Kim Wilson, Lecturer in International Business and Human Security, began her interest in development when she entered the microfinance field in its infancy, after a career in mainstream venture financing. She began as a volunteer, a first step that led her to professional employment as a loan officer, MFI director, and investment fund advisor for both non-profit and for-profit microfinance ventures. She also oversaw the microfinance portfolio of a large international NGO. Her work in microfinance has led her to service in other sectors critical to rural development such as water, agriculture, and education.
A graduate of Wellesley College and Simmons Graduate School of Management, she is a Senior Fellow at Fletcher’s Center for Emerging Market Enterprises and also at the Feinstein International Center. She is interested in the financial resilience of households and markets at the base emerging market economies. Prof. Wilson is also the 2009 recipient of the James L. Paddock teaching award at The Fletcher School.
Prof. Wilson is a former member of the CFI Advisory Council.
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Lecturer, Fletcher School of Law and Diplomacy, Tufts University

Kim Wilson

Madison  Chapman

Should the international development and humanitarian communities bother with niche tech solutions for migrant financial inclusion? An app you might use every day gives us a hint. 

Blog Post

In recent years, practitioners have touted the link between migration and technology for increasing financial inclusion, <a href="https://reliefweb.int/report/world/role-technology-addressing-global-migration-crisis#:~:text=When%20refugees%20and%20IDPs%20use,their%20autonomy%20and%20self%2Dreliance.&amp;text=New%20digital%20platforms%20connect%20displaced,greater%20capacity%20to%20support%20themselves." target="_blank" rel="noopener noreferrer">integration</a>, and livelihoods support. Migrants themselves have developed applications to support integration, in what some call the “<a href="https://www.weforum.org/agenda/2018/12/social-media-is-casting-a-dark-shadow-over-migration/" target="_blank" rel="noopener noreferrer">app-ification of migration</a>” or “migrant tech.” Humanitarian and development agencies have <a href="https://oxfamilibrary.openrepository.com/bitstream/handle/10546/558591/rr-new-technologies-cash-transfer-010111-en.pdf?sequence=6&amp;isAllowed=y" target="_blank" rel="noopener noreferrer">helmed the push for migrant tech</a>, especially with regard to mobile cash transfers.

Also stepping into the “technology gap” — perceived or real — are developers, who create applications for <a href="https://techcrunch.com/2018/10/27/here-are-25-of-the-most-innovative-new-projects-using-tech-to-help-refugees-and-ngos/?guccounter=1" target="_blank" rel="noopener noreferrer">every use under the sun</a>: <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf" target="_blank" rel="noopener noreferrer">returnee integration</a>, mobile “game-ified” bilingual education, <a href="https://www.elrha.org/project/mobile-tech-gbv-syrian-adolescent/" target="_blank" rel="noopener noreferrer">gender-based violence prevention</a>. The International Organization for Migration (IOM) recently joined the game with its <a href="https://www.iom.int/migapp" target="_blank" rel="noopener noreferrer">MigApp</a>, which provides information, a money transfer service, and translation. Governments and organizations like the <a href="https://www.oecd.org/migration/mig/migration-strategic-foresight.pdf" target="_blank" rel="noopener noreferrer">OECD</a> have been quick to laud such interventions as efforts to make humanitarian aid future ready.
<blockquote class="pullquote--right">The most useful digital tools for migrants are not migrant tech at all.</blockquote>
Few doubt that mobile technology occupies a key role in migrant life. Yet our research with migrants in Quito, Ecuador, suggests that in spite of efforts to “app-ify” migrant integration, the most useful digital tools for migrants are not migrant tech at all. Instead, migrants take off-the-shelf applications such as WhatsApp and flex them to fit their needs.
<h2>The “WhatsApp Bank": Stories from Migrants in Quito</h2>
In Quito, the “Bangladeshi Club” meets once a week, rotating through different Bangladeshi restaurants. Only about 25 Bangladeshi migrants live in the city, so it is easy to stay in touch. They take advantage of a WhatsApp group chat to coordinate their weekly meetings where, between food and conversation, everyone has the chance to benefit from a communal fund. Each week all members contribute to the fund and should anyone fall on hard times, they can petition the club for a loan.

Formal financial inclusion is unavailable to many migrants in the Ecuadorian capital, not just ones from Bangladesh. As of 2016, the country had among the <a href="https://www.afi-global.org/sites/default/files/publications/2019-07/AFI_FILAC_SP_AW_digital.pdf" target="_blank" rel="noopener noreferrer">lowest number of users of mobile money</a> services in Latin America. The dearth of reliable and robust digital financial services (DFS) in Ecuador pushes migrants to adapt.

Nowhere was the inventive use of WhatsApp clearer than among Venezuelan migrants in need of remittance services. Runaway inflation in Venezuela, coupled with tight DFS regulations in Ecuador, encourages creative thinking among migrants hoping to send money home. Remittances to Venezuela take three forms: in-kind, cash, or via wire or bank transfer. Migrants least preferred the latter option. Due to severe inflation and perceived corruption in Venezuela, money transferred to Venezuelan banks immediately loses value. Thus, alternative options that rely heavily on WhatsApp, and whose legality might be in question, have gained traction.

In one typical example, a Venezuelan migrant wishing to send remittances will connect with a Colombian runner through WhatsApp word-of-mouth networks. Over WhatsApp, the migrant tells the runner how much they would like to remit. The runner responds with a price for services rendered, plus extra for the border bribe they will certainly pay. The migrant then wires money to the runner in Colombia, who performs one of two actions: withdraw cash or buy goods.

