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The following post, written by Tilman Ehrbeck, CEO of CGAP, was originally published on the Huffington Post Business Blog, with the title Behavioral Insights to Advance Financial Inclusion — or Why Swedes Are Not Necessarily Better Human Beings Than Danes.
In Sweden, all new drivers start out registered to be organ donors in the event of their passing. They have the freedom to opt out without negative consequences. Fourteen percent decide to do so and 86 percent remain organ donors. Across the Oresund, less than 10 miles away, Danes have to proactively decide whether they want to become organ donors. Less than 5 percent do, and more than 95 percent don’t. On the global scale of things, Sweden and Denmark are culturally quite similar: generally credited with being open-minded, socially responsible, common-sense Scandinavians.
The vast difference between Swedish and Danish organ donor participation rates (technically “presumed consent”) despite all the cultural similarities is one of the most dramatic examples of the power of policy design that takes into account pervasive human cognitive and behavioral biases to help us do what we generally think is a good thing, but often have a hard time following through with. One such bias is that, when decisions are tough, we tend to prefer the status quo; and relatedly, it’s much harder to proactively opt for something, rather than to simply stick with the offered default choice. (The approach, popularized by the term ‘nudging,’ even led the UK Prime Minister to set up a ‘nudge’ policy advisory unit.)
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.
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