The Cambodian microfinance sector has undergone significant changes in recent years. Many of these changes were implemented in the spirit of improving outcomes for borrowers. For instance, in March 2017, the National Bank of Cambodia imposed an <a href="https://www.nbc.org.kh/download_files/legislation/prakas_eng/Prakas-on-Interest-Rate-Cap-Eng.pdf">18 percent interest rate cap</a> on loans provided by microfinance institutions, citing the need to curb high levels of over-indebtedness. However, investors and financial service providers (FSPs) responded by highlighting the <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/20494/WPS7070.pdf?sequence=1&amp;isAllowed=y">inefficiencies</a> of such a cap as a policy tool as it would render operations virtually <a href="https://www.syminvest.com/news/interest-rate-cap-rattles-cambodias-microfinance-industry/2017/3/24/6527">unsustainable</a> in rural areas.

Largely missing in this dialogue about client protection is the client perspective. This is where FSPs can play a critical role. In doing so, FSPs can demonstrate a clear commitment to the adequate standards of care enshrined in CFI's <a href="http://www.smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">Client Protection Principles</a>, even during these challenging times.
<blockquote>CFI launched the Client Voices survey project in Cambodia to explore the suitability of IVR.</blockquote>
With this in mind -- and with support from the <a href="https://mastercardfdn.org/">Mastercard Foundation</a> and in partnership with the <a href="https://www.cma-network.org/">Cambodia Microfinance Association</a> -- CFI launched the Client Voices survey project in Cambodia to explore the suitability of interactive voice response (IVR) as a cost-effective and scalable solution to more readily understand risks faced by clients (see also the <a href="https://centerforfinancialinclusion.org/client-voices-rwandans-speak-on-digital-financial-services/">Rwanda Client Voices</a> report, the most recent in the series).
<h2>What Is IVR?</h2>
IVR is a technology that relies on an automated system to transmit pre-recorded information to callers, who in turn provide their input via the touchscreen or keypad of their mobile phone. For this project, we used Verboice – an open-source IVR platform built by <a href="https://instedd.org/ilabs/">InSTEDD</a> – to deploy a 15-question survey to clients of AMK, HKL, and MAXIMA, three Cambodia-based FSPs.

To understand how IVR works in the context of the Client Voice survey, consider the following vignette:
<h6 style="text-align: left;"><em>After a hard day’s work, Leakhena, a client, settles into her chair and picks up her phone to dial the number featured on the brochure she received from her loan officer earlier in the week. On the other end of the line, a recorded voice -- named Srey Pov -- informs her about the purpose of the survey and prompts Leakhena to disclose her gender. Leakhena presses “1” on her keypad to indicate that she is a woman. She listens and responds to the next 14 questions – such as whether, over the past 12 months, she has had to cut her expenses on necessities such as food and school fees to repay her loan – before Srey Pov bids her farewell. In the span of five to seven minutes, and from the comfort of her home, Leakhena could share feedback on her borrowing experience with the FSP.</em></h6>
This ongoing project is poised to reveal client experiences in Cambodia, and, in the process, has also offered critical insights into how providers can best integrate IVR into their client feedback mechanism.
<h2>Insight #1: Don’t Let Jargon Stand Between You and Your Clients</h2>
To drive client engagement, it is useful to keep in mind a basic principle of behavioral design: use simple and clear language.

By applying this fundamental to the design of an IVR survey, we can deduce that clients are more likely to respond to a voice that sounds like them. We employ the term “voice” broadly to encompass the various components that may catch the ear of survey respondents. These elements include intonation and speech tempo, and, as we discovered early in the project, semantics.

Our partners took the lead in formulating the questionnaire and hiring local voice talent to record it. Preliminary rounds of cognitive testing revealed that the original version of the questionnaire used jargon for certain words such as “loan officer,” “receipt,” and “complaint” that clearly fell on deaf ears. While these words were assumed to be commonplace in Khmer (the national language of Cambodia), clients would either ask for clarification or skipped the question altogether.
<blockquote>Words such as “loan officer,” “receipt,” and “complaint” fell on deaf ears.</blockquote>
Recognizing that the success of IVR surveys depends on providers adopting the voice that clients use themselves, we replaced the technical survey jargon with vernacular terms before recording a second batch of audio files.
<h2>Insight #2: Consider Ways to Defray the Cost Clients Must Bear to Participate</h2>
Providing feedback can have considerable cost implications for clients. The average monthly income of farmer households in Cambodia – who constitute a sizeable share of microfinance clients in the country – is approximately $110 USD. While prepaid airtime credit can be purchased for the equivalent of $0.50, clients might view their phone balance – however big or small – as an opportunity cost, especially considering that most of them are stretching their income to cover other essential expenses, such as food, electricity, and school fees.

Understanding that a client’s phone balance can have some bearing on their ability and willingness to participate in a phone-based survey, we programmed the platform to assure clients that would not incur any charges for airtime used while completing the survey. To further incentivize participation, we entered all respondents into a lottery draw for a chance to win airtime credit. Despite these efforts, we quickly observed that waiving airtime charges was not sufficient to guarantee the participation of all clients.

An initial examination of our survey results showed that the volume of in-network calls, i.e. calls between clients subscribed to the same mobile network operator (MNO) as the one through which we secured the dedicated survey phone lines, outnumbered the volume of out-of-network calls. Although there are many reasons an uneven split between in- and out-of-network callers could occur, we suspected that the most likely explanation is that the latter group can initiate a call to an out-of-network number only if a minimum balance is held on their device.