In the first scenario, the runner takes out cash and smuggles it into Venezuela. They then transport the package to the intended recipient. In the second, more common case, the runner uses the remittance money to purchase essential goods in Colombia. They then ferry the goods across the border or tap agent networks to make the delivery. In both cases, WhatsApp plays an essential role.
<blockquote class="pullquote--left">WhatsApp supports business growth, marketing, and development for migrants in Ecuador.</blockquote>
WhatsApp also supports business growth, marketing, and development for migrants in Ecuador. Venezuelan migrant Rosa operates her direct-to-order Venezuelan restaurant via WhatsApp. Her clients communicate their home-country cravings directly to her, and Rosa shops for the ingredients and prepares the meals made-to-order. In this way, she fills a very specific community niche and has built a loyal base of clients who depend upon her customizable Venezuelan food. WhatsApp enabled her business to boom.
<h2>What's Next?</h2>
The centrality of WhatsApp to migrant social and economic life in Quito begs the question: Is it really necessary to “app-ify” migration?

Our research offers a simple response: no. This thinking aligns with a small but growing chorus of concerned researchers. A <a href="https://www.rand.org/pubs/research_reports/RR4322.html" target="_blank" rel="noopener noreferrer">RAND Corporation study</a> of refugee technology use in the Middle East and Greece confirms that migrants rely “mainly on mainstream technology developed for more general audiences,” and concludes that the influx of applications and “innovations” is simply “too much.” In the Mediterranean, research at <a href="https://sites.tufts.edu/journeysproject/the-financial-journey-of-refugees-evidence-from-greece-jordan-and-turkey/" target="_blank" rel="noopener noreferrer">The Fletcher School of Law and Diplomacy confirmed</a> those findings. Migrants frequently deployed applications used for maps, currency conversion, language translation, and weather. Notably, none of these applications were created specifically for migrants.

The RAND researchers recommend that humanitarian and development agencies invest more in working within mainstream platforms and less on developing niche products. This includes removing access barriers, scaling internet connectivity, managing data privacy, promoting digital literacy, and improving mobile phone penetration. These are all productive activities that agencies can do—and already do well. Why reinvent the wheel when already-popular migrant platforms exist? Our answer: don’t.

Migrants are the ultimate connectors. They have been using technology for years and will continue to do so, but in their own way and at their own pace. Humanitarian agencies claim that new technologies strengthen migrant autonomy, yet community-developed online systems already lend migrants voice.

Technology will continue to transform how migrants work, move, and connect. No doubt, off-the-shelf technology has made migration a bit more straightforward. Our job as humanitarians is not to invent new technology. Our job, on behalf of migrants, is to help existing technology go the distance. Let’s get to work.

There’s (Not) an App for That: Taking a Hard Look at the “App-ification” of Migration

In the context of cash assistance to displaced persons, what constitutes a "frivolous expense" to donors doesn't necessarily reflect reality. 

Are you following the question of how people receive cash assistance in emergencies or protracted crises? If so, hop aboard the listserv of CALP (<a href="http://www.cashlearning.org/">Cash Action Learning Partnership</a>). Brisk discussions, great resources, and important insights circulate weekly, often daily. 

Lately, we have been discussing “frivolous expenses”—money spent on alcohol, cigarettes. Participants in the listserv are making excellent points. They assert that tracing cash uses in hopes of soothing donor concerns that money is not being spent wisely is folly for two reasons: 1) we already have substantial <a href="https://blogs.worldbank.org/impactevaluations/do-poor-waste-transfers-booze-and-cigarettes-no">evidence</a> that an increase in available cash to households does not increase marginal consumption of alcohol or cigarettes and 2) it’s hard to trace actual use since cash assistance typically supplements other sources of household income.

I would like to pose a third reason why a focus on the uses of cash assistance is folly. To do that, I need to take us into the language of financial planners. Rarely do financial planners, at least in the U.S., use the term “frivolous expense.” Instead, they prefer to divide people’s budgets into <a href="https://bizfluent.com/info-8721606-discretionary-vs-committed-fixed-costs.html">committed expenses and discretionary expenses</a>. In this system, the same item can potentially be classified differently at different points in time. For example, a financial planner speaking to my students the other day agreed that purchasing a grande latte at the local Starbucks was a discretionary expense in the fall semester, and should be enjoyed only after committed expenses were budgeted for and met (including any set-asides for savings). But the coffee’s classification could change. Let’s look to the spring. In March, inviting a potential employer to an informational interview might include treating them to a beverage. For each networking week, the grande latte (in fact two) would now be budgeted as a committed expense: it represents an investment in a student’s future.

Perhaps in settings of displacement we should similarly analyze expenditure on cigarettes and alcohol. When are they committed expenses and when are they discretionary? In a qualitative study I led in 2016 and 2017 on the <a href="http://fletcher.tufts.edu/Institute-for-Human-Security/Research/Migration-Crisis-and-State-Fragility/Financial-Mobility-of-Refugees">Financial Journey of Refugees</a>, those receiving cash assistance said they did not use their aid on cigarettes and alcohol.*

Those not receiving cash assistance, and not yet habituated to the games of aid, were forthcoming about their cigarettes budgets. Cigarettes, they claimed, were a condition of their survival. To gather information on affordable apartments or the best routes out of the country, they needed to offer up a smoke to the person in the tent next door. They happily offered a cigarette to the man at the taxi stand to learn the best times to cross a border or where to get the best rates to convert hard currency into local money. When you are a refugee or migrant, information is survival. Investing in information is not a discretionary expense, it’s a committed expense. In Greece, one group of young Afghan men told us that they did not smoke in Afghanistan but budgeted for cigarettes prior to departure. Their informants told them they had to invest in being sociable along their travels across Iran and Turkey. In fact, they took up smoking as a strategy for socializing and planned to quit when they reached their countries of destination.

