Last week’s post discussed how we implemented an embedded education program with VisionFund and Zoona in Zambia that leveraged touch points in an effort to improve clients’ financial capabilities. While we hope this blog series has begun to convince you that embedded education can help solve the financial capability gap, one important issue remains: where is the evidence of success? Does this approach really improve outcomes for clients and businesses?

Microfinance Opportunities (MFO) aimed to add to the knowledge base of “what works” in financial education with our evaluation of the Consumer Education for Branchless Banking (CEBB) project in Zambia. The evaluation applied a mixed-methods approach with multiple data sets. We analyzed information from in-depth interviews, focus groups, knowledge surveys, and transaction data from VisionFund and Zoona’s management information systems.

The data tell a compelling story. Qualitative interviews indicated that both clients and branch staff thought the education program was having a positive impact on how clients were interacting with the branchless banking service and on their overall financial capabilities.

A consumer at Chipata Branch, for example, said:

“The training was good for me because it opened up my mind.  I used to just carry on the business like I ordered goods for K50 or K60. [Then] when I sold I just used the money. When I wanted to order again I found that I was short of money and I had to borrow money to order because I had used part of my capital. But now after training I changed my system. I use only profit for expenses and reinvest some profit in the business and my business has grown.”

At Lusaka Branch, a credit officer reported:

“What went well is what I would call maybe financial management or money management where [clients] really have learned to manage their income, save, planning how much they get from their business and other sources of incomes, and the importance of conventional banking as opposed to saving at home.”

End-line survey data confirmed these insights. When compared to the baseline survey, recipients of the education program improved their score on 11 of the 12 questions assessing their knowledge, skills, or attitudes as they related to general money management and the use of the Zoona’s services. Furthermore, there was a statistically significant improvement on six of those 12 questions.

We also looked into two other effects that credit officers and branch managers reported seeing in the behavior of people who had received financial education:

1) People were borrowing more manageable sums of money; and

2) They were more likely to repay their debts on time.

We used a quasi-experimental design to see if this was the case. We compared transaction data from loan groups that we know received the financial education training with groups that may or may not have received the training (logistical challenges led to the uncertainty surrounding the latter set of groups). We looked at their behavior both before and after the intervention. We also took into account factors like the branch a group belonged to and their experience with the loan process. Our results showed that groups that we know received financial education training asked for an increase in their next loan that was 12 percentage points smaller than groups that did not receive the training.

While we could not look at individuals’ repayment rates, we did have access to VisionFund’s monthly portfolio-at-risk (PAR) data. We used regression analysis at the branch level with 30-Day PAR data, focusing on the branches that received financial education while controlling for branch-level changes and events that impacted the entire organization. These results were also positive. On average, the proportion of portfolio-at-risk was 7.7 percentage points lower after the intervention occurred than before. This means, for example, a branch with 10 percent portfolio-at-risk before the intervention had 2.3 percent portfolio-at-risk after the intervention, all else equal.

The qualitative and quantitative findings present a compelling argument to conclude that our embedded education program successfully improved the financial capabilities of our participants. Not only do the data complement each other, they tell a story that follows a logical progression:

This gives us good reason to believe that the embedded education model does work. Results from Zambia indicate improved financial management behavior at the individual level and that behavior change had an important bottom-line impact for the FSP VisionFund by reducing the proportion of late repayments. We believe, as we will detail in next week’s post, that this suggests that there is a business case for embedded education. Financial education that is delivered effectively, cost efficiently, and at scale has the potential to be self-sustaining for implementing parties like MFO. We’ll also share outcomes from our cases in the Philippines and India in the coming weeks.

This post is part of MFO’s new blog series, where we’ll share key learning and evidence from our current work.

For examples of work that has contributed to the knowledge base of “what works” in financial education see: Keeping it Simple: Financial Literacy and Rules of Thumb, The Impact of High School Financial Education: Experimental Evidence from Brazil, and Uganda Financial Education Impact Program.

Guy is Executive Director of Microfinance Opportunities (MFO). Before becoming Executive Director, Guy was a Senior Advisor to MFO and served as Principal Investigator on five Financial Diaries studies and as project leader for the development of the Financial Capabilities Index Web Portal. Guy received his Ph.D. from the University of Chicago in 1994, and subsequently worked for four years in Chicago in the field of community economic development. He then served 13 years as a Lecturer in Public Policy at the Harvard Kennedy School where he taught courses in management and microfinance. He continues to teach in Executive Education programs at the school.

As Microfinance Opportunities’ Research Officer, Eric manages consumer research projects and performs quantitative analysis for both the consumer research and financial education teams. His work focuses on understanding how low-income households manage their cash flows and their implications for financial inclusion. He is currently working on projects in Ghana, Tanzania, Myanmar, and Zambia. Eric holds a Master in Public Administration with a focus on International Development and Administration from the Maxwell School at Syracuse University and a Bachelor of Arts degree in economics and political science from the University of Nevada, Reno. Prior to joining MFO, Eric was a member of Teach For America in Denver, CO where he taught high school mathematics.

Have you read?

Embedded Education: Taking Financial Education to Scale

Design and Implementation of Successful Embedded Education

Four Insights into Youth Financial Capability

Last week we highlighted historic challenges to scaling financial education (FE) and offered the embedded education model as one viable solution. The embedded approach has the potential to benefit traditionally under- and unbanked populations and financial service providers (FSPs) alike. Of course, embedded education is about more than simply incorporating educational resources within providers’ existing delivery channels. In large part, the success of embedded education hinges on putting clients at the center of its design and implementation and understanding how financial capability is developed.