We since have been coordinating with our partner MNO to convert the survey telephone lines into toll-free numbers. Whenever possible, FSPs should look for creative ways to minimize the cost that clients have to bear to share their feedback, even if that cost is as seemingly small as a minimum balance.
<h2>Insight #3: Be Prepared to Navigate a Complex Mobile Landscape</h2>
A country’s mobile landscape, as well as the diversity in phone specifications, can bring <a href="https://www.healthynewbornnetwork.org/hnn-content/uploads/JMTM_OperationalChallengesInMHealth_Cambodia.pdf">operational hurdles</a> when deploying an IVR survey. For example, <a href="https://www.phnompenhpost.com/business/kingdoms-sim-cards-hit-193m">SIM card registrations</a> significantly outnumber the country’s population, which makes contacting customers all the more challenging. Also, the majority of phones do not support Khmer script, which can disproportionately affect the user experience of those clients with lower levels of literacy.

In advance of launching Client Voice, the FSP field staff – comprised of loan officers and branch managers – met with and distributed flyers to clients to promote awareness of the survey. During this period, they also had clients confirm whether they had access to a mobile device and, if they owned one, to provide the phone number they most frequently use.

Additional data collected by one FSP further illustrates the complexity of mobile ownership and access. Thirty-nine percent of their clients own a smart phone and 61 percent own an analog device. The same FSP also noted that 73 percent of their clients own a personal phone, 25 percent share a phone within their household, and the remaining 2 percent do not own a phone but have access to one.
<blockquote>Knowing the level of digital literacy and mobile access of clients helped field staff tailor survey-related messaging.</blockquote>
By knowing the level of digital literacy and mobile access of their clients, the field staff were able to better tailor their messaging about the survey. For example, for those clients who were less digitally literate, field staff explained each step with the support of a flyer and gave a live demonstration on how to dial into the survey line. While this degree of hand holding is not always required, it is certainly helpful to ensure the participation of clients who might be otherwise excluded.
<h2>An Ideal Method During These Challenging Times</h2>
CFI has been thinking a lot about <a href="https://www.centerforfinancialinclusion.org/how-should-fsps-respond-to-the-covid-19-pandemic">how providers can respond to the COVID-19 pandemic</a>. At the time of writing, the Cambodian government was considering declaring a <a href="https://www.rfa.org/english/news/cambodia/emergency-03252020181626.html">state of emergency</a> due to the coronavirus. We believe this makes IVR technology even more appealing given social distancing constraints. By using IVR, providers can successfully collect data in real time, at greater scale and lower cost, even in the midst of a global pandemic or other negative externalities that makes traditional survey work difficult.

As for this survey, we look forward to sharing our findings, so we can offer a more complete view of the Cambodian microfinance landscape – one that features client voices – in the coming weeks.

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Amplifying Client Voices Using Interactive Voice Response (IVR) Technology: Insights from Cambodia

Mastercard Foundation

Cambodia

East Asia and Pacific

Keeping Clients First

Behavioral Insights

Financial Capability

Client Treatment

Consumer Protection

Blog Post

The current focus on client outcomes – as demonstrated by the proliferation of frameworks describing financial health, well-being, or similar all-encompassing concepts – has renewed attention on how we achieve positive impact for clients. Currently, the behaviorists – those who believe an understanding of cognitive biases and deft application of behavioral insights in intervention design can lead to superior outcomes – rule the day. Meanwhile, financial education, traditionally seen as an enabler of better client outcomes, has become debatable, as research has shown that traditionally delivered education programs provide mixed results at best. Collectively, these trends are giving way to the narratives that client outcomes are achievable through behavioral interventions and that financial education is an ineffective relic of the past.
<blockquote>Current trends are giving way to narratives that client outcomes are achievable through behavioral interventions, and that financial education is an ineffective relic of the past.</blockquote>
This is a dangerous story. It positions the concept of education as an antagonist to behavioral insights rather than as a collaborator, and it presumes that behavioral interventions are superior to educational ones. This post aims to re-balance that narrative.

A quick point of order: financial education and financial literacy are often used interchangeably – in colloquial conversation this makes sense (“educated” and “literate” are synonyms, after all) but using them interchangeably confuses the delivery of education with its intended outcome (literate clients). I use the term financial education to refer to the process of teaching knowledge and skills and financial literacy as the state in which one possesses financial knowledge and skills.

A Fourth Era: Balancing Behavioral Interventions with Quality Education

Financial Health

After months studying the drivers of financial health and mobile and internet usage in Eastern Europe, I was excited when our team finally landed in Serbia. During the hour-long taxi ride from Belgrade’s Nikola Tesla Airport to Novi Sad, we finalized our work plan for the coming days while catching glimpses of the countryside.