Both alcohol and cigarettes had benefits beyond their powers to elicit crucial information. They also facilitated bribes. A woman told us of the “special drink” she carried to persuade the guards at a checkpoint to usher her family through without checking their documents, which if examined, would be cause for their arrest or return. Cigarettes were often exchanged in detention centers and safe-houses for favors like an early release from detention or a better placement on the open-back truck. They were also cheaper than cash bribes. Without using the terms “committed expenses” versus “discretionary expenses,” our respondents set us straight on how exactly cigarettes and drinks constituted an investment in their safety, survival and resilience.

Thus we add a third nail in the coffin of donor insistence on tracing the uses of their cash assistance – the utter frivolity of tracking frivolous expenses. I am sure we will find many more nails to pound into the coffin as our discussion advances.

* Incidentally, respondents were confused about whether they should say they used cash assistance on condoms. Did condom expenditure prove that they were responsible adults earnestly trying to prevent disease, or did it prove that they were irresponsible adults interested only in the next conquest. And, no, we did not ask them if they spent their cash assistance on condoms. Our respondents surfaced the topic when we asked what questions asked by other researchers confused them, so that we would not make the same mistakes. They then asked us for tips on how to answer the condom question, which we gladly gave them.

Kim Wilson is a Lecturer in International Business and Human Security at the Fletcher School, Tufts University and is part of the faculty of Fletcher’s <a href="http://fletcher.tufts.edu/Institute-for-Human-Security">Henry J Leir Institute for Human Security</a>.  

Have you read?

<a href="https://cfi-blog.org/2017/03/09/the-digital-demands-of-the-displaced-dont-track-me-dont-expose-me-dont-cut-me-off/">The Digital Demands of the Displaced: Don’t Track Me, Don’t Expose Me, Don’t Cut Me Off</a>

<a href="https://cfi-blog.org/2016/02/09/financial-inclusion-and-immigration-in-europe-disrupting-identity-norms/">Financial Inclusion and Immigration in Europe – Disrupting Identity Norms</a>

<a href="https://cfi-blog.org/2017/09/28/migrations-middlemen-and-how-to-pay-them/">Migration's Middlemen and How to Pay Them</a>

The Frivolity of Frivolous Expenses

How do refugees finance their journeys and which expenses need financing?

This was the question that a team of us at The Fletcher School at Tufts University set out to answer in our study “<a href="http://fletcher.tufts.edu/Institute-for-Human-Security/Research/Migration-Crisis-and-State-Fragility/Financial-Mobility-of-Refugees">The Financial Journey of Refugees</a>.” We studied the routes and financial challenges of more than 100 refugees in Greece, Jordan and Turkey, between July 2016 and April 2017. The refugees we interviewed had traveled from South Asia, Central Asia, the Middle East, East Africa and West Africa.

Regardless of their country of origin, with the exception of Syria, a refugee’s biggest expense was the cost of hiring a smuggler. Smuggling expenses ran about 85 percent of the total cost of the journey. The smuggler’s fee included important services: travel by air or overland, depending on the refugee’s budget, guide services across borders, payment of bribes at border crossings, and documentation falsification expenses. Smuggling prices varied widely by country of origin (some borders being porous, others sealed tight), by how deluxe a trip was (air versus ground), by numbers of borders crossed (affecting the number of falsified IDs required). To give an example, journeying overland from Afghanistan through Pakistan, Iran, and Turkey to Greece might cost $7,500 per person, a price that went up or down based on shifting rules and border crackdowns. Traveling from Eritrea to Greece might cost the same amount. Traveling from Syria to Turkey could cost as little as $500.

The price of the journey was one factor in a traveler’s safety – the higher the cost, the better the traveling modes, and the safer the travel. While what refugees paid their smuggler was important, how they paid them was equally important. Did the refugee pre-pay the kingpin smuggler in advance of the journey? Did she post-pay him after arriving safely in Greece or Germany? Did she pay leg by leg? All these strategies were in play and we outline them in our <a href="http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Human%20Security/Final%20Journeys_Briefing%20Paper.pdf">report summary</a> and they are detailed by the refugees themselves in a <a href="http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Human%20Security/Compendium%20Financial%20Journeys%20%20Publication.pdf">Compendium of Field Notes</a>. Below we describe two of many strategies.
<h3>Strategy 1: Guarantee Scheme via a Financial Third Party</h3>
Money agent networks, often informal, span from Pakistan to Germany, and around the world. These networks—dubbed Eastern Union by a Jordanian regulator—do far more than transfer funds from person A to person B. They will store funds for later disbursement or, if instructed, will shunt funds directly to smugglers. For example, a journeyer traveling overland from Kabul to Athens might visit a money agent in Kabul (a saraf) who will take her deposit for $7,500. When she arrives safely to her first waypoint, which could be in Zahedan, Iran, she texts a code to her saraf. The code, incidentally, would have been randomly generated by the saraf’s app before her departure and she would have memorized it. By sending the code, the refugee signals her safe arrival at the Zahedan waypoint. The saraf then forwards a predetermined sum to the kingpin smuggler, using a network of couriers and other money agents to get him his funds. The kingpin in turn deploys a combination of banks and money agents to make sure his local smugglers get paid.

