusion and technology innovation
The main concern of the forum panel was making sure that we bring in financial inclusion, and technology innovation is one of the key things for this. What I strongly believe in is the mobile money product itself. And mobile money products are being held up with a pillar, which is the agent distribution. Just like any other product that is mass distributed – Coca Cola and similar products – mobile money products need to be visible, available, and trusted. So once all of that is achieved, then innovation can chip in.
Listening to the customer
It’s important to listen to the customer because customers are the reason why we do this. We want to make sure that we don’t complicate their lives because the minute that we do that we already risk excluding them with our complicated innovation that we put in the mix. And we’ve got it wrong many times, we’ve learnt from our mistakes, and as a Product Manager, I know that it’s critical to listen to our customers.
Learning from mistakes
I’ll give you an example of a mistake we made with a product that we learnt from. We launched a life insurance product in Tanzania, and we expected millions to adopt it. We were actually shocked with the cultural behavior in Tanzania. Every customer that we communicated with to pick up the product kept saying: ‘You guys want me to die! Why do you want me to die?’ Here, we learnt that it’s not all about what we think is good for the customer. So we went back to the drawing board. Nevertheless, the product is used by hundreds of thousands in the country.
Now the team in Tanzania has done a study to see what type of insurance our customers need, and then reposition it. And one of the key findings from that study is that customers need a product they directly benefit from, health insurance was seen as ideal because then they feel they benefit out of it. They don’t want to buy an insurance cover that benefits somebody else – for example, the life insurance product where the customers felt it was just bad luck for them and that we just wanted them to pass away!
Kenya: the archetype of mobile payment
Kenya is a very good place to go and look at how mobile payments and technology has worked out. But you need to enter into different markets in different ways. If you look at Kenya, the population is dense and one agent would service hundreds of customers. When you go to Tanzania, where the population is much sparser, an agent would service fewer customers, and that makes it less attractive to an agent. Consequently, agents choose to invest in some other type of business instead of mobile money. (That’s only one of the differences between the two markets. A study has been done to highlight the differences of these two neighboring countries.) What we learnt in Tanzania is that we need to make sure that different products and services are integrated into the agent point-of-sale. So when you give an agent a tool to conduct mobile money services, allow them to do utility payment or airtime as well, so they actually aggregate from transactions from the same customer. That creates more incentive and profitability to the agent.
> Posted by Center Staff
The FI2020 Global Forum in London gets underway this Sunday with a pre-Forum side meeting on financial inclusion for persons with disabilities (PWDs). This client-centric start feels like a fitting precursor for an event to expand financial inclusion.
Financial inclusion requires that financial services meet the unique needs of all clients, especially the needs of the most underserved and vulnerable client groups. Sessions throughout the Forum reflect this key tenet. In addition, there are side meetings on the Financial Capability Roadmap and the Consumer Protection Roadmap, focused on moving these roadmap principles and recommendations to action. These and the other three financial inclusion roadmaps were developed through a consultative process that collected and incorporated the perspectives of specific client groups.
Among Forum participants are representatives of various client segments – such as PWDs, women, the elderly, youth, rural populations, and migrants – to help raise awareness of their unique needs and assets. Here’s a collection of pertinent statistics for financial inclusion on these client segments:
- 1.8 billion of the world’s population is between the ages of 10 and 24
- 87 percent of youth are concentrated in the developing world
- About half the world’s youth report being economically active
- 38 percent of young adults have an account compared to over 54 percent of older adults
- In 1950, globally, 1 in 20 people were elderly. By 2050, it will be 1 in 5.
- In 2000, only 6 percent of people in less developed countries were over 65 years old. By 2050, that number will grow to 20 percent.