Evelyn served as CFI&#8217;s Vice President of Knowledge and Programs where she managed research on women’s financial inclusion, fintech, and MSEs, as well as CFI’s measurement, evaluation, and learning activities and other special projects.
Prior to joining CFI, Evelyn developed and executed MetLife Foundation’s financial inclusion and financial health strategies leading a global team focusing on both low- and high-income markets. Evelyn began her career managing special asset (non-performing) portfolios in the United States before moving to Uganda where she led a microfinance industry-building program and provided strategy and operations support to MFIs, projects, and international organizations as a consultant. Following her time in Uganda, Evelyn worked with USAID’s office of microenterprise development and on the Financial Services for the Poor team at the Bill &amp; Melinda Gates Foundation on programs across a range of issues: poverty measurement, conflict-affected regions, savings, and digital financial services.
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Former Vice President, Knowledge and Programs

Evelyn Stark

Reflecting on conversations from Financial Inclusion Week 2022, it's clear that women’s access and inclusion remains a top priority for the inclusive finance space. This post is part of a blog series highlighting FIW 2022 sessions that touch on CFI’s four strategic priorities.

Blog Post

FIW Recap: Women’s Financial Inclusion Remains Key Global Focus

Nina Holle

This report is part of a series that shares how we can improve the design and delivery of digital cash transfers for low-income women.

Report

A woman's world changes when payments are designed to suit her needs, digitized, and directed into her own account. During the pandemic, however, women were often excluded from receiving humanitarian cash transfers because of a lack of access to basic identification documents. Humanitarian organizations have become key advocates to allow functional IDS – ration cards, refugee ID cards, cards provided by cash transfer programs from organizations like World Food Programme (WFP) – to be recognized as proof of identity. The ability to register a bank or mobile money account has enabled access to humanitarian payments for millions.

This report highlights the benefits of having an ID, the barriers for women in obtaining an ID, and how we can leverage cash transfers to facilitate women's access.

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This resource was developed in partnership with the World Food Programme (WFP) and the Bill &amp; Melinda Gates Foundation.

Bridging the Gap: How Humanitarian Cash Transfers Can Facilitate Women’s Access to IDs

Julia Arnold

Investing in digital financial capability is essential to support women navigating increasingly digitalized financial systems. A woman who is digitally and financially capable can evaluate, choose, and use financial services that enhance her life. Investing in her digital financial capability can contribute to meaningful access to and usage of financial services. This can be a positive step in improving economic opportunities for women and their families.

Approaches that work for women require going beyond traditional financial education to approaches that may require more time, support, and a deeper understanding of the social and <a href="https://www.centerforfinancialinclusion.org/normative-constraints-to-womens-financial-inclusion-what-we-know-and-what-we-need-to-know">gender normative constraints</a> that prevent women from realizing their economic potential.

This publication shares how we can improve the design and delivery of digital cash transfers for low-income women using a four-phased approach: diagnose, design, deliver, and document. It presents examples of promising interventions tailored to women’s needs and realities and offers practical suggestions and tools for market and ecosystem actors to support women’s digital financial capability.

This resource was developed in partnership with the World Food Programme (WFP) and the Bill &amp; Melinda Gates Foundation.

Making Digital Financial Capability Programs Work for Women

This is the first of a two-part blog series inspired by “A PACT to Promote Resilience,” a CFI publication on measuring resilience at the fintech provider level and the implications for users.

Fintechs have been successful by seeking out market gaps and providing customers with easier and better ways to lead their financial lives. In the past, growth and opportunity have been industry bywords. But two years into a global pandemic, another term is driving conversations in both fintech and inclusive finance: resilience.

Fintechs have proven their resilience by surviving the early months of the pandemic and reemerging smarter, with optimism intact, and ready to take on new growth opportunities. In response to COVID-19, many fintechs <a href="https://www.centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19">jumped on the opportunity to deliver government and humanitarian cash transfers</a>, which was also a key input to the resilience of millions of low-income households. The last two years saw millions of people turn to high-tech opportunities to improve their lives: gig work through platforms, digital government-to-person (G2P) payments, and digital commerce platforms. Aside from offering access to products, fintechs also provided information about health and education, which helped people cope with the health and economic shocks brought on by COVID-19.

Concerningly, this <a href="https://www2.deloitte.com/us/en/pages/financial-services/articles/beyond-covid-19-new-opportunities-for-fintech-companies.html" target="_blank" rel="noopener noreferrer">focus on resilience may be difficult to sustain</a>. Because of a rapid increase in fintech investments, there is a chance that fintech’s attention may be drawn away from resilience as they turn towards incentives to move upmarket in search of growth and profit.
<blockquote class="pullquote--right">Inclusive fintechs and impact investors must continue to consider the importance of resilience – both for the fintechs as well as their low-income clients.</blockquote>
CFI believes that mission-driven, inclusive fintechs can better serve their low-income customers and grow their businesses. However, to do so, inclusive fintechs and impact investors must continue to consider the importance of resilience – both for the fintechs as well as their low-income clients.
<h1>Introducing the PACT Framework for Resilience</h1>
To fill what we determined was a gap in our community’s ability to identify and analyze the shared dimensions of resilience, CFI – with support from <a href="https://www.comicrelief.com/partners/jersey-overseas-aid" target="_blank" rel="noopener noreferrer">Jersey Overseas Aid and Comic Relief</a> -- recently unveiled the <a href="https://www.centerforfinancialinclusion.org/a-pact-to-promote-resilience">PACT framework</a>. Adapted from <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2628707" target="_blank" rel="noopener noreferrer">academic</a> and other socio-economic development programs, the framework explains how both fintech resilience and customer resilience are driven by a combination of abilities and access to resources across four non-linear dimensions: Preparedness, Access, Capability, and Ties (Networks).