We came to Serbia to join our colleagues at the <a href="http://mfc.org.pl/">Microfinance Centre</a> (MFC) in conducting in-depth interviews with current and prospective customers of <a href="http://www.obs.rs/eng/">Opportunity Bank Serbia</a> and <a href="http://fiiw.pl/">Fundacja Innowacja i Wiedza</a> (Foundation for Innovation and Knowledge). We wanted to learn everything we could about the interviewees’ ambitions, challenges, attitudes, and technology use, so we can use these insights to design and develop a digital tool that will help clients understand and improve their financial health. This research is part of the <a href="https://www.centerforfinancialinclusion.org/about/what-we-do/building-financial-capabilities-and-strengthening-institutions-through-customer-centered-innovations/">Building Financial Capabilities &amp; Strengthening Institutions through Customer-Centered Innovations</a> project, supported by <a href="https://www.metlife.com/corporate-responsibility/metlife-foundation/">MetLife Foundation</a>.
<h2>Observations on Currency Usage</h2>
[caption id="attachment_35062" align="alignright" width="300"]<img class="size-medium wp-image-35062" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2019/05/novi-sad-taxi-300x218.jpg" alt="" width="300" height="218" /> <em>Taxis in Novi Sad, Serbia, often quote cab fares in euros.</em>[/caption]

As we pulled up to the hotel, I was perplexed when our driver, Božidar, quoted the cab fare in euros. Last time I checked, the dinar was the currency of Serbia, since it remains an EU candidate country. Yet Božidar wished to be paid in euros, as did many other local vendors. We discovered that our interviewees commonly use euros alongside dinars. One farmer said that she quickly deposits any payments made in euros, but she tends to use her dinars for everyday purchases or stash them at home for emergencies. A shop owner said the majority of her suppliers pay her in euros while she accepts payments from customers in both currencies.

The trend of “euroization” or “dollarization” — a foreign currency substituting or complementing the domestic one — is well studied. The graph below, from the Austrian central bank’s Euro Survey, shows that among its neighbors in central, eastern, and southeastern Europe, Serbia is the most euroized, with the highest proportion of all its cash and deposits held in the form of euros.

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Dinars vs. Euros: Financial Health and the Multiple Currency Dynamic

MetLife Foundation

Building Financial Capabilities and Strengthening Institutions Through Customer-Centered Innovations

Europe and Central Asia

Serbia

Personal Financial Management

<em>This post originally appeared on the <a href="https://www.accion.org/four-reasons-focusing-on-financial-capability-is-good-business">Accion</a> website.</em>

If you’ve never used financial services in the past, you’re going to encounter a significant learning curve when you finally get access. That’s why more institutions are rolling out products to support first-time clients and equip them with actionable tips and tools to simplify their experience. These new services aren’t just good for customers, they’re good for business. By helping consumers attain the <a href="https://www.centerforfinancialinclusion.org/a-change-in-behavior-catalogue-of-innovations-in-financial-capability">knowledge, skills, attitudes, and behaviors</a> necessary to make sound financial decisions — what we call financial capability — customers can become more informed and engaged. In other words, they become better customers.

For any financial institution interested in increasing customer loyalty, building better financial capability is crucial.

<a href="https://www.centerforfinancialinclusion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion">As we work with MetLife Foundation</a> to expand financial capability through customer-centered innovations, we’re excited about the potential benefits for both customers and institutions. Here are four reasons why helping clients build their financial capability is a win-win:
<h2>1. Financial Capability Drives Active Use of Financial Products</h2>
Products that help increase financial capability, <a href="https://www.centerforfinancialinclusion.org/financial-capability-building-practices-in-mexico">drawing insight from behavioral science</a>, can encourage customers to use products more often, which translates to higher profitability for providers and greater usefulness to customers.

Take the case of <a href="https://www.grupobancolombia.com/wps/portal/personas/productos-servicios/cuentas/ahorro/transaccional/ahorro-a-la-mano">Ahorro a la Mano</a>, a mobile savings product and e-wallet from Bancolombia, the largest bank in Colombia. The bank discovered that if a customer does not make a transaction within the first month of opening the account, she is unlikely to make a transaction at all. It decided to use <a href="https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/nudge/">nudges</a> to remind users to put money into their savings.

Bancolombia worked with <a href="https://www.forbes.com/sites/petercohan/2011/06/01/juntos-finanzas-helps-latinos-save-plan/#3c0a808d5db3">Juntos</a>, a fintech company that specializes in data science and behavioral insights. Juntos developed a chatbot named “<a href="https://www.centerforfinancialinclusion.org/how-financial-institutions-and-fintechs-are-partnering-for-inclusion-lessons-from-the-frontlines-2">Emilia</a>,” that could point out opportunities to use the product and makes special offers to encourage transactions within the first month. Because they provide individually tailored messages in a friendly, personal voice, Emilia’s nudges and reminders build trust with clients, and they become more likely to act on her suggestions.
<h2>2. Customer Loyalty Increases</h2>
As customers use their products more frequently, they are likely to become more loyal. Most financial service providers’ balance sheets and product viability calculations do not figure long-term customer loyalty into their calculations, but customers that stick with a provider over time are important to business success.

In September 2017, BBVA launched <a href="https://www.bbva.com/en/bbva-opens-its-banking-app-in-spain-to-accounts-and-products-from-other-providers/">Bconomy</a>, a digital platform meant to add value to the customer experience by giving them a full picture of their financial health. Fueled by data analytics, the platform uses behavioral insights to encourage positive behavior. Clients can see an overall snapshot of their finances, turning their bank accounts into financial management hubs. The tool ensures that customers continue returning to the platform and rely on BBVA as their primary financial provider. To date, the platform has had over <a href="https://www.centerforfinancialinclusion.org/banking-sector-approaches-to-customer-engagement-and-capability">2 million users per month</a>.
<h2>3. Capable Customers Use More Products</h2>
Part of the accepted definition of financial capability is a person’s confidence in using a wide range of products to meet their financial needs. Savvy institutions that promote financial capability also build appropriate follow-on products for customers. Institutions that ignore this strategy may see their first-time customers move on to other providers as they become more comfortable with formal finance.