There is no single way this system of guarantee works. It is customized, improvised upon, and individually negotiated by various actors. In some instances, there is no code. In others, there are several codes. In some instances, the kingpin smuggler chooses the saraf. In others, the refugee chooses the saraf. In Syria, the third party is often a shopkeeper who charges $50 to insure the journey. In Iran, the money agent charges a percentage (often 10 percent) of transactions.
<h3>Strategy 2: Crowdsourcing via Kin</h3>
Typically, crowdsourcing via kin is a pre-payment strategy, but not always. We interviewed refugees who were held hostage by smugglers at various points along their routes. When relatives—sometimes a circle of relatives both forward and backward along the route—paid up, the hostage refugee was released to be smuggled farther along her route.

Often crowdsourcing came in the form of pre-payments along various points in a route. For example, traveling from Eritrea to Greece, a journeyer might signal a relative in Khartoum to fund trip expenses. The relative in Khartoum would crowdsource funds from family members in multiple countries across Europe and North America. She might use Zain, a mobile money system, to collect the funds and hold them in Khartoum. She would then secure a smuggling network to help the Eritrean refugee cross to Sudan. The kingpin smuggler would be paid via a courier upon the refugee’s safe arrival in Khartoum. If the Eritrean refugee wanted to continue north to Turkey, Greece or Northern Europe, another round of crowdsourcing would begin. Again, the relative would make payment to the smuggler after the refugee’s safe arrival. In some cases, to ensure compensation, the smuggler will stay with the refugee in a safe house until he has received his payment via Western Union or an informal money agent.

Said one refugee: “It’s a collective system. All Eritreans understand each other on this.” The understanding is that she does not have to pay her relatives back, but she is expected to pay her debt forward: when someone else in her network tries to escape Eritrea, she is expected to do her part to financially support his or her expenses.

What do these strategies mean for providers of financial services? Clearly suppliers cannot legally, knowingly pay smugglers. But, perhaps there are other forms of financial assistance that are perfectly legal.

First, licit travel is often part of a route and could be better insured. For example, a refugee may be able to obtain a visa to a transit country and would like to secure legal travel there. But, because prior legs of the journey may be cobbled together through smugglers, the refugee cannot predict when they will reach the transit country. Insurance could help offset this uncertainty. Too often providers are skeptical that people need financial education to understand sophisticated insurance products. As long as the systems are familiar and offer value, refugees both literate and illiterate, will master them quickly. Second, providers believe that people don’t like to save, but, we found that saving for a purpose—journey preparation—is valuable. Surely, there are many legal ways to assist refugees to accumulate savings for journey purposes. And just as surely, clever suppliers could find ways for refugees to easily access those licit savings along their journey. Third, the ubiquity of informal agents could lead to service expansion. Can trusted informal money agents be co-opted and certified within a legal framework in much the same way that Uber has recruited its drivers?

Have you read?

<a href="https://cfi-blog.org/2017/03/09/the-digital-demands-of-the-displaced-dont-track-me-dont-expose-me-dont-cut-me-off/">The Digital Demands of the Displaced: Don't Track Me, Don't Expose Me, Don't Cut Me Off</a>

<a href="https://cfi-blog.org/2016/02/09/financial-inclusion-and-immigration-in-europe-disrupting-identity-norms/">Financial Inclusion and Immigration in Europe – Disrupting Identity Norms</a>

<a href="https://cfi-blog.org/2016/08/17/a-learners-license-to-master-the-rules-of-the-credit-road/">A Learner's License, To Master the Rules of the Credit Road</a>

Migration’s Middlemen and How to Pay Them

Predictably, the long tentacles of <a href="https://www.microfinancegateway.org/library/responses-refugee-crisis-financial-education-and-long-term-integration-refugees-and-migrants">financial inclusion</a> have coiled themselves around the most vulnerable targets of humanitarian aid: low income <a href="http://www.digitalfinanceinstitute.org/?post_projects=childrens-adventure-camps">refugees</a>, migrants and displaced populations (hereon: “refugees”).

Just as predictably, the financial inclusion agenda is driven by suppliers (aid providers, donors, financial intermediaries and governments). Few refugees are demanding to be included in a digital/formal ecosystem. That does not mean they don’t appreciate the shelter, food and cash that humanitarian agencies have mustered on their behalf. They do. They also appreciate the efforts of those same agencies to make cash assistance easier. E-cash that can be transformed into physical cash at convenient times and places is an example. Use of debit cards at ATMs to withdraw cash from digital accounts can cut valuable time otherwise spent waiting in long cash distribution queues. Very appreciated, indeed.

But beyond handily retrieved cash assistance, refugees, obsessed with the business of surviving, aren’t all that interested in being co-opted by yet another development agenda, in this case, financial inclusion. They aren’t demanding a bank account, a mobile wallet, or a branded payment card. Nor are they demanding that their cash retrieval method turn into a savings program. In fact, such programs, however well-intended, can backfire. Some NGOs place restrictions on cash withdrawal amounts – an attempt to force savings or nudge smoother consumption. But such restrictions can lead to cash cards getting swallowed at the ATM; refugees forget, or perhaps never understood, the various constraints layered into their cards.
<blockquote>But beyond handily retrieved cash assistance, refugees, obsessed with the business of surviving, aren’t all that interested in being co-opted by yet another development agenda, in this case, financial inclusion.</blockquote>
Despite the supply-side’s lust for data, refugees, especially older ones, reject the notion of being traced. It’s easy to see why. Some are fleeing such ruthless trackers as the Taliban, ISIS, or their home governments and thus are protective of data that might expose even a whiff of their whereabouts. As a consequence, some reject debit cards, e-vouchers, or e-wallets for anything other than maximum withdrawal of cash as soon as a digital distribution is made.