While researching and developing the PACT framework, CFI explored the COVID-19 experiences and responses of more than 20 winners of the <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50 (IF50) competition</a>. In addition to the IF50 winners, we spoke to investors, accelerators, and industry associations about how they approached inclusive fintech during lockdowns and the aftermath.
The dimensions of the PACT framework are outlined below along with calls to action for the inclusive finance community.
<h1>1   Preparedness</h1>
The pandemic has been a case study on the importance of planning and the consequences of not doing so, and many fintechs were unprepared for the initial shock. All stakeholders in inclusive finance and digital financial services should have in place business continuity plans that consider the risks and responses for both probable and unlikely internal and external events. The plan should outline responses to risks that hurt business – staff turnover, climate-related shocks, wars – and those that spur hard-to-manage growth, such as the pandemic-fueled social protection payments.

Many fintechs do not have comprehensive business continuity plans in place, but they should. It starts by understanding the relationship between fintechs and customer resilience – awareness donors and investors should have to help fintechs achieve both growth and preparedness.
<h1>2   Access</h1>
Access does not equal impact. While we know that many low-income people accessed services during the pandemic, there is still no strong data available on impact. Additionally, there is a lack of data on the impact of access (or lack of access) to financing that enabled some fintechs to get through the pandemic more easily. Inclusive fintechs that had strong ties to accelerators and existing investor networks were able to arrange bridge funds or raise new capital. Others found themselves forced to drastically reduce their services, lay off staff, or change their business models – sometimes moving their business away from the low-income customers they sought to serve.

<blockquote class="pullquote--left">Fintechs have a tremendous opportunity to collect data on customers’ ability to cope with and respond to shocks.</blockquote>
Because of the many different services and business models of fintechs, impact measurement is complicated. But as data-producing and data-driven companies, fintechs have a tremendous opportunity to collect data on customers’ ability to cope with and respond to shocks (in addition to their saving, borrowing, and spending behavior). This data is not only useful for research and sharing with impact investors, but also provides valuable business information to inform product design and growth efforts.

<h1>3   Capability</h1>
Fintechs are known for being agile. Agility is also a characteristic of low-income people. Both are accustomed to pivoting quickly to find solutions to increase income and reduce expenses or adapt their skills to new work. In this framework, capability is focused on advice-seeking behavior, know-how, and the ability to respond quickly in terms of adversity.
In the last year, there have been <a href="https://www.youtube.com/watch?v=lcqVnqH9vHc&amp;list=PL30fMMRd3G_4BUL_Uib6BV-QGR9ipaZTC&amp;index=21" target="_blank" rel="noopener noreferrer">many anecdotes</a> that provide good reason to offer kudos to fintechs for their contributions to customer resilience – but without systematic data on how fintech capability can strengthen customer capability, it is difficult to build on these efforts or understand nuances that could drive greater impact. An investment in measurement and integrating data collection into the customer platform has the potential to be useful to fintechs, impact investors, and donors. We hope that fintechs’ data-driven approaches will soon extend to impact measurement as the sector grows.

<h1>4   Ties</h1>
The value of ties goes beyond personal and business relationships. Fintechs and their users have a unique opportunity to forge community bonds that are stronger than a simple customer-provider relationship.
The pandemic showed this. Many fintechs provided health and education information to their customers or helped their users classify their services as “essential,” so they could continue operating during government shutdowns. Current users, agents, and civil society organizations helped new fintech users sign up for and access government payments or gig platforms. Fintechs also found board members, investors, and accelerator colleagues who could pitch in to respond to the many issues the pandemic threw their way. Finding ties to measurement experts would be a useful next step.

<blockquote>With a continued focus on resilience and using the PACT Framework as a guide, we can embed resilience in inclusive fintech to support their preparation for inevitable future storms.</blockquote>
With a continued focus on resilience and using the PACT Framework as a guide, we can embed resilience in inclusive fintech to support their preparation for inevitable future storms. We can also improve customers’ preparedness and increase their capability to manage through adversity. The PACT framework is a first step towards understanding the interplay between fintech resilience and customer resilience – an area worthy of further investigation. Together we can help low-income households and businesses benefit from inclusive fintech.
For more details and examples of these four points in practice, we encourage you to read the <a href="https://www.centerforfinancialinclusion.org/a-pact-to-promote-resilience">full publication</a>.

For Inclusive Fintechs, Resilience Is Growth’s Much-Needed Companion

Jayshree Venkatesan

Using a Framework to Understand How Fintechs and their Customers Cope, Survive, and Thrive

Two years into the COVID-19 pandemic, the role of digital financial services in providing access to essential services is undeniable. Digital financial services have enabled governments and nonprofits to deliver timely social protection payments and aided families and friends of those in need to quickly share financial resources. The rise of platforms and small business fintechs allowed for new forms of commerce that have kept people employed and grown gig work opportunities, which helped customers in small villages and large cities alike to purchase goods needed for their households.
<blockquote class="pullquote--right">We need data, metrics, and measurement standards to better understand and move the needle on measuring resilience.</blockquote>
The role fintechs have played over the last two years is clear. We have data about the growth of fintechs during the pandemic, on how much capital they have attracted from investors, and many anecdotal stories about how individuals and firms using fintechs have experienced direct benefits from moving to digital solutions. But while there are many stories of the positive relationships between fintechs and their customers during the pandemic, we need data, metrics, and measurement standards to better understand and move the needle on measuring resilience.