The first post in this series raised the importance of adult learning principles (relevance, dialogue, immediacy, and respect, to name a few) for the effective design of educational materials. These principles ensure that materials will reshape consumers’ attitudes and build their knowledge, skills, and self-confidence to act on their financial decisions. The approach is holistic and engaging, providing consumers with the opportunity to dialogue with others as they learn and to wrestle with their questions. The approach also provides the opportunity to apply new knowledge and skills, leveraging moments when consumers are positioned to act on what they are learning – for example, while transacting with the FSP. Finally, the approach ensures that the educational messages are reinforced, so that financial education is not a one-off event and clients are frequently exposed to key messages.

MFO’s experience over the past few years with embedded education suggests that a good embedded education strategy involves five key elements:

1. Identify existing consumer contact points that are most feasible for integrating FE;
2. Develop clear, concise, and consistent financial management messages for the consumer audience;
3. Build engaging tools to deliver messages that use the organization’s existing communication channels with consumers;
4. Empower frontline staff to be agents for sharing and reinforcing FE during real-time encounters;
5. Engage stakeholders to strengthen the enabling environment for financial capability development and help ensure that the success of FE is not dependent on one set of actors or one contact point.

To illustrate the process, let’s look at MFO’s FE program in Zambia with partners Zoona, an electronic payments platform that provides real-time payments through cash distribution channels, and VisionFund (VF), a microfinance institution. Prior to the program, VF had just switched to an electronic system for loan disbursals using Zoona’s platform. Migrating to the new electronic system proved to be challenging for VF clients who were accustomed to the old way of receiving and repaying loans, and had minimal understanding of how the new system worked. The FE program aimed to build clients’ financial capabilities by breaking through barriers related to knowledge, skills, and self-confidence to use the service appropriately as well as to increase trust in the service. The FE program also tackled basic money management topics such as tracking spending, budgeting, debt management, and saving, so clients could strengthen their financial capabilities and become more effective clients of VF.

Here’s how the embedded FE strategy worked. MFO designed a financial education strategy that leveraged existing consumer contact points and “teachable moments” within Zoona and VisionFund’s existing infrastructure. First, MFO developed eight 20-minute FE sessions that VF loan officers could incorporate within their preexisting monthly meetings with their client loan groups. Clients also received illustrated workbooks to use during the FE trainings and to help reinforce key FE messages at home. Finally, when client loan groups visited agents to collect their loan disbursements, the agents led 5-minute refresher sessions focused solely on the Zoona service, followed by a 5-minute Q&A.

The FE delivered at each customer contact point was designed to fit the context of the specific contact point with regards to the person delivering the FE, the amount of time with clients, and the physical location. VF loan officers and Zoona agents received training on how to deliver FE and tools appropriate for use at their customer contact points. The tools were designed in a simple, visually appealing manner to engage customers’ interest and facilitate clear, consistent explanations of a topic.

In addition to the client workbooks, VF loan officers used colorful, illustrated posters to support their training. Zoona agents received a set of posters that focused on the Zoona service. Each poster was made of a resilient rubberized material for hanging inside or outside the agent shop and represented a key message to convey to loan groups during a given visit. Zoona agents also received a counter sheet, a laminated visual aide that they could place on their counter to illustrate the steps for transacting with the Zoona loan disbursement and repayment system.

The effective implementation of MFO’s embedded strategy in Zambia was due to the positioning of the overall FE program within the FSP’s operational processes and by its alignment with the business objectives of VisionFund and Zoona. Frontline staff and agents are more likely to engage in strengthening the financial capability of consumers when the FE helps them achieve the outcome or the performance required for their jobs – for example, lower delinquency among borrowers or faster transactions, allowing them to serve more customers at the agent’s shop.

The embedded approach simultaneously enhances the capacity of low-income consumers to make informed financial decisions and mitigates challenges to implementation of FE for FSPs. Utilizing monthly loan meetings and client visits to collect loans allowed VisionFund and Zoona to embed educational encounters within their preexisting service contact points; doing so enabled VisionFund and Zoona to reduce costs, increase relevance to core business, and deliver FE to customers at scale. Meanwhile, VF clients received the resources they needed to make and exercise money management decisions that best fit the circumstances of their lives. By the end of the program, VF clients showed positive changes in knowledge, skills, attitude, self-confidence, and behaviors around money management and use of the Zoona service.

This post is part of MFO’s new blog series, where we’ll share key learning and evidence from our current work. We’ll focus on outcomes of our embedded education model next week, with emphasis on evidence from the program in Zambia. Stay tuned.

Guy is Executive Director of Microfinance Opportunities (MFO). Before becoming Executive Director, Guy was a Senior Advisor to MFO and served as Principal Investigator on five Financial Diaries studies and as project leader for the development of the Financial Capabilities Index Web Portal. Guy received his Ph.D. from the University of Chicago in 1994, and subsequently worked for four years in Chicago in the field of community economic development. He then served 13 years as a Lecturer in Public Policy at the Harvard Kennedy School where he taught courses in management and microfinance. He continues to teach in Executive Education programs at the school.

Julie Lee is Senior Technical Advisor for Financial Education at Microfinance Opportunities. Julie designs strategies that embed financial education within organizations and build the financial capabilities of consumers. She develops tools, curricula, and trainings to fit the needs of low-income consumers and increase the capacity of the people who deliver financial education. Julie’s recent projects include embedded financial education programs for branchless banking, and the development of a national financial education strategy in Rwanda.

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Beyond Giving Hope – Religion’s Contribution to Financial Capability

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Clearing the Path to Financial Capability in Latin America