There’s more. As part of addressing a “<a href="http://nextbillion.net/unlocking-the-power-of-digital-financial-services-for-humanitarian-response/">financial inclusion gap</a>,” agencies and <a href="http://nextbillion.net/unlocking-the-power-of-digital-financial-services-for-humanitarian-response/">donors</a> are examining the closed loop nature of the cards they issue. Wider use of cards and access points across networks is one reason to lengthen the loop. That sounds good. Agencies and donors also promote individually owned e-wallets and cards. Refugee-owned accounts (versus NGO-owned accounts) allow users to top up their cards and wallets with remittances and earnings. That sounds good, too. And agencies hope to increase digital transactions to improve data collection.

Wait, that definitely does not sound good.

Again, data collection is exactly what many aid-receiving refugees fear.  They worry that humanitarian actors (NGOs, UN agencies, governments and commercial intermediaries) will know too much about them, that the full content of their accounts – not just the aid-funded portion – will become visible to anyone with the right permissions, permissions over which refugees have zero control.

The refugee wonders: if aid agencies can track all transactions in my account, which transactions will be deemed “good” (the purchase of milk?), which “bad” (the purchase of cigarettes?), and which up for grabs (the purchase of condoms?)? Will bad purchases signal that I am irresponsible and thus trigger a closure of my cash assistance? If I receive remittances on the same account that holds my e-cash assistance, will my aid agency assume that I no longer need that assistance?

Getting the answer right requires users to fathom a bottomless pit of aid agendas. It’s easier to withdraw cash as soon as it becomes available than to imagine the possibilities that might arise from storing funds digitally.

But what if the world of financial inclusion suddenly were to become relevant to refugees? What might real demand look like?  In the summer of 2016, faculty, students and alumni of the Fletcher School, Tufts University, embarked on a study called the Financial Journey of Refugees. The study was sponsored by CRS Greece, GiZ Jordan, DRC Turkey, and the Trampoline House in Denmark. We researched 109 subjects and dozens of key informants in Greece, Turkey, Jordan, Denmark and Afghanistan. Our primary research question was: how do refugees finance their journeys and manage their money along the way? In the course of our qualitative discussions, they told us far more than we asked. Many confided their financial experiences and their experiences of aid across multiple countries. Results can be found in a recently released <a href="http://fletcher.tufts.edu/CEME/Featured-CEME-Senior-Fellows/~/media/CC882A166CB2476CA6C5DB62739FF5CC.ashx">essay</a>.

So, what are refugees demanding, if not financial inclusion? One way to find out is to understand what they do today to manage their financial tasks. Here are a few highlights: they are using kinship networks to finance their journeys, to store savings and to borrow to fill gaps in income as they settle and make their way. They are using local hawaldars – money traders – to store and release funds to their smugglers at different waypoints in their journeys as well as to settle debts within cross-border kinship networks.  But, perhaps an important takeaway goes beyond use of financial services and peers into the workings of a close cousin of finance: information services. Refugees are using Facebook, Whatsapp, and Viber, enabled by smart phones that they own or borrow. Together these platforms constitute a refugee communications backbone.

Facebook is deeply trusted (maybe more than justified). Refugees use Facebook to check whereabouts of relatives, indicate a need for funds, or refer a good smuggler. With mobile phones ubiquitous and smart phones prevalent, Facebook is accessible (and VPN workarounds possible in places where it is banned, such as <a href="https://www.lostwithpurpose.com/access-facebook-blocked-sites-iran/">Iran</a>). Refugees monitor and update Facebook often, particularly in places where batteries can be charged easily.

The near-ubiquity of Facebook and the perpetual fear of digital financial accounts seem incongruous. Our study does not reconcile these divergent claims. We only acknowledge them and ask: what value proposition makes Facebook so attractive that it overshadows the fear of traceability? Can Facebook move beyond its current third party offerings via <a href="https://www.bloomberg.com/news/articles/2016-06-13/inside-facebook-s-plan-to-get-users-to-buy-flowers-in-messenger">Messenger</a>, out of banked transactions, into bankless P2P transactions, like the hawala? Might they link to a crypto-currency and brand it in a friendly way? What would regulators need to do to make this possible?

But there are other questions, too. Can progressive central banks, such as the Bank of Jordan, focus on a demographic that is unafraid of being digitally tracked, such as <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/12/GSMA-case-study_Jordan_2016.pdf">young people</a> whose goal is to assimilate and impress? And in good time, could it let the behavior of the young become the norm? Meanwhile, can cash assistance providers applaud their own efforts as humanitarians, shedding concerns about whether their life saving cash and e-cash services – remarkable for what they are – contribute to a financial inclusion agenda?

<a href="https://sites.tufts.edu/kimwilson/">Kim Wilson</a> is on the Faculty of the Fletcher School, Tufts University and oversees Fletcher's participation in the <a href="https://digitalfrontiersinstitute.org/the-institute/certificate-digital-money/">Certificate in Digital Money</a> offered jointly with the Digital Frontiers Institute.

Have you read?