With the support of <a href="https://www.accion.org/institutional_partnerships/jersey-overseas-aid-comic-relief">Jersey Overseas Aid and Comic Relief</a>, CFI conducted research to better understand fintechs, their resilience, and the impact they have on the livelihoods of low-income customers. CFI’s research on fintech resilience is the first attempt to set forth a framework and call to action to understand the interconnectedness between progress at the provider level and the implications for users. Through our research, we found that, by and large, fintechs are operationally resilient, although many early-stage fintechs did have to resort to layoffs and salary cuts, or to slowing growth plans. However, measuring resilience — whether at the level of financial institutions or customers, as well as how they influence each other — is at an early stage of research.
<blockquote>PACT measures resilience as a combination of abilities and access to resources across four dimensions: Preparedness, Access, Capability, and Ties (Networks).</blockquote>
To support our work in understanding how to measure and quantify fintech’s resilience and impact, CFI developed the PACT framework. This helps us analyze the resilience of both fintechs and low-income customers, and see where and how there are direct connections between the two. PACT measures resilience as a combination of abilities and access to resources across four dimensions: Preparedness, Access, Capability, and Ties (Networks). This framework can inform investors and donors who are looking to support low-income customers.

A PACT to Promote Resilience

Sonja Kelly

The new Gallup Global Financial Health Study contributes significantly to our understanding of how to make financial inclusion work for customers. This dataset comes at the perfect time—right on the heels of the Global Findex

This post originally appeared on the <a href="https://nextbillion.net/does-greater-inclusion-lead-to-financial-health/">NextBillion Blog</a> and is re-posted here with permission.

What conditions create physical health? We know more now than we ever have—working out, eating lots of vegetables and limiting alcohol intake seem to be healthy decisions. But there is no one agreed-upon set of conditions for physical health and wellness. Rather, there is a body of literature that provides clues about different aspects of health. For instance, nutrition literature makes it clear that broccoli is a better food choice than bacon, and data shows us that doing yoga is healthier than watching TV.

In the same way, the new <a href="http://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx" target="_blank" rel="noopener">Gallup Global Financial Health Study</a> gives us additional language and data to understand more about what drives different aspects of financial health. No single perspective on financial health constitutes a definitive “theory of everything,” but the new Gallup data contributes significantly to our understanding of how to make financial inclusion work for customers. This dataset comes at the perfect time—right on the heels of the <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener">Global Findex</a> launch—and with it, we can start to ask ourselves with humility if financial inclusion is leading to financial health.
<h3>An Unprecedented Look at Personal Finance</h3>
First, some background about the Gallup survey. The financial inclusion field has benefited greatly from excellent surveying and reporting, from <a href="http://financialdiaries.com/about" target="_blank" rel="noopener">financial diaries projects</a> in <a href="http://www.usfinancialdiaries.org/about/" target="_blank" rel="noopener">multiple countries</a> to huge global databases such as the World Bank’s Global Financial Index, or Findex, which gathers and analyzes sex- and age-disaggregated data on account ownership, transaction patterns, account dormancy and much more. MetLife Foundation, in partnership with Rockefeller Philanthropy Advisors, wanted to know even more: the first-hand perspectives of individuals’ financial situations as they experience them.

So MetLife Foundation partnered with Gallup, one of the global leaders in polling and surveys, to get a deeper understanding on several points: how financially secure people are (or are not), the predictors of financial insecurity, and the degree to which people perceive that they have control over their financial lives. Gallup surveyed more than 15,000 people in 10 very different countries, across a range of economies, between January and March 2018 to take an unprecedented look at personal finance and how people perceive their situation.

To gauge financial security, the Gallup pollsters asked two simple questions: first, how long respondents could cover their basic needs (through savings or by selling assets) if they lost their income; and second, whether making repayments against debts does or does not make it difficult for them to pay for other things they need. We recognize of course that financial security is a complex and contextual phenomenon: A person with the same level of income and assets might be financially secure in one country but insecure in another, depending on available social protection safety net services and a host of other variables. Gallup chose those two simple but powerful questions in order to maintain comparability across 10 survey countries (Bangladesh, Chile, Colombia, Greece, Japan, Kenya, South Korea, United Kingdom, United States and Vietnam) that had been chosen for their diversity.