<a href="https://acreimex.com.mx/">Acreimex</a>, a savings and credit cooperative in Mexico, has incorporated savings into payroll loan repayments so that customers who opt in can save painlessly while they repay their loans. Savings discipline is a key attribute of financially capable people, and automated savings is a tool that assists people to stick to their best intentions. Acreimex built this option by combining its two most popular products. It merged its payroll loan and savings services by rounding up repayment installment amounts and automatically depositing the excess amount into clients’ savings.

The combination of products resulted in significant increases in savings activity and balances. An evaluation showed that participants made about <a href="https://optixproject.org/acreimex/">twice as many deposits and saved 30 percent more</a> than those who didn’t participate. Additionally, <a href="https://nextbillion.net/stealthy-saving-building-on-payroll-credit-to-automate-savings/">96 percent of savers chose not to withdraw the balances</a> from their accounts throughout a 12-month pilot.
<h2>4. Investing in Financial Capability is More Effective — and Less Expensive</h2>
Traditional, classroom-based financial instruction is costly. Features that build financial capability are often cheaper and more effective because they generate direct and longer lasting behavior change.

When researchers analyzed more than 200 individual impact studies on financial education, they found that <a href="https://www.nefe.org/Portals/0/WhatWeProvide/PrimaryResearch/PDF/CU%20Final%20Report.pdf">only 0.1 percent of the observed positive changes</a> in people that had attended classroom-based financial education programs could be attributed to the programs themselves.

On the other hand, impact evaluations of financial products that incorporate behavioral insights to nudge client behavior consistently find statistically significant positive impacts. For example, in a study with <a href="http://www.bancoadopem.com.do/app/do/frontpage.aspx">Banco ADOPEM</a>, researchers tracked customers who attended either a traditional accounting-based financial education class or a class that, in keeping with behavioral insights, offered simple rules of thumb in accounting. Both classes aimed to assist customers to separate business and personal accounts. In the end, the <a href="https://www.povertyactionlab.org/sites/default/files/publications/124_303%20Rules%20of%20Thumb%20AEJ%20Apr2014.pdf">customers who received the simplified rules of thumb displayed more positive business outcomes</a> — they saw a 30 percent increase on average in the level of sales during weeks with typically low sales and saved an average of 6 percent more in personal savings.

More and more institutions are thoughtfully designing products and experiences that not only match their customers’ experiences and lives, but also consider their attitudes, skills, and behaviors. Financial institutions that invest in building up financial capability are likely ensuring they will have customers that are more active users of their products, that are loyal for longer, and that will use a wider variety of products.

<em>We’ll continue to share insights on financial capability based on research conducted by Accion’s Global Advisory Services team and the Center for Financial Inclusion as part of our project on <a href="https://www.centerforfinancialinclusion.org/about/what-we-do/building-financial-capabilities-and-strengthening-institutions-through-customer-centered-innovations/">Building Financial Capabilities and Strengthening Institutions through Customer-Centered Innovations</a> project, supported by MetLife Foundation.</em>

Four Reasons Focusing on Financial Capability Is Good Business

Chile

Latin America and The Caribbean

Colombia

Dominican Republic

Mexico

Spain

<em>This post originally appeared on the <a href="http://www.accion.org">Accion</a> website.</em>

Chilean banks have made critical advances to drive greater financial inclusion in recent years. From agent networks to payment platforms to the CuentaRUT account — a simplified deposit account with a debit card that the state-owned Banco Estado made available to anyone in Chile with an identity card, Chile has nearly reached universal access to financial services.

However, despite these advances, many small merchants in Chile still aren’t finding financial tools that meet their needs. Micro, small, and medium enterprises (MSMEs) make up <a href="http://www.smefinanceforum.org/data-sites/msme-country-indicators">98.5 percent</a> of enterprises in the country and are a significant driver of economic growth; however, <a href="http://www.smefinanceforum.org/data-sites/msme-finance-gap">more than a quarter</a> of these microenterprises have faced difficulty in accessing financing in times of need. Compounding this problem are high levels of financial insecurity among Chileans. <a href="https://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx">Nearly half of the population</a> feels unsure about how they would cover their basic needs if they lost their income. For merchants whose personal and business lives are closely intertwined, this lack of financial security in their day-to-day lives translates to lack of security in their businesses as well.

Accion's Customer Strategy team traveled to Santiago to talk to micro-entrepreneurs so we could better understand how they are currently using their financial services. MetLife Foundation supported this research as part of our <a href="https://www.accion.org/accion-metlife-foundation-improve-financial-inclusion-in-latam">joint effort to boost the financial capability of customers</a>. Just as <a href="https://www.centerforfinancialinclusion.org/why-arent-people-saving-money-in-mexico">CFI did in Mexico</a>, we conducted interviews with a wide variety of small merchants to understand their motivations, goals, and feelings toward financial services, and to hear about the strategies they use to stay financially healthy.