<a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">Financial Inclusion of Refugees: An Introduction</a>

<a href="https://cfi-blog.org/2017/02/14/refugees-and-humanitarian-assistance-which-kind-of-aid-is-best/">Refugees and Humanitarian Assistance: Which Kind of Aid Is Best?</a>

<a href="https://cfi-blog.org/2016/02/09/financial-inclusion-and-immigration-in-europe-disrupting-identity-norms/">Financial Inclusion and Immigration in Europe - Disrupting Identity Norms</a>

The Digital Demands of the Displaced: Don’t Track Me, Don’t Expose Me, Don’t Cut Me Off

We should be careful before glorifying financial innovation

In the <a href="http://www-groups.dcs.st-and.ac.uk/~history/PrintHT/Longitude1.html">olden days</a>, awards were not given for innovation itself but for how effective an innovation was in relation to the importance of the problem it solved. But what we see today in financial inclusion is the ubiquity of innovation – often front and center - as the lead determinant in a plethora of prize competitions. Check the first <a href="http://www.wsj.com/public/resources/documents/Financial-Inclusion-Challenge-Official-Rules.pdf">judging criteria</a> of this <a href="http://www.wsj.com/public/resources/documents/financialinclusion.html">prestigious contest</a>.

Why would the entity commissioning the award, The Wall Street Journal, care about how innovative or unique the business was or how it broke from tradition? Wouldn’t it care most about how well the service solved a problem and the problem’s significance?

In financial inclusion, innovation itself has been an endgame for quite some time. Take the <a href="http://www.fastcompany.com/713911/fast-50-2008-ideo">much-hyped</a> “Keep the Change,” <a href="https://www.bankofamerica.com/deposits/manage/keep-the-change.go">Bank of America’s</a> program to hoover in payment leftovers at the cash register. If you buy $3.80 worth of coffee, the amount is rounded to $4.00 of which twenty cents goes to your bank account. Greeted as a clever way to encourage savings, the idea was indeed innovative back in 2006. But was it good? Here is what a critic, <a href="http://www.bankrate.com/finance/savings/spend-to-save-accounts-helpful-or-hoax-1.aspx">citing another critic</a>, had to say about Keep the Change: "If you want something that makes it quick and easy, lets you fool yourself into thinking you're actually saving, (spend-to-save) programs are good." But despite this perversion, Keep the Change has been the winner of multiple awards, many with innovation in their <a href="http://www.businesswire.com/news/home/20060927005182/en/2006-Outstanding-Corporate-Innovator-Award-Announced-PDMA#.Vgh20HiPJUR">descriptions</a>.

Plenty of ideas are creative and go nowhere. That’s where the ideas I have in the shower go, where they should, down the drain. But innovation is the crack-cocaine of the funding world. Funders including donors and impact investors want to be thought of as doing something new and what is newer than innovation? Innovation is the new excellence, the new buzzword, the new impact.

Design firms that feed funder appetite for innovation are generating an explosion of events that dub those in attendance “expert-for-a-day.” I just completed my third and possibly last human-centered hackathon, a forum that deemed every idea safe and every suggestion good, no matter how absurd. We were instructed as we brainstormed to stay mentally positive and intellectually curious, even if what was on offer was decidedly insane. This open-mindedness, we were told, was the heart of the innovation process. But after a day of outlandish ideation, we were permitted little room to pronounce any proposal doomed or even dangerous. By the close of the workshop, we had offered up pounds of sticky-notes, colored dots, and Sharpies to the grand deity of design: the prototype. But to what end?

A Brazilian banker friend, in pleasantly accented English, reflected on his own experience a few years back where he had endured weeks and weeks of co-design and prototyping in the name of financial inclusion. The process was led by the very same firm that engineered Keep the Change. “It was all so exciting, so energizing,” he remembered. Asked how the product performed, he responded: “Oh, uptake was so low and usage lower.”

Innovation in financial inclusion is not a problem per se; it can be a path to socially important solutions. And, not all innovation is led by design firms, but rather by <a href="http://unreasonable.is/mexico-series-kiwi/">committed entrepreneurs</a> and leaders. Yet, should innovation be a goal rewarded for its own sake? Should it be egged on by brainstorm-brokers who have no ultimate stake in the outcome, especially when those “innovated upon” can become exposed to extreme risk?

Glorifying, even fetishizing innovation in financial inclusion surely has its downsides. Perhaps the biggest is that no one knows what financial inclusion is. Back to the <a href="http://opinionator.blogs.nytimes.com/2012/02/29/prizes-with-an-eye-toward-the-future/">olden days</a>: kings, their navies, and merchant mariners all felt the pinch of not knowing the location of their ships at sea. Only in determining both latitude and longitude could sailors fix their sea-going positions. The “un-longituded” had a problem that was precise, important and finally, though innovation, solved. But that’s not the case in financial inclusion. The problem is imprecise, and if you ask the “un-included,” depending on what scheme you are including them in, inclusion is often irrelevant.

Rewarding innovation qua innovation can point the arrows of effort and resources away from expanding <a href="http://sg2015conference.org/">proven concepts</a> toward accelerating <a href="http://dschool.stanford.edu/blog/2012/11/20/juntos-finanzas-wins-global-innovation-award/">unproven ones</a>. What about the long-established credit union extending business hours in a hard scrabble area or <a href="http://fletcher.tufts.edu/~/media/Fletcher/Microsites/IBGC/Gates%20Residency/FINAL_Fletcher%20Policy%20Memo%202015.pdf">enabling the expansion</a> (pg. 5) of a rural bank network? Tens of thousands of in-the-trenches improvements can advance good financial services, none of which may be particularly innovative or require expensive design processes, but many of which have demonstrated their relevance, <a href="https://www.usaid.gov/results-data/success-stories/three-boxes-one-rising-community">are worthy of attention</a>, and even deserve a prize.