Financial control is the extent to which people perceive that they are in control of and can influence their financial situation. In the Gallup survey, financial control levels are measured as the percentage of respondents who gave a positive response to at least eight out of the 10 dimensions below. 
<h3>Dimensions of Financial Control</h3>
<ol>
 	<li>Do you think that no matter what you do, your financial situation will stay the same?*</li>
 	<li>Do you think that you can overcome any financial problem that you might face?</li>
 	<li>When you spend money on something you don’t need, do you usually regret the decision later?*</li>
 	<li>Have you tried to save money in the past, but been unable to do so?*</li>
 	<li>Do you avoid thinking about how you are going to pay for things in the future?*</li>
 	<li>Do you think you will EVER be able to pay back all the money you owe?</li>
 	<li>Do you enjoy planning what you are going to do with your money in the future?</li>
 	<li>Are you satisfied with how much input you have in financial decisions in your household?</li>
 	<li>If you had a financial emergency today, such as a medical emergency, do you think you would be able to find the money to pay for it?</li>
 	<li>Do you have people in your life who can help you financially if you ever need it?</li>
</ol>
*Reverse-scored item.

Finally, to derive predictors of financial insecurity, the Gallup survey cross-tabulated self-reported financial insecurity with demographic data (age, sex, education level, marital status) and with the self-reported degree of perceived financial control to see what patterns might emerge. To dig into all of these indicators (and others), see the full dataset <a href="http://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx" target="_blank" rel="noopener">here</a>.

In an initial analysis full of surprises, two of the biggest were these: The relationship between account ownership and perceived financial control is weak at best. (See Figure 1). And especially in the emerging markets—places where the financial inclusion community has focused the most attention—people’s access to financial services appears to have little correlation with financial security. (See Figure 2)

In Kenya, for example, 82 percent of people have an account, but only 9 percent are financially secure. And in Bangladesh, 50 percent of people are financially included (that is, have an account), but just 7 percent are financially secure. Even in the United States, which also spends significant philanthropic and government funds to increase financial health, only 33 percent are secure despite the fact that 93 percent have an account.

Figure 1: Account Ownership and Perceived Financial Control

<img class=" size-full wp-image-25662 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/06/figure-1-acct-ownership-and-percd-control.jpeg" alt="Graph of account ownership and perceieved financial control." width="720" height="540" />

Figure 2: Account Ownership and Financial Security

<img class=" size-full wp-image-25663 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/06/fig-2-account-ownership-and-financial-security.jpeg" alt="Graph of Account Ownership and Financial Security" width="720" height="540" />
<h4> </h4>
<h3>The Implications for the Financial Inclusion Agenda</h3>
So, does this mean we should give up on financial inclusion? No. This research is a point-in-time assessment and would benefit from being repeated across a wider set of countries and over a longer period, to see how trends in account ownership and financial control and security relate. In addition, account ownership does seem to make clients happy – in response to the survey’s question, “Overall, do you think that using the services of a bank or other financial institution improves your life?” most account owners (bank and mobile) responded positively. That might mean that they appreciate saving time by avoiding queuing to pay simple bills, or by sending or receiving money quickly to and from loved ones.

But though these benefits can be useful, they are not the ultimate goal of financial inclusion. Worse, these findings could also mean that it’s easier to borrow or spend for frivolous things or to lay bets on sports games, which would likely do little to increase feelings of control, and would certainly not boost financial security.

Further, financial inclusion has always been an overly simplistic term. Virtually all definitions of financial inclusion stress the importance of low-income people using a full suite of financial tools that enable them to manage daily cash flows, save and plan for the short and long term, take advantage of opportunities, and protect against risk. Inclusion and account ownership are just the tip of the spear and perhaps have been too much the focus in the field to date.

The balancing act in this field has always been between two related goals. On the one hand, there’s the need to identify the most efficient way to reach the largest possible number of low-income people. And on the other hand, there’s the need to make those products as useful and custom-tailored as possible, enabling clients to grow their businesses, improve their ability to send their children to school, obtain timely medical care, or otherwise respond effectively to their individual life circumstances.

Although much necessary work has been done to walk back the previous over-hyping of microcredit as a silver bullet for poverty alleviation, it seems unwise to over-correct and limit our focus to inclusion, without keeping in mind the intended outcomes. Perhaps it’s time for those of us working in this field to expand our views beyond basic financial tools and to expand or renew our focus on the quality of those tools and the outcomes they enable. Our current nomenclature is not clear or reflective of our shared goals.
<h3>What Comes Next?</h3>
MetLife Foundation requested that Gallup make the dataset publicly available. Gallup has enthusiastically encouraged researchers to use the data and share the results. The Center for Financial Inclusion team is planning to dig through these 15,000 survey responses and produce a brief later this summer, to highlight what the data says about the relationship between financial services use, attitudes toward these services, and financial health. For this deep dive, the subjective nature of the survey—which focuses on perceptions rather than empirical data—presents challenges but also an opportunity to understand the client perspective.

For MetLife Foundation, we want to make sure that our efforts remain ultimately focused on the point of it all: building the capacity of more people around the world to live financially healthy lives. As with physical health, the thinking about financial health is evolving: Different ideas and assumptions from our field will certainly join the food pyramid and other examples of discarded conventional wisdom in the archives of outdated theories. Our job is to continue learning and supporting others to keep doing their best work, too.

This data on financial control and security offers the industry one lens into financial health and wellness—in the same way the Apple Watch might provide a different behavioral nudge toward fitness than the Fitbit or Garmin. With all of these different approaches, we can build an inclusive world that works better to enable positive financial outcomes for end-users. We’re excited to see how this data adds to and catalyzes this conversation on financial health, and we look forward to seeing where these new observations take our industry.

Download the Gallup dataset <a href="http://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx" target="_blank" rel="noopener">here</a>.