Here’s what we learned:
<h3>1. Significant barriers block entrepreneurs from using business accounts.</h3>
Every microentrepreneur we spoke with had a CuentaRUT card, but for many, that was the extent of their relationship with formal financial services. All of them cited high fees, interest rates, and long application processes to access business accounts and credit as barriers to usage. Margarita, the owner of a travel agency and a small bookstore, told us that the most challenging part of starting her business was opening a business bank account, which required numerous documents and costly fees. Therefore, many use their CuentaRUT account for both personal and business purposes, making it difficult to manage their business and personal financial lives separately.
<h3>2. Chileans perceive taking credit from banks as risky.</h3>
Gianfranco, the owner of a small restaurant, wants to expand his business, but he has no interest in taking out a loan. He fears losing everything he has worked for by putting his business up as collateral. He told us, “I don’t like the idea of being indebted or dependent on anyone.” Maritza, the owner of a mini-market, shared a similar sentiment: “I don’t have confidence in financial institutions; they don’t worry or care about their smaller clients.” Many of the merchants we spoke to prefer to borrow from friends and family.
<h3>3. Blacklisting deters participation in the formal financial system.</h3>
[caption id="attachment_34006" align="alignright" width="234"]<img class="wp-image-34006" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2019/01/Screen-Shot-2019-01-08-at-3.32.07-PM.png" alt="A Chilean restaurant owner sits at a table" width="234" height="204" /> <strong>Jamie, a restaurant owner in Santiago</strong>[/caption]

Dicom, the national credit agency, records negative credit information such as payment delays and defaults. However, the agency does not offer a clear path to resolve negative reports and as a result, many small businesses avoid deepening their relationship with lenders. Many major retail stores offer consumer credit cards, and in the past, they did so without proper credit assessment and did not inform customers of the <a href="https://www.nytimes.com/2011/07/24/business/global/abuses-by-credit-issuers-in-chile-and-brazil-snare-consumers.html">consequences of default</a>. As a result, many people, unable to pay or unaware of the lasting nature of default, were reported to Dicom, and remain on that blacklist. Today, nearly 900,000 people are recorded as delinquent.

Jaime, a restaurant owner in Santiago, is 74 and has been an entrepreneur all his life. He was reported to Dicom over 30 years ago and has no way to resolve the black mark on his account. In fact, he doesn’t know what caused him to be listed in the first place, despite his efforts to find out. He has upgraded his business several times, but always with his savings, as he has no access to credit. Today, he hopes to buy a car so that he can purchase supplies directly for his restaurant, without paying for transport. However, he cannot make such a large purchase until he builds up enough savings. Jaime needs information to help him better understand why he was blacklisted and concrete steps to help him improve his credit score.
<h3>4. Informal savings remain more comfortable and familiar for people.</h3>
Findex data tells us that only 21 percent of the population in Chile saves money at formal financial institutions. Many interviewees told us that they have difficulty putting money away, often finding it overwhelming just to meet their fixed expenses. When they do set money aside, they prefer to save informally, either in inventory or through investment in assets that will produce income later. Many told us that opening a savings account seems difficult, but everyone wanted to increase their resources so that they could take more time off and work less.
<h3>5. Merchants prefer to learn about financial products from people, not websites.</h3>
Several merchants mentioned that they are hesitant to make financial decisions based on digital information. Lorena de Diaz, the owner of a house cleaning business, told us that she prefers to learn about new products in person, as she can’t verify the accuracy of information provided through a website or mobile application. She likes to be able to ask questions at the branch and feels that she better understands financial products when a person can explain it.

The microentrepreneurs we spoke to need tools tailored to their needs, from working capital to finance their inventory to inexpensive business saving and checking accounts, delivered with transparent and trustworthy communication from their providers. As we continue working with fintechs and financial service providers of all sizes, we hope that better understanding customers’ pain points, aspirations, and desires will lead to better communication on how to use financial products, or even entirely new products that truly improve people’s financial health. Over the next two years, Accion will be working with financial service providers in Mexico and Chile to use customer research to design, test, and implement product innovations that will drive usage and improve financial health.

<em>This research was conducted by Accion as part of our part of our <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion/">Building Financial Capabilities and Strengthening Institutions through Customer-Centered Innovations</a> project, supported by MetLife Foundation.</em>

5 Reasons Small Merchants Aren’t Using Financial Services in Chile

Entrepreneurs of MSMEs

Underserved Groups

Remember back when taking photos was a little indulgence, before the camera was with you all the time, and before it became essentially free to take photos?

Our behaviors and ethics around photography have changed because of the smart phone. We used to look left and right for passersby before taking a photograph, but now few bother with that nicety; you´ll just take another one if someone walks in front. That´s a simple response to shifted incentives.

Another thing you'd expect to happen with the new ease of taking photos is that interest in them would tend to fade. We´d find it too easy, we'd have too many of them. But that didn't happen, in fact quite the opposite: the cheaper and more plentiful, the more photos people seemed to take. People now take selfies in suburban trains.

Scarcity principles do not seem to apply here. Why is that?

Personal photography has always been about manufacturing memories. When you take photographs on a trip, that´s what you are choosing to remember your holiday by. In the same way that the blockchain represents the construction of an indelible transaction history, with photos you are fixing an image-chain of memories.

But where does the image-chain reside?

Not in a hard drive or a memory stick. Memories are experiences you relive in the telling, not in the storing. Stretching the analogy a bit, your image-chain lives in your social network of friends, just as the blockchain lives in a peer network of computer nodes. Others must validate the history you are creating – with money and with memories.

And that is why the business of personal digital photography has exploded, despite the abolition of scarcity. At the same time as digital has allowed us to take pictures more easily, it has also allowed us to spread our social networks more broadly. And that’s what motivates us to take selfies.

The phenomenal success of digital photography is because it is connected with our other digital experiences, and in particular social networking.

Now let´s draw the analogy with digital money (of the traditional, non-crypto kind).

We want to lead people into a form of money that we tell them is better than cash. But it is often hard to make that case on a head-to-head <a href="https://www.centerforfinancialinclusion.org/making-payments-better">feature comparison</a>. From the perspective of someone who has always managed his business in cash, how do you trade off digital money´s benefits in terms of security, traceability, immediacy and distance invariance, against cash´s benefits in terms of familiarity, ease of use, cost, reliability, probability of acceptance, privacy, and electricity independence?