<img class="alignleft wp-image-19620" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/10/kim-wilson.jpg?w=150" alt="" width="100" height="98" />Kim Wilson is a Lecturer at the Fletcher School, Tufts University, a Senior Fellow of Fletchers' Council on Emerging Market Enterprises and incoming Board Member of the <a href="http://fletcher.tufts.edu/hitachi/">Hitachi Center for Technology and International Affairs</a>.

Have you read?

<a href="http://cfi-blog.org/2014/10/29/the-great-competition-and-innovation-deficit/">The Great Competition and Innovation Deficit</a>

<a href="http://cfi-blog.org/2015/08/10/new-fi2020-e-magazine-three-essential-debates/">New FI2020 E-Magazine: Three Essential Debates</a>

<a href="http://cfi-blog.org/2014/08/06/reality-check-three-ways-we-hype-up-financial-inclusion-break-throughs/">Reality Check: Three Ways We Hype Up Financial Inclusion Breakthroughs</a>

The False God of Innovation

&gt; Posted by Kim Wilson, Fellow, Center for Emerging Market Enterprises and the Feinstein International Center, Tufts University

[getty src="103296651?et=5dH7-OFqQDd8DtZLFGR_Hw&amp;sig=EAGFqEhiM-Qvwwdczp8GszAdKvxjk0YA5hvUbNyZC6g=" width="594" height="396"]

“Everything should be as simple as it can be, but not simpler.” This aphorism credited to Albert Einstein inspires our call to Lean Research.

Two Fridays ago at MIT a group of 50 of us met to hash out some principles that, if followed, might generate better research in development and social science contexts. NGOs, universities, foundations, corporations, government, and multi-lateral agencies were represented in our group.

Our analogy of choice was Toyota. If “the Toyota way," or lean manufacturing as it has come to be called, could cause profound and beneficial disruptions in production processes, might lean research cause equally profound and beneficial disruptions in research processes?

Much of our discussion that day traveled along four paths, which grew into a starter set of principles:

Lean Research is right-sized. The sample and method are perfectly suited to the research objectives. Unnecessary questions are cut, and necessary activities are added in. It also means much homework must be done to ensure the study is necessary at all and that the information could not have been gathered through secondary research or through key informants.

Lean Research is relevant. The information gathered must be understandable to a wide range of stakeholders, including the subjects researched. It must be accessible and actionable, able to drive changes in policy or practice. Again, this means much homework must be done before the research even begins. Researchers must identify stakeholders who will actually use the information.

Lean Research is respectful, even delightful. Human subjects might enjoy a six-hour interview during harvest or they may not. Enjoyment depends on the benefits they get from the research experience (in Lean Research, we assume every research is a treatment). How do we maximize the experience of the human subject to get better, more accurate results?

Lean Research is rigorous. As one of our colleagues from MIT’s JPAL said: the most respectful research is rigorous. And that is true. Research that uses faulty protocols is a complete waste of a subject’s time and undermines findings that could advance knowledge. Lean Research does not permit cutting corners. Samples must be representative of the population, and methods unbiased. The research must be reproducible.

Alex Counts of Grameen Foundation goes a step further to ask: how do we give subjects the chance to rebut or confirm findings from their perspective (see <a href="http://alexcountshaitibook.wordpress.com/2014/08/06/the-start-of-a-movement-for-lean-research/">this </a>for his ideas)? He also proposes an annual top ten examples of research that has driven practice and/or policy, which seems like a great idea.

What does this all have to do with financial inclusion? First, many folks in the room represented institutions that dealt directly with financial inclusion such as Bankable Frontier Associates, CGAP, The Bill &amp; Melinda Gates Foundation, SEEP, The MasterCard Foundation, and MasterCard Worldwide.

Second, it was easy to see how Lean Research principles might guide intelligence gathering in financial inclusion. For example, if a large-sample survey produces roughly the same evidence as a series of financial diaries, then such a survey may be more right-sized (efficient), while still following a rigorous system of protocols. If a study team has the objective of helping an MNO and a bank to develop a successful mobile money platform, then the team is obliged to find the result categories that are actionable or relevant, before even conducting the study. In fact to inform the study design, they must map backward from the go/no-go decisions that suppliers would need in order to take their next step. In terms of respect of the human subject, how about this example?
A gift that people like - but rarely get - is a portrait. So during the second round of our survey, we took individual portraits of each grain trader (415 in all) and then distributed them during the debriefing phase. When I visited one trader he said "But how does this help me? I have four wives so I need one for me and one for each of them!" (And the researcher, <a href="http://www.fletcher.tufts.edu/Fletcher_Directory/Directory/Faculty%20Profile?personkey=FDC4EA42-D905-4600-9D6E-87806A647E90">Dr. Jenny Aker</a> complied.)
The next steps of our initiative are emerging. Several participants volunteered to crystallize Lean Research principles and guidance in a clear, readable way, so that they could form a kind of checklist. Others wanted to push forward the idea of a prize for Lean Research. A few agreed to identify research that are starting soon so that they may press them through the Lean Research sieve, with peers commenting along the way. MIT and Tufts are interested in convening a process mapping of the experience of the human subject, just as one would map a consumer experience. We are confident that other expressions of Lean Research will bubble from our participants and we hope from well beyond those who could attend.

If you are reading this post and were not among us on August 1 but would like to be part future conversations, please contact us: <a href="mailto:leanresearch-admin@mit.edu">leanresearch-admin@mit.edu</a>.

