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> Posted by Sarah Rotman Parker, Director, the Center for Financial Services Innovation, and Sonja Kelly, Director, the Center for Financial Inclusion
The following post was originally published on the CGAP blog.
Over the past year, the Center for Financial Services Innovation (CFSI) and the Center for Financial Inclusion (CFI) have explored financial health in emerging markets. We wanted to understand whether the concept of financial health, promoted widely in the United States by CFSI, could be used as a relevant framework to understand consumers. Financial health is defined as coming about when your daily systems help you build resilience and pursue opportunities. Our working hypothesis was that financial health could serve as a method of tracking progress in emerging markets since it is what people strive to attain, and therefore is one of the core aims of financial inclusion.
Our work took us to rural and urban areas in Kenya and India. With the help of the Dalberg Design Impact Group and funding from the Bill & Melinda Gates Foundation, we asked consumers in these markets questions about their financial lives. These questions ranged from how much money they could come up with if they liquidated all of their assets to whether their friends would help them financially in the case of an emergency (and about a hundred other questions in between these two ends of the spectrum).
The aim of the research was to identify the key indicators of financial health in a developing world context, similar to the eight key indicators that CFSI had identified for the U.S. market. We found that while financial health as a concept holds in countries like India and Kenya, the indicators to define and measure financial health look somewhat different from those in the United States. The resulting framework can be summed up as follows (and the full report is here).
> Posted by Caitlin Sanford, Bankable Frontier Associates
“Although Paula is experiencing economic difficulties, she says that she will stretch the little money she has to cover household expenses.” -Field researcher’s qualitative journal
Today the Mexican Ministry of Finance (Secretaría de Hacienda y Crédito Público), the federal development bank BANSEFI (Banco del Ahorro Nacional y Servicios Financieros), the MetLife Foundation, and Bankable Frontier Associates (BFA) release the results of the Mexico Financial Diaries at an event at the library at the National Palace in Mexico City. The Mexico Financial Diaries, with support from the Bill & Melinda Gates Foundation and the World Bank, tracked cash flows of 185 families located on the outskirts of Mexico City, in a small town in Puebla, and in a rural Mixteco community in Oaxaca over the course of about 11 months.
Mexico is the first Latin American country where this Financial Diaries methodology has been used to collect fine-grained household finance data. These data add to the growing compendium of Financial Diaries data from Kenya, Rwanda, South Africa, India, Bangladesh, Tanzania, Mozambique, Pakistan (all implemented by BFA and partners), the U.S. (implemented by NYU’s Financial Access Initiative and the Center for Financial Services Innovation), and Zambia (implemented by Microfinance Opportunities).
> Posted by Elisabeth Rhyne, Managing Director, CFI
What are the most important unanswered questions in financial inclusion?
Last week I was fortunate to participate in the small, idea-packed Conference on Financial Inclusion at Harvard Business School, organized by Professor Rajiv Lal. The attendees were a high-level microcosm of the financial inclusion world, a sort of mini-Financial Inclusion 2020 Global Forum. A prime purpose of the gathering was to identify a potential research agenda.
Among the ideas emerging from very rich conversations, I identified three distinct areas of research: business questions that could be addressed through HBS’s famous case method; research focused on regulation; and social science research focused on consumers. Because what one says at HBS stays at HBS, I cannot identify who offered what idea, but here is a brief summary.
> Posted by Center Staff
Last week, the Center for Financial Services Innovation announced the release of the Compass Guide to Prepaid at the Power of Prepaid Conference in Washington, DC. This guide is an important tool for improving the design and delivery of general purpose reloadable (GPR) prepaid cards.
By developing prepaid card accounts and products, CFSI hopes to contribute to global financial inclusion by providing underserved consumers with a quality financial tool that ensures security, accessibility, convenience and much more. Read the rest of this entry »