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Does Greater Inclusion Lead to Financial Health? New Research Raises Pointed Questions for the Industry

<h4>What Happened and Where Are We Today?</h4>
&gt; Posted by Evelyn Stark, Assistant Vice President, Financial Inclusion Lead, MetLife Foundation, and Graham A. N. Wright, Group Managing Director, MicroSave

<a href="http://cfi-blog.org/category/financial-inclusion-2020/"><img class="alignright wp-image-8901" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg" alt="Financial Inclusion 2020 Blog Series banner image" width="326" height="72" /></a>Financial Inclusion 2020 (<a href="http://www.centerforfinancialinclusion.org/fi2020" target="_blank" rel="noopener">FI2020</a>) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

In the previous post “<a href="http://cfi-blog.org/2015/08/25/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-two/" target="_blank" rel="noopener">The Ebb and Flow of Customer-Centricity – Beyond the Basics</a>” we discussed the details of building a customer-centric, or market-led financial service provider – and the intricate jigsaw puzzle of skills, processes, incentives, planning, and execution required to pull it off.

Results 

So, did all of our action research partners become client-centric market leaders? Are clients in their countries receiving amazing customer service and great products? The truth is that some institutions are better at delivering client-centric products than others. As a result of the project our 10 action research partners* developed or refined nine savings products and 11 loan products. At the end of 2007, when the project closed and MicroSave transformed into a consulting company, 373,705 customers had loans from our action research partners; the outstanding balances on these loans were $300 million; 2.5 million people had savings accounts and an overall outstanding balance of $530 million.

Over the same period MicroSave trained more than 51 Certified Service Providers and over 1,000 staff in marketing, R&amp;D, operations, and risk management departments. Many of these people remain in the industry (if not in the same jobs). These people and institutions have a deep understanding of being “market-led” and we need to build on the talent and experience the industry already has.

We have all seen great research on what clients want and need and we’ve seen some really great innovations in being able to deliver simple products and to design great products that use behavior and psychology to encourage client success. What we haven’t seen is many of these great designs reaching scale. The reality is that the difficult part of delivering great products that truly help clients meet their needs and goals is in the hard, un-glamorous work of system and organizational change.

Where are we today?

<img class="alignright wp-image-19235" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/08/8-31-2015.png" alt="" width="315" height="270" />Some of our partners “stopped” being market-led when the MicroSave team, or the CEO or product champion left. Being a client-centric organization is a supply side strategic choice – and it is an ongoing business practice. It requires constant attention, just like keeping up with IT, regulations, financial performance.

Being market-led or customer centric is not a project. It is not a behavioral economics (BE) class, nor a donor-funded human centered design (HCD) exercise, nor one department. It’s a continuous process of acting and reacting to the market, to the products your competitors are offering your clients, to the complaints and desires of your customers; and to your numbers. It is all about using your data to measure not just your bottom line, but to understand client behavior. It is about a commitment to constantly seek to understand your customers’ perceptions, needs, and aspirations … as well as the elements of your services with which they struggle … and to respond to these by changing processes, marketing and communication, staff training and incentives … and sometimes products. It is also about understanding customers at the economic and social level, and not to study them through product lenses. In fact, when we redefined microcredit years ago, and came up with microfinance, we painted microfinance as the four core products (transactional, savings, credit and insurance). In a way, we defined microfinance as a product approach, and took the focus away from the customer, the people we deemed as our target audience.

Recently Social Performance Management (SPM) has begun to encompass many of the key essentials of a <a href="http://bit.ly/1cGz0Kn">market-led and customer focused approach</a>. SPM recognizes that satisfied staff inspired by a clear, <a href="http://bit.ly/17uzROm">board</a> and management-endorsed mission and <a href="http://bit.ly/17QHOun">strategy</a> that is incentivized by remuneration systems rewarding a <a href="http://bit.ly/1jpFI9X">customer focus</a>, are essential to achieve an effective social and financial bottom-line. Such a strategy must, of course, necessarily encompass appropriate products and delivery systems.

Given the recent renewed and welcome attention to client-centricity, complete with new acronyms (BE, HCD) and new tools (design thinking, financial diaries, GIS maps, big data, algorithms, rapid proto-typing), we thought we’d remind people that we as an industry are not starting from scratch! We’ve had experiences (good and bad) that we can build on to ensure that more and more financial institutions take a strategic rather than project approach and we really can serve the millions of people outside the financial mainstream.

We also want to remind ourselves that we have not yet arrived at the end of the journey, where customer-centric financial service providers deliver great customer experience to customers who use the products and services. We still have to solve a few more challenges. How do you make the business case work? How do you ensure that we use a granular understanding of the economic and social lives of our customers and translate that into financial services that they continuously want to use? How do you empower customers to understand what you offer, to choose the right solution and to use it with confidence? How do you build trust between customer and financial service provider? Our understanding is that the concept of customer-centricity as a supply side strategy is an essential part of the path to solve these challenges. However, we need to go deeper in embedding customer-centricity as a business model in financial service providers. As mentioned, this means that we need to enter the worlds of organizational change, and the management of change. We need to learn from leading customer-centric firms in other industries, and from trail blazers in the financial inclusion world. Indeed, the quest started by MicroSave and partners, many years ago, is far from complete.