The answer is by linking digital money to broader benefits.

Think again about the runaway success of digital photography. Few got into selfies because digital cameras produce better pictures. In fact, the new digital cameras people took to so readily were often worse than the analog cameras they displaced. It was the ease of sharing photos through social networks that drove the interest in taking selfies anytime, anywhere, in a ready digital format.

It´s the same story with the Kindle e-book reader. I too prefer the printed book to the same book on a Kindle. But I prefer having instant access to any book on my Kindle, to having that one printed book. Oh, and by the way, there’s a reading light and an adjustable magnifying glass thrown in as well.

It will be the same thing with money. Few will get into digital money because they find it to be a better way to pay for half a kilo of rice at the corner shop. But they would get into digital money if you convinced them that it is a better way to, for instance, control their finances.

And by getting into digital money, I really mean into and not out. Wanting to keep money in digital form once you receive it, as opposed to the widespread current practice of cashing out upon receiving digital money, immediately and in full. In the same way that digital photos may once have been printed out, but no longer: they mostly remain in their pure digital state. So I´m talking about digitizing money, not just the odd remote payment.

Digital photography is powerful because it captures the stories you tell yourself and others about your past – your past holiday, for instance. It´s a tool to control your past. Saint Augustine referred to this as the present of the past: your <a href="https://www.psychologicalscience.org/observer/memory-vs-experience-happiness-is-relative">present idea of what the past</a> was.

Digital money ought to capture the stories you tell yourself and others about your future. In so doing, it would give you a sense of influence over your future. The immediate future of how you will get by the next round of bills, the further out future of how you will get out of your current economic strictures, and maybe also the longer-term future of how your children will have a better life that you did. It is the present of the future, in Saint Augustine´s terms: your present idea of what the future holds, and how much influence you will have in determining that.

You might find this esoteric and far afield from financial inclusion. It is not. Just put two thoughts together. First, people frequently manage their money by separating it out and ascribing a different story to each type of money depending on its source, destination, time horizon, moral import, savings vehicle, etc. Is that not what budgeting is all about? Second, digital technologies have a proven track record in creating not only virtual realities, but hyper-realities. Do people not feel that the hyperactive, hyper-happy, hyper-virtuous image they project on Facebook and Pinterest is more real than their real, limited self?

The question is of course how we build such a digital money system. Much research and experimentation will need to go in this direction.

Just to leave you with a kernel of a suggestion of how this might be at all possible, and to link back to the topic of digital photography where we began: how about if, within your mobile wallet application, you could set some money aside by taking a picture of your kids, or your house, or some friends, or whatever motivated your thought of creating a new type of money? Your money app is then a collection of pictures, which tug at emotions, which invite stories, which trigger actions, which pull money, which reinforce emotions… When you look at the app you should see reflected what is in your head, not what others think you should be doing with your money.

Reflections on Digital Photos and Digital Money (With a Little Blockchain Thrown In)

Delivery Channels

Digital Financial Services

<span lang="ES-MX">Este webinar, presentado en conjunto por el CAF - Banco de Desarrollo de América Latina y el Centro para La Inclusión Financiera de Acción, expone los resultados del proyecto conjunto realizado por ambas instituciones (el primero de su tipo en la región) que buscó introducir a los actores que lideran el tema de educación financiera en Colombia, tanto de los sectores público, privado y no gubernamental, a metodologías de diseño de intervenciones más efectivas que incorporan conocimientos de la ciencia del comportamiento humano, y buscan no sólo transferir información financiera útil a las personas si no también mejorar sus comportamientos y hábitos financieros. Durante esta sesión virtual, Gabriela Zapata, Experta en temas de Inclusión Financiera, Diana Mejía, Especialista Senior en Desarrollo Productivo y Financiero de CAF (Banco de Desarrollo de América Latina) y Pablo Antón-Díaz, Gerente de Investigación del Centro Para la Inclusión Financiera de Acción, presentaron el reporte final de este proyecto que incluyó los resultados obtenidos y los principales obstáculos enfrentados. El panel concluyó con una presentación de recomendaciones y lecciones aprendidas para esfuerzos futuros de este tipo en Colombia, al igual que para otros países de la región interesados en realizar trabajos similares.</span>

Webinar: Expandiendo Capacidades Financieras en Colombia

Latin American Development Bank (CAF)

Banks

Financial Service Providers

Microfinance Institutions

Webinar

In July 2017, Colombia launched its National Economic and Financial Education Strategy, which established an action plan for promoting financial education in the country. The Intersectoral Commission for Economic and Financial Education, in charge of implementing the strategy, partnered with the Latin American Development Bank (CAF) and the Center for Financial Inclusion at Accion (CFI) to develop a training program to impart the latest financial education programming insights and best practices to those who would be implementing the national strategy.