<img class="alignleft wp-image-11631 size-full" style="border:0 solid #ffffff" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/07/kimwilson.jpg" alt="kimwilson" width="75" height="112" />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.
Have you read?
<a href="http://cfi-blog.org/2014/06/13/the-holy-grail-of-microfinance-research/" target="_blank">The Holy Grail of Microfinance Research?</a>
<a href="http://cfi-blog.org/2013/04/10/measuring-and-missing-financial-inclusion/" target="_blank">Measuring (and Missing) Financial Inclusion</a>
<a href="http://cfi-blog.org/2012/11/16/measuring-financial-inclusion-the-basic-set-solution/" target="_blank">Measuring Financial Inclusion: The "Basic Set" Solution</a>

Lean Research – Is It Time to Reimagine the Study of Financial Inclusion?

<img class="alignright" src="http://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg?w=300&amp;h=66&amp;h=66" alt="" width="300" height="66" />The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/financial-inclusion-2020" target="_blank" rel="noopener">Financial Inclusion 2020</a> project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

<a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/growing-income-growing-inclusion">Growing Income, Growing Inclusion: How Rising Incomes at the Base of the Pyramid Will Shape Financial Inclusion</a> by Sonja Kelly and Elisabeth Rhyne deftly summarizes the relationship between income and formal financial services. It maps those countries that can begin to look forward to big chunks of their populations moving up the economic pyramid. The good news is that incomes are increasing - those earning $1 or $2 a day can anticipate doubling that amount soon.

The bad news is that financial inclusion watchers consider the emerging “vulnerable class” –those with a daily income of $4 to $10 –  to be financially included only when formal suppliers reach them.  Sure, formal inclusion is one kind of inclusion and certainly helpful for some. But the informal to formal continuum is linear. It misses many lateral possibilities that, taken together, could produce multiple robust and interlocking financial ecosystems, with formal options constituting just one part of those systems.

Conventional wisdom goes like this: I am poor and therefore dwell in a primordial, financial murk. As I crawl out of the murk via more income, formal products nudge me onto the dry banks of financial evolution. I am complete. Such thinking feels so natural, so right, so logically unassailable.

But conventional thinking has not proven out this linear progression. While the Kelly and Rhyne paper points to 1) a strong correlation (.76) between income and account ownership and 2) increased access to formal financial services accompanying increased income for the bottom 40 percent of the population, it also says, “for individuals, participation in one sector may not replace or preclude participation in the other. Customers will pick financial products and providers from across the spectrum of formality to meet their needs.”

This last sentence captures my imagination. It inspires me to entreat our financial philosophers: why focus your genius on dragging customers kicking and screaming into banks, or decamping reluctant bankers to the countryside in search of business they don’t want?

Why not, instead, focus on helping folks receive all the benefits we ascribe to the formal system - transparency, safety, convenience, reliability, fair pricing, and privacy - without the expenses of that system (those hefty reserves, that costly supervision), while at the same time improving upon those benefits?



Might we imagine a system better than either the formal or informal system of today? How would this be possible?

Let us digress a bit, first, and turn to the world of energy. Visionaries in energy have questioned the classic electrical grid model (you are included when you are on the main power grid) and look to a world of a more distributive energy, with technology central to the efficient movement of power in and out of extreme nooks and crannies.

We can translate their world into ours. More distributive sources of energy mean more resilience in the system. One power plant goes down but folks still have their lights on – there are lots of nodes of local energy storage to be tapped. Let’s substitute: More distributive sources of financial services mean more resilience in the system. If one bank goes down, folks still have credit – there are lots of nodes of local money storage to be tapped.

One more try: Self-organizing systems of energy (versus monolithic systems of energy) allow for more efficient energy storage and circulation. A home with excess solar power can move surpluses economically to nearby homes in need. Now for finance: More self-organizing systems of money (versus monolithic systems of money) allow for more efficient money storage and circulation. A cluster of people with excess money can move surpluses economically to nearby clusters in need.

At the heart of this translation is smart technology. Technology is making smart energy possible and technology can make smart finance possible.

Picture a world in which I belong to an ASCA, a local savings club (and note, I have seen ASCAs with share-outs ranging from $50 to $15,000). I have developed a nice credit history with this club. Maybe I would like more credit than the club has at the moment. No worries, I “share” my credit history with another club in the network (just as I share a folder in a drop box or share to a select few on Facebook), and they lend to me.

Or imagine that my club has been saving for two years and has a surplus that it would like to lend at a nice profit. Again, no worries, our club searches for a club with a capital deficit – perhaps one at the beginning of a new cycle.

Technology makes all this possible. Even smarter technology would “sense” our patterns and those of other groups and make recommendations.

This lending from one group to another is already happening without the benefit of technology. I just saw it in Nicaragua and India. Search and transfer costs could have been reduced if smart technology had been involved.

Helpful apps are already on the scene. FSD Kenya, a DFID project, has developed a new smart phone app for group use. It is easy to envision a “share” function to draw in all kinds of formal and informal services.

Technology will soon not only enable more distributive financial services (and therefore systemically more resilient services) but also more transparent, convenient, and reliable financial services – all this without asking customers or bankers to change their behaviors. Plus, local knowledge can be fed into the circuitry, reducing risks of all kinds.

The point is not to rule out formal services but to rule them in along with many other options. Smart tools in the hands of creative people will change the face of the financial landscape for all of us, not just the bottom 40 percent.

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.

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