<a href="https://www.linkedin.com/pub/evelyn-stark/b/266/75b">Evelyn Stark</a> played a key role in the development of MicroSave’s market-led approach and is a certified service provider in several of its toolkits. Evelyn now heads MetLife Foundation’s financial inclusion initiative. <a href="https://uk.linkedin.com/in/grahamanwright">Graham A. N. Wright</a> is so unimaginative that he still remains at MicroSave.

*MicroSave’s action research partners included Equity Bank, Kenya Post Office Savings Bank, Centenary Bank, FINCA-Uganda/ Tanzania, Teba Bank, Tanzania Post Bank, Pride-Tanzania and Uganda Microfinance Union.

Have you read?

<a href="http://cfi-blog.org/2015/08/19/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-one/">The Ebb and Flow of Customer-Centricity in Financial Inclusion – Part One</a>

<a href="http://cfi-blog.org/2015/08/25/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-two/">The Ebb and Flow of Customer-Centricity in Financial Inclusion - Part Two</a>

<a href="http://cfi-blog.org/2014/07/08/does-financial-inclusion-need-to-be-more-customer-centric/" target="_blank" rel="noopener">Does Financial Inclusion Need to Be More Customer-Centric?</a>

The Ebb and Flow of Customer-Centricity in Financial Inclusion - Part Three

<h4>Beyond the Basics…</h4>
&gt; Posted by Evelyn Stark, Assistant Vice President, Financial Inclusion Lead, MetLife Foundation, and Graham A. N. Wright, Group Managing Director, MicroSave

<a href="http://cfi-blog.org/category/financial-inclusion-2020/"><img class="alignright wp-image-8901" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg" alt="Financial Inclusion 2020 Blog Series banner image" width="326" height="72" /></a>Financial Inclusion 2020 (<a href="http://www.centerforfinancialinclusion.org/fi2020" target="_blank" rel="noopener">FI2020</a>) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

In the <a href="http://cfi-blog.org/2015/08/19/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-one/" target="_blank" rel="noopener">first part</a> of this blog series, we saw how understanding customer demand is not enough to deliver mass financial inclusion … or even a successful product. Supply side factors are key … if rather more difficult than a quick market research exercise. Even after careful pilot-testing and a structured roll-out, all that preparation and keen balancing of client desires and institutional capacity to deliver sustainably didn’t necessarily work! Where were the clients? Why weren’t they storming the doors and asking for these wonderfully designed products? Weren’t our loan officers as excited as the project team? Did the CEO’s endorsement and great speech at the annual meeting make loan officers ready to sell the new products? Weren’t clients telling each other, and their cousins and friends?

No, they weren’t.

The supply side (staff) had not conveyed to the demand side (clients) that they had new products based on their feedback; they hadn’t convinced and trained staff, who were concerned that their jobs were about to get harder. Clients weren’t buying, and staff weren’t selling these new products. Once again, the action research partners* attacked the issues and MicroSave worked alongside, frantically learning and documenting.

<ul>
 	<li><a href="http://www.microsave.net/files/pdf/Product_Marketing_Strategy.pdf">Product Marketing</a>: We quickly discovered that any idea of “offer it and they will come” was optimistic. Product marketing and communication are essential in making the product and its functionality known.</li>
</ul>
<ul>
 	<li><a href="http://www.microsave.net/files/pdf/Developing_Staff_Incentive_Schemes.pdf">Staff Incentives</a>: Many financial services providers did not offer staff incentives – or, rather, offered all staff the same incentives; or offered staff the “wrong” incentives. Paying incentives for no arrears led to some pretty poor customer service. Not paying incentives for savings, or for new products saw “orphan” products and a lack of attention to the customers’ full financial needs.</li>
</ul>
<ul>
 	<li><a href="http://www.microsave.net/files/pdf/Human_Resource_Management.pdf">Human Resource Management</a><img class="alignright wp-image-19139" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/08/part-two.png?w=490" alt="" width="315" height="237" />: To implement an effective staff incentive system of course required a systematic and robust human resource management system within which to operate. And as our partners grew, this need was further exacerbated particularly when trying to deliver high quality customer experience.</li>
</ul>
<ul>
 	<li><a href="http://www.microsave.net/files/pdf/Risk_Management.pdf">Risk Management</a>: New products bring change and new risks at the operational and strategic level – all a bit scary, particularly for organizations that have largely copied a tried and tested model as <a href="http://blog.microsave.net/innovation-overkill-why-product-innovation-in-financial-inclusion-isnt-always-the-right-move/">market-followers</a>! New products bring not just process risks, but also regulatory and reputational risks, not to mention the obvious interest rate and credit risks. An approach to assessing and managing the risks involved in developing and introducing new products was also developed.</li>
</ul>
<ul>
 	<li><a href="http://www.microsave.net/files/pdf/Customer_Service_Strategy.pdf">Customer Service</a>: By this stage, MicroSave’s action research partners were very focused on being customer responsive … and clear that this involved rather more than teaching their front-line staff to smile at their clients. This led to demand for a customer service toolkit to analyze and improve on all aspects of customer service. Now, with the emphasis on using agents, this is as relevant at the agent level.</li>
</ul>
<ul>
 	<li><a href="http://www.microsave.net/files/pdf/Corporate_Brand_Identity.pdf">Corporate Brand and Identity</a>: From sleeping dinosaurs to rampaging lions, our partners had many different brand positions in their markets. Recognizing the power of brand to drive their business and attract the right customer segments, the action research partners also wanted a corporate brand and identity toolkit.</li>
</ul>
<ul>
 	<li><a href="http://www.microsave.net/files/pdf/Strategic_Marketing.pdf">Strategic Marketing</a>: The action research partners had realized that all these disparate strands required a completely different approach to running their businesses – one that put the client at the very center of everything.</li>
</ul>
Did this array of interventions yield the desired results? All will be revealed in Part 3: “The Ebb and Flow of Customer-Centricity – What Happened and Where Are We Today?”