This report describes our efforts to communicate behavioral economics best practices to policymakers and practitioners in Colombia, including case studies from Fundación Capital and Banco de la República. We also evaluate the success of our efforts, and make recommendations for further embedding behavioral insights into financial education programming.
<h1>Major Findings</h1>
<h5>WHAT DOES IT TAKE TO BUILD FINANCIA CAPABILITY?</h5>
<h2>Shifting the financial education paradigm in Colombia begins with understanding how to design behaviorally-focused interventions.</h2>
Financial education programs are delivered by financial service providers, government agencies, public schools and universities, research institutions, institutional donors and non-profit organizations throughout Colombia. The majority of these programs are delivered in classroom-based settings, town hall-style lectures, seminars or workshops and employ printed materials and videos to communicate information. These kinds of traditional financial education models are difficult to scale, expensive to implement and often struggle with low attendance and participation.
<blockquote>Traditional financial education models are difficult to scale, expensive to implement and often struggle with low engagement.</blockquote>
Information transfer alone does not adequately engage people in the type of active learning and practice that prompts
behavior change. There is a growing body of evidence showing that financial education interventions that incorporate behavioral economics principles are more likely to improve client’s money management skills than traditional interventions.
By hosting six two-day workshops between for a mix of stakeholders from the public, private, and non-profit sectors in Bogotá, we gave practitioners a holistic understanding of what is necessary to design behaviorally focused interventions. We also asked participants to think deeply about cognitive biases that impact the success of behavior change programs, including procrastination, social norms, limited attention span, predisposition to the present, loss aversion, and default options. We asked participants to identify how these biases affect their lives, underscoring the fact that cognitive biases are present in all of us, not just beneficiaries of social programs or financial product users.

This project gave us a valuable opportunity to put our own behaviorally-informed principles into practice in the development of the workshops. We aimed to make the workshops fun, social and customized to the target audience. We developed simple, memorable rules of thumb for making financial education workshops more effective. Additionally, we were able to leverage what seemed to be somewhat of a national "teachable moment" right at the start of the implementation phase of the National Financial Education Strategy of Colombia. Overall, we are satisfied with the high level of information retention that we found in our follow-up surveys, and we are convinced that this constitutes a very important step in the right direction.

Expanding Financial Capability in Colombia

Report

Why is it that <a href="http://datatopics.worldbank.org/financialinclusion/">80 percent</a> of bank account holders in Madagascar only use their accounts once a month or less?

What makes the parents of a child requiring unforeseen medical treatment in the DRC choose to approach their <a href="http://cenfri.org/blog/ive-got-your-back">mutualitée</a> (a local form of informal mutual aid society) for a loan despite access to a microfinance institution or local bank?

If a Zimbabwean has a mobile money account, why does he ask a family member to send him money in the care of a bus driver rather than through that mobile account?

The gap between uptake and usage is well documented in financial inclusion. But while these insights are important evidence of the gap, they tell us very little about <em>why </em>this gap exists. The result is that we know there is a problem, but without understanding why, we can do very little to change the problem.

To help us better understand the why, we at <a href="http://www.i2ifacility.org">insight2impact</a> (i2i) have been <a href="http://access.i2ifacility.org/Publications/i2i%20MFW%20Note%203%20-%20Financial%20services%20usage_Digital.pdf">exploring the factors that affect usage</a>. In doing so we have incorporated insights from across multiple fields on human decision-making and applied the most relevant aspects of existing models and understanding to the field of financial inclusion.

Decision-making is important for both financial service providers (FSPs) and policymakers to understand, but it isn’t simple, and, typically, our decisions are not based on one single factor. Furthermore, psychology and behavioral economics have illustrated that in some cases we are not even cognitively aware of many of the important factors that influence our decisions.

Some of these factors appear straightforward at first. For example, in the case of mobile money use in Zimbabwe, although the bus drivers do not carry the money free of charge, they charge the sender and the recipient does not pay a fee.

However, if you unpack this further, you may find that there are other factors that influence the decision. As one mobile money user explained, “It took me a long time to start using it [mobile money account], maybe because I didn’t trust it. I didn’t trust the services … I wasn’t sure how it was going to be working out."

Addressing or removing the barriers to usage does not mean people will automatically make use of specific products, nor does initial uptake (even voluntary uptake) imply sustained use. There is a trigger that results in uptake and first-time use, but this is often followed by a significant drop-off in activity. This is often evident in mobile money, where <a href="http://cenfri.org/documents/MAP/2015/Malawi/MAP%20Malawi%20Diagnostic%20Report.pdf">promotions for free airtime lead to spikes in uptake</a>, but low usage is observed over time, and consumers continue to rely on cash.

So, what are the factors that affect financial decision-making (the drivers of usage)? In our understanding, there are a range of factors, but they largely fall into three categories:

• <strong>Functional:</strong> Fundamentally, positive relative value is required for a person to continue using a device (although perceived value rather than actual value drives decisions). These functional drivers are the most obvious and visible component of decision-making. In the example cited above the respondent asked that money be delivered via a bus driver to avoid paying transaction fees.

It may be tempting to just stop here. However, we know that what influences our decisions goes beyond the basic dollars and cents:

• <strong>Relational:</strong> Relational factors like trust have been explored in detail by other researchers, but we want to delve deeper to understand what constitutes trust in the use of financial services and how this manifests. In our example, the individual in Zimbabwe signed up for a mobile money account but delayed using it until a level of trust had been established. Other relational drivers, like belonging, have not been explored as deeply, yet still appear to play an important role in decision-making.

• <strong>Behavioral:</strong> Individuals may be unaware of some of the factors that influence their thinking and the way they respond to things, but a better grasp of these behavioral drivers (and the way these are affected through specific interventions) will be useful for FSPs attempting to drive usage of specific products and for policymakers keen to deliver impact through financial inclusion policies. One example is hyperbolic discounting – the fact that people prioritize present value over future value and choose smaller rewards now over larger rewards at a later time – which influences the way that people perceive relative value and cost for short and long-term products/needs.

Individuals make decisions within a context and that context has an influence on the outcome of their decision. We call these structural factors.

