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> Posted by Center Staff
Yesterday a digital finance event in Bogota hosted by the Colombian government and the Better Than Cash Alliance celebrated a pioneering business-to-business electronic banking program that’s led to over 300,000 Colombian coffee farmers receiving access to formal banking services. Launched in 2006 by the Colombian Coffee Growers Federation (FNC), the Smart Coffee ID Card program offers the farmers represented by FNC with a dual identification/e-banking card that can be used for payments, debits, and savings. It now encompasses over 8 million transactions totaling nearly $1 billion. The event launched a Better Than Cash Alliance case study on the Smart Coffee ID Card program, which finds that the FNC initiative is a benchmark example of how transitioning from cash to e-payments in emerging economies can lead to increased safety, productivity, growth, and greater quality of life.
> Posted by Elisabeth Rhyne, Managing Director, CFI
In my breakout group at CFI’s workshop last week in Bogota, everyone talked at once. With eight voices coming at me, my brain’s very basic ability to understand Spanish shut down. The workshop participants were bursting with ideas they urgently wanted to express. But, as my colleague Sonja Kelly pointed out, a situation where everyone is speaking and no one is listening is an apt metaphor for the problem the workshop sought to address.
The workshop focused on the challenges in integrating insights from behavioral economics into the operations of financial institutions. Two organizations that leverage behavioral economics for product design, ideas42 and Innovations for Poverty Action, presented the research perspective. Closely connected with academics at Harvard, Yale, MIT, and Princeton, both organizations start from the research finding that a number of cognitive and emotional biases cause people to make decisions that depart from rationality, and that these biases can significantly affect the use of financial services. Ideas42 focuses on identifying features in product design and delivery that, while not overruling choice, nudge people in a desirable direction – features such as commitment savings accounts or reminder messages to encourage savings. IPA promotes the same kinds of nudges, but focuses on the testing of these innovations through randomized controlled trials.
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