The Sakombi neighborhood in Kinshasa, capital of the Democratic Republic of Congo, is not an area where traditional banks spend their marketing money. The people who live and work here are street hawkers and day laborers, low-income people in the informal economy who are generally considered risky and expensive customers by most financial institutions.

Microfinance institution FINCA thinks differently. It conducts regular sales drives in Sakombi and in similar neighborhoods across Kinshasa, offering new customers the chance to open a bank account with just a one dollar deposit. These marketing drives build on a network of agents that FINCA is rolling out with the help of mobile and biometric technology.

Agent and mobile banking are key components in FINCA’s growth strategy in this market where the MFI sees huge potential. There are few other places in the world where access to financial services is as low as in the DRC. Less than 4 percent of the population of 67 million use banks or other formal financial services, according to the latest estimates from the Central Bank.

“We estimate that at present, 3 percent of our potential market is served by FINCA or similar microfinance institutions, while 97 percent of the Congolese market is still unbanked,” says FINCA DRC CEO Alejandro Jakubowicz.

The agent network is considerably cheaper than a traditional brick-and-mortar expansion, and the biometric point-of-sales devices that agents use are not only convenient in terms of outreach but also solve an important identification problem as few people have national ID cards. Customers essentially have their bank accounts in their fingertips.

To learn more about how FINCA is trying to bank the low-income population in the DRC, have a look at the above video.

Video credit: World Bank

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“What’s in a name? That which we call a rose by any other name would smell as sweet.” – Shakespeare

While Juliet’s musings on the essence of her Romeo might be poetic, she is quite wrong. Words determine a great deal about how we think about things—and one word change could change hundreds of thousands of people’s use of financial products.

Percent of People Who Report Saving in the Past Year

In Mexico, if you were to ask those at the base of the pyramid whether they save, they would likely tell you no. CFI’s Country Profiles show the Global Findex Data in the figure at right.

When asked whether they had saved any money in the past year, roughly 14 percent of people in the bottom 40 percent of the economy in Mexico answered yes. This same group of people in all upper middle income economies (of which Mexico was a part at the time of the survey) were about twice as likely to say yes to this question.

Does this mean that the poor in Mexico just don’t prioritize savings? Probably not.

In Mexico, there is a difference between the word for “saving” (ahorrar) and the word for “keeping” (guardar). When you ask people at the base of the pyramid whether they “keep” money for the future, they are much more likely to answer yes.

The Findex survey (the source of the above data) may have inadvertently run into this problem in Mexico. The difference between two words could explain the low incidence of saving reported at the base of the pyramid compared to countries with a similar income level.

When we take this language difference into account, there are implications for institutional knowledge, financial education, and product marketing.

On this front, Bancomer in Mexico has found that there is a reorientation to be done within the bank itself—while Bancomer is listening to clients, for listening to be effective it must be listening for the right language. Within the bank, integrating the vernacular of low-income clients has led to new views on this income segment. Past market research has included the question of whether potential clients are saving—with dismal results. With the recognition that this population is saving, but just calling it something else, there is a different perception of the kinds of products that customers might be interested in.

By listening in the right ways, Bancomer has realized that not only are people at the base of the pyramid saving by “keeping” money for the future, they are also saving by investing in commodities. For example, in Mexico it is quite common for low-income families to buy construction material, even when they have no immediate home-improvement plans. This is an inflation-proof savings strategy, as materials can be sold in the future at current market prices.

When it comes to working with clients, financial education must involve affirming that “keeping” money is the same as “saving” and “buying raw materials” is a form of both saving and investment. If low-income customers were to recognize this, it would significantly change the way they approach products offered at any institution. Imagine a prospective customer seeing a “money-keeping account” and thinking “Oh, that’s what I need. It will help me keep my money safe.”

Finally, from the bank’s perspective, how products are marketed is critical. Bancomer already has an arsenal of marketing around certain products. The promotion above, which offers a free pressure cooker if you open a savings account, might not be seen as relevant to someone at the base of the pyramid because it uses “ahorrar” instead of “guardar.” The ad may be sending a message from the bank to low-income consumers that the bank is not for them, keeping the bank from a potential market segment.

As we move forward with our understanding of people at the base of the pyramid, and the ways financial services can empower them to improve their lives, we must remember that the words we use—and the words we hear—are not arbitrary. They are integral to moving financial inclusion forward.

* “Poorer” is defined as those in the bottom 40 percent of the economy, and “richer” is defined as those in the top 60 percent. Figure includes both formal and informal savings mechanisms.

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A few months ago, the instructor of a user design workshop challenged the class to redraft the Healthcare.gov website, the official site of the Affordable Care Act.

In a flash, my 23-year old classmate and team member, Sam, deftly sketched out a new landing page and a few forms. We had time left over to chat. It was Sam’s chance to question the very existence of the site itself.

Sam complained that the Affordable Care Act seemed neither affordable nor about care. As a healthy freelancer he would be soon forced to purchase an expensive financial product – health insurance. And a quick search informed him that if he did not comply he could plan on spending $695 to opt out. Sam turned to me and said, “I don’t know where to begin.”

Projected to cost $1.36 trillion dollars by 2023, the Affordable Care Act is one of the biggest financial inclusion experiments in the world. It requires that every resident of the U.S. participate in a financial scheme to purchase health insurance.

In making the product fully inclusive, U.S. President Barack Obama and proponents of the bill could have followed the advice of many of the financial education skeptics I call “inclusionists”: The inclusionists dismiss high touch financial education as a key part of financial inclusion. The arguments against high touch education run thus.

• Going digital is the answer – face-to-face is too expensive. As it turns out, proponents of the bill soon realized that they would exclude the very people they hoped to include if they did not have an analog component. Sam himself a “young digital” went back to his home state to get face-to-face help from two of the many publicly-funded “navigators” and “assisters”, i.e. financial education service providers.