<a href="https://www.linkedin.com/pub/evelyn-stark/b/266/75b">Evelyn Stark</a> played a key role in the development of MicroSave’s market-led approach and is a certified service provider in several of its toolkits. Evelyn now heads MetLife Foundation’s financial inclusion initiative. <a href="https://uk.linkedin.com/in/grahamanwright">Graham A. N. Wright</a> is so unimaginative that he still remains at MicroSave.

*MicroSave’s action research partners included Equity Bank, Kenya Post Office Savings Bank, Centenary Bank, FINCA-Uganda/ Tanzania, Teba Bank, Tanzania Post Bank, Pride-Tanzania and Uganda Microfinance Union.

Have you read?

<a href="http://cfi-blog.org/2015/08/19/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-one/">The Ebb and Flow of Customer-Centricity in Financial Inclusion - Part One</a>

<a href="http://cfi-blog.org/2014/07/08/does-financial-inclusion-need-to-be-more-customer-centric/" target="_blank" rel="noopener">Does Financial Inclusion Need to Be More Customer-Centric?</a>

<a href="http://cfi-blog.org/2015/03/10/responding-to-needs-and-wants-in-a-market-driven-financial-institution/">Responding to Needs and Wants in a Market-Driven Financial Institution</a>

The Ebb and Flow of Customer-Centricity in Financial Inclusion - Part Two

Why Being Customer-Centric Is a Supply Side Strateg

&gt; Posted by Evelyn Stark, Assistant Vice President, Financial Inclusion Lead, MetLife Foundation, and Graham A. N. Wright, Group Managing Director, MicroSave

<a href="http://cfi-blog.org/category/financial-inclusion-2020/"><img class="alignright wp-image-8901" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg" alt="Financial Inclusion 2020 Blog Series banner image" width="326" height="72" /></a>Financial Inclusion 2020 (<a href="http://www.centerforfinancialinclusion.org/fi2020" target="_blank" rel="noopener">FI2020</a>) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

In recent years Human Centered Design (HCD) became a buzzword in the financial inclusion world. It focused financial service providers on the design of products and services based on customer insights. Design firms became part of the technical provider fraternity, servicing financial service providers in the quest to improve inclusion. At the same time, the network of financial service providers broadened to include mobile network operators and retail chains, in addition to microfinance institutions (MFIs), banks, cooperatives, and a myriad of microfinance suppliers. With new entrants come new ideas – and repetition of old ones. One consistent, but underrated idea, is to focus on the customer.

Customer-centricity is not a new concept in the microfinance and financial inclusion world. In 1998, MicroSave was set up (by UNCDF/DFID who were then joined by CGAP, the Ford Foundation, and the Austrian and Norwegian governments) to promote savings in the microcredit landscape of East and Southern Africa. Initial research in Uganda revealed that although microfinance institutions (MFIs) did not have a legal mandate to collect savings, they did have another problem: <a href="http://www.microsave.net/files/pdf/Client_Drop_outs_From_East_African_Microfinance_Institutions.pdf">drop-outs as high as 60 percent per annum</a>. Further investigation revealed that much of the problem lay in poorly designed credit products. Much of 1999 and 2000 was spent understanding the problem, re-designing products, and developing the “<a href="http://www.microsave.net/files/pdf/Market_Research_for_MicroFinance_TS.pdf">market research for microfinance</a>” tools and training.

This past experience resonates with the current realization among proponents of financial inclusion that customers are not using products. This is evident in the <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/03/SOTIR_2014.pdf">GSMA research</a> that found that 68 percent of registered mobile money customers do less than one transaction in 90 days. <a href="http://www.microsave.net/files/pdf/No_Thrills_Dormancy_in_NFA_Accounts.pdf">No frills accounts in India</a>, and transactional accounts in many other settings, are mostly dormant (<a href="http://bankablefrontier.com/wp-content/uploads/documents/GAFIS-FocusNote1.pdf">GAFIS, 2011</a>, <a href="http://www.dnaindia.com/money/report-india-has-nearly-20-crore-dormant-bank-accounts-world-bank-2077978">DNA, 2015</a>). The market-led research approaches aimed at microfinance, and the human centered design approaches of the recent years, did not fully succeed in focusing provider efforts on the customer, nor did they help to increase the use of financial products and services. In the quest to understand this, we return to the unfolding story of the early years of market-led approaches, based on the MicroSave experience.

MicroSave and its partners were quite pleased with the success of the client research and the new, in-depth understanding of their needs and wants. But, self-congratulations were cut short by the first mid-term review in 2000 (unpublished manuscript). Led by industry gurus Elisabeth Rhyne and Marguerite Robinson – MicroSave was, rightly, chided for having focused entirely on the demand side and not addressing the importance of the supply side problems that needed to be solved to achieve real change.