• Make the interface intuitive – users will figure it out, after all they are capable. The problem with this approach is that even if the interface is intuitive, the product may not be intuitive. Sam is an example. He understood the interface, even fixed it to his liking, but for him the product was inscrutable.

• Education is a marketing problem. Suppliers stand to gain from more customers and thus should bear the burden of reaching more. But, imagine the confusion if suppliers alone were in charge of educating the U.S. public on their insurance options? Chaos would ensue. Suppliers are self-interested in promoting their own products.

Instead of falling for the arguments of the inclusionists, proponents of the Affordable Care Act allocated hundreds of millions to educate people like Sam and those who are far poorer and less literate.

Affordable Care has multiple forms of high tech and high touch points of access, countless opportunities to seek face-to-face support, and a wide range of payment options, all bound up with community activism, public education, and presidential comedy. Yes, my president is pushing financial inclusion as humor. He is not relying on intuition, commercial marketing, or the world of digital interaction to drive users to do the heavy lifting of product adoption. Instead, he is relying on old-fashioned, even banal, forms of financial education.

Sam is finally enrolled. The process involved a painful set of choices and a pinch to his pocketbook. He is not sure he likes his product but says, “I could not have enrolled without lots of people telling me about it and watching video clips – both funny and serious. I finally got the point.” Sam is a college graduate. English is his first language. For Sam, financial education was crucial.

Kim Wilson is a lecturer at The Fletcher School and a Fellow with the Center for Emerging Market Enterprises and the Feinstein International Center at Tufts University.

Image credits: Bloomberg/ Getty Images

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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.

However, there is a trapdoor in this picture. The rise in strong feminine images in financial advertising also coincides with some very negative portrayals of men in the industry: the testosterone-driven traders and gamblers who led us over the financial cliff in 2008. As Christine Lagarde, Director of the International Monetary Fund has famously stated, only partly in jest, if the firm had been called “Lehman Sisters” there might not have been the same resulting devastation to world economies. There has been extensive coverage of research suggesting that if financial firms had fewer men, those firms would have taken on less risk. Both headlines and Hollywood have also focused on the antics of a few particularly macho financial executives, from the “Wolf of Wall Street” to the “London Whale.” It may be that today’s financial firms are trying to portray a “feminized” face to distance themselves from stereotypes like these.

But it’s not all “optics” – more and more women are actually taking on breadwinning roles. Grossman touched on several demographic factors supporting the trend: one-third of working women earn more than their husbands, 40 percent of households with children under 18 are headed by a women; and female students account for 57 percent of undergraduates in the United States. More women have also taken on more responsibility for retirement planning, in part due to market and retirement plan upheaval; in 1978, the IRS created the structure in which the federal government essentially shifted the burden of retirement financing from employers to employees. Without the safety of defined benefit pension plans in an era of diminished job security, most Americans, as couples or individually, need to be much more active players in the dialogue about their own asset allocation and investment options well in advance of retirement.

To read the rest of this post, visit the Harvard Business Review Blog Network.

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It turns out there really is no escaping it. That old saying “it’s all about who you know” applies to the microfinance industry, too. In a paper published last month in the journal Science, researchers from MIT and Stanford University shared findings from a study on the diffusion of information and participation, specifically looking at how enrollment in new microfinance programs is influenced by the social network positions of those who are first told about the program. The study found that an MFI’s initial point-of-contact could have serious implications for a program’s enrollment.

The researchers grounded their study in modeling the diffusion of information and participation through a social network that discriminates between information passing (people must be aware of a program before they can enroll in it) and endorsement (the decisions of those who are aware of a program may be influenced by the decisions of those around them). In order to create such a model, one has to map out, in great detail with lots of data, such a social network. That’s just what the researchers did.

The team spent six months collecting information about the local residents of the study’s site: 43 villages outside of Bangalore, India. They surveyed households about a wide range of interactions – who goes to temple with whom, who asks for advice from whom, who barrows kerosene from whom, etc. – constructing a social network structure. Once this was created, representatives from the participating MFI, Bharatha Swamukti Samsthe, began entering the villages and offering microfinance loans to residents, starting by inviting village “leaders,”  teachers, shopkeepers, savings group leaders, etc., to an informational meeting, and afterwards asked them to spread information about the loans.

In the interactions and enrollments that ensued, the researchers estimated the dynamics of the entire diffusion model, which proved accurate in witnessing the villages’ enrollments over time. The model then yielded a measure of the potency for any given person within the social network to be the MFI’s first point-of-contact regarding new program enrollment. The researchers called this measure of potency, or social influence, “diffusion centrality.” Diffusion centrality, which can be applied to any given position in a social network, incorporates variables like how many friends an individual has, as well as how well connected an individual is to other well-connected individuals.

The study’s results showed that depending on who was the initial point-of-contact, participation in the microfinance program varied from about 7 percent to 44 percent. One of the study’s researchers, Matthew Jackson of Stanford, described, “In villages where they contacted very central people, they ended up with high participation, while in villages where they contacted less central people they ended up with low participation.” Participation in loan programs increased by roughly 11 percent when well-connected individuals were contacted first. As compared to non-participants, individuals who became program participants were seven times more likely to pass along program information to other individuals. The study also found that informed individuals make relatively independent decisions, as they are not more likely to participate in the program if their informed friends participate.

For someone who works in communications and marketing, my initial question is on the prevalence of advertising efforts across various mediums throughout the microfinance industry that already adopt this approach. If you happen to know of any aligning efforts, please feel free to contribute them in the comments section. For a closer look at the study, head over to the Science website.

Image credit: Nicolas Mirguet/ Scalino

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