The realization was that any industry could not be “client-centric” without ensuring that the supply side organizations who wanted to serve these customers were actually willing and able to serve them. Working with some of the more innovative financial institutions in East and Southern Africa, MicroSave spent the next seven years incorporating client responsive products within “market-led” institutions.

Being Customer-Centric Is a Supply Side Strategy… 

<img class="alignright wp-image-19051" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/08/mictosave.png?w=490" alt="" width="350" height="327" />When one hears supply side strategy, it conjures up deceptive marketing, product push, sell at all costs, and finding new ways to make more money for managers and shareholders. Customer-centricity, we’ve heard lately, should be about researching and understanding the customer. But, is that enough? Being customer-centric must be a supply side strategy if we – this entire industry, including donors, consultants, and retail financial services providers – really want to deliver high-quality products that low-income people want to buy and use.

Conducting market research with clients had some excellent benefits beyond the product design. All of the MicroSave Action Research partners* required product champions and staff from throughout their organisations to participate in the research. Virtually all of them came away from the research with a much deeper appreciation of what their clients' financial lives were actually like. It became very clear to loan officers that late payments were less a result of “stubbornness”, and more a result of a highly structured loan product that didn’t take into account farm cycles, or sickness, or school fees which needed to be paid before students were allowed to sit for exams. They also were amazed at the knowledge that clients had about microfinance, including what the competitors were offering and informal institutions. MFI staff were energized by the research and excited about designing new products. This is similar to the CGAP experience in supporting the HCD-based work with <a href="http://www.cgap.org/sites/default/files/CGAP_Insights_into_Action_final.pdf">financial institutions in seven countries</a> in recent years. Managers and leaders who are engaging with clients gain understanding and insights beyond the mere reading of reports.

But, market research and being excited about it is the “easy” part in implementing customer-centric products! Actually delivering the products clients wanted required changes both large and small in:
<ul>
 	<li><a href="http://bit.ly/1fpfvey">Planning, implementing and monitoring</a> <a href="http://bit.ly/1fpfvey">pilot-tests</a>. Systematically determining whether the new product met clients’ needs or was cost-effective for the institution to deliver was not done. Therefore, these new products were at risk for never being rolled out (CFOs questioned the business case), or not being “sold” (staff continue with the existing, understood, products).</li>
 	<li><a href="http://www.microsave.net/files/pdf/Costing_and_Pricing_Overview.pdf">Costing and pricing</a>. Prior to being market-led, many of our institutions looked at their bottom line not on a per product basis, or even a segmented client basis, but on a whole portfolio basis. Really focusing on the client meant our partners had to make trade-offs to offer what clients wanted, and what they could do at a low cost to serve. Costing and pricing models gave all departments a common framework for decision-making and led to clearer choices when trade-offs had to be made.</li>
 	<li><a href="http://www.microsave.net/files/pdf/Process_Mapping.pdf">Process mapping</a>. Efficiency is essential to keeping costs down, and most institutions had managed towards efficiency – for lending in the form of group loans and rigid loan-ladders, and for payments through reliance on technology. Unfortunately, efficiency often flies in the face of customer-centricity: not everyone wants to borrow in a group, repay weekly and progress in loan amounts at the same pace as their neighbor.  Not everyone wants to use their phone to bank. Process mapping tools helped FSP staff and the leadership analyse and improve the entire process and enable client-centricity by being more efficient in back-offices and in ways clients may not see, in order to give clients the services they wanted and needed.</li>
 	<li><a href="http://www.microsave.net/files/pdf/Product_Rollout.pdf">Going to Scale</a>. Rolling-out new products and taking them to scale after the completion of a pilot-test is a difficult and complex process. Rollout is a multi-step process of moving a product from the successful conclusion of the pilot test, to the point where it is fully operational in all desired locations. A carefully planned rollout reduces risk of failure, allows you to organize resources and optimize their use, saves money and ensures full and effective management and staff buy-in.</li>
</ul>
In Part Two of this series, “The Ebb and Flow of Customer-Centricity – Beyond the Basics,” we discuss what else was needed.

<a href="https://www.linkedin.com/pub/evelyn-stark/b/266/75b">Evelyn Stark</a> played a key role in the development of MicroSave’s market-led approach and is a certified service provider in several of its toolkits. Evelyn now heads MetLife Foundation’s financial inclusion initiative. <a href="https://uk.linkedin.com/in/grahamanwright">Graham A. N. Wright</a> is so unimaginative that he still remains at MicroSave.

*MicroSave’s action research partners included Equity Bank, Kenya Post Office Savings Bank, Centenary Bank, FINCA-Uganda/ Tanzania, Teba Bank, Tanzania Post Bank, Pride-Tanzania and Uganda Microfinance Union.

Have you read?

<a href="http://cfi-blog.org/2014/03/28/behavioral-approaches-to-product-innovation-at-the-base-of-the-pyramid/" target="_blank" rel="noopener">Behavioral Approaches to Product Innovation at the Base of the Pyramid</a>

<a href="http://cfi-blog.org/2014/07/08/does-financial-inclusion-need-to-be-more-customer-centric/" target="_blank" rel="noopener">Does Financial Inclusion Need to Be More Customer-Centric?</a>

<a href="http://cfi-blog.org/2015/03/10/responding-to-needs-and-wants-in-a-market-driven-financial-institution/">Responding to Needs and Wants in a Market-Driven Financial Institution</a>

Evelyn Stark

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