• <strong>Structural:</strong> We define these as the contextual considerations (for example, gender, level of urbanization, and so forth) that influence the drivers identified above and therefore affect uptake and usage, but which the individual, policymaker or FSP will have no or very little control over.

Of course, given the complexity of human decision-making, many of these factors resist our attempts at simple, neat classification. As an example, trust in financial services is often the outcome of number of experiences, and even a composite of other drivers. It can be affected by behavioral factors like an intrinsic bias (for example, certain providers are “out to get me”) or social factors like having viewed negative comments about a specific provider on social media.

Through a closer examination of the drivers mentioned above, i2i hopes to understand what the most critical drivers of financial product usage are and how they interact and influence each other.

The drivers of usage don’t only explain why or whether people opt to (continually) use a financial service, but which device they use and which provider they turn to – including whether these are formal providers or informal providers like savings groups or friends and family. These insights are likely to be valuable to FSPs, policymakers and development organizations alike.

The objective with this work is not to build an exhaustive model of all the individual factors that influence consumers’ decisions to use financial products, but rather to offer a framework that simplifies reality in that it encompasses all the key factors of customer decision-making in digestible form. Better understanding the range of, and the most important, factors that influence use will aid policymakers and providers to design policy approaches and products that target sustained use rather than merely uptake.

We would love to hear from you if you think we have omitted a category of drivers, or if you have previously conducted research in the field. Email <a href="mailto:jeremy@cenfri.org">jeremy@cenfri.org</a> to contribute to this analysis of the drivers of financial services usage.

<em>In addition to this desktop research on drivers of usage, insight2impact will be piloting demand-side surveys in select countries to better understand people’s financial needs and how they go about meeting these needs in different environments. The insights from our desktop research and these pilots will enable us to refine <a href="http://i2ifacility.org/news/measuring-impact-in-the-financial-sector">our measurement frameworks</a> and contribute to a richer understanding of financial inclusion.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2015/06/09/considerations-for-the-pursuit-of-financial-inclusion/">Considerations for the Pursuit of Financial Inclusion - Beyond Account Access</a>

<a href="https://cfi-blog.org/2016/10/25/building-trust-and-growing-digital-financial-services-a-look-at-jumo/">Building Trust and Growing Digital Financial Services: A Look at JUMO</a>

<a href="https://cfi-blog.org/2017/09/27/financial-inclusion-from-a-consumer-perspective/">Financial Inclusion from a Consumer Perspective</a>

Closing the Gap between Uptake and Usage of Financial Products

Congo, Dem. Rep.

Sub-Saharan Africa

Madagascar

Zimbabwe

Agent Banking

Mobile Banking

Payments

Women

Mavis Wanczyk, a staff member at Mercy Medical Center in Springfield, Massachusetts and a mother of two, recently became a multi-millionaire, revealing herself as the $758.7 million Powerball jackpot winner – the largest individual winner ever. Wanczyk quit her job of 32 years less than 24 hours later.

Reflecting on her decision, Wanczyk remarks, “I was just there to buy it, for just luck. Just go in, buy a scratch ticket, and say maybe it’s me, maybe it won’t be me. It’s just a chance, a chance I had to take.”

The odds of winning the Powerball jackpot are 1 in over 292 million. In order to purchase all of the possible combinations, an individual would need to spend $584,402,676 on tickets. You are about 100,000 times more likely to be struck by lightning at some point in your lifetime than you are to hit this particular jackpot.

So why do <a href="https://www.theatlantic.com/business/archive/2015/05/lotteries-americas-70-billion-shame/392870/">Americans spend $70.15 billion</a> on lottery tickets annually, while very few of us live in fear of being struck by lightning?
<h3>The Behavioral Science of Gambling</h3>
In order to make sense of this phenomenon, it is important to first understand that humans do not always make rational, utility-maximizing decisions. This is especially the case when it comes to risk. Two principles from behavioral science explain why we gamble when the odds of hitting the jackpot are so low.
<ul>
 	<li><em>Availability bias</em> - The overestimation of an event’s likelihood based on the strength of a memory about such an event is referred to as an availability bias. We immediately think about Mavis and her success when evaluating our own decisions to enter the lottery, forgetting the millions who did not win. Hearing about lottery winners in the news shifts the odds in our minds.</li>
 	<li><em>The “near miss” effect</em> - The feeling of almost winning and wanting to try again (even if you were not even close). This explains why people who get half of the numbers right often re-enter the lottery, even though the digits they had right had no bearing on the overall outcome.</li>
</ul>
<h3>Savings and the Limits of Incentives</h3>
Americans are not great savers. The personal savings rate (the ratio of total savings to total after-tax income) was 3.5 percent in July 2017, and this rate has been <a href="https://fred.stlouisfed.org/series/PSAVERT">steadily declining</a> from nearly 14 percent in 1975. Furthermore, <a href="http://time.com/money/4374915/emergency-savings-americans/">27 percent</a> of Americans have no emergency savings. These trends are even more acute among low-income individuals. <a href="https://www.urban.org/research/publication/poverty-incompatible-asset-accumulation">Forty percent</a> of families with incomes below the poverty level have no bank account and, among those that do, the average balance is $310.

This presents a lose-lose situation for low income consumers. In order to avoid taking a loss on low-income customers, banks charge them high fees, but these fees drive low-income customers away from banks. Instead, many consumers turn to riskier and costlier alternatives, including gambling.

Policymakers and independent organizations have introduced incentive schemes to encourage greater savings, including matched or subsidized savings such as Individual Development Accounts (IDAs), which are special savings accounts targeted at low-income consumers to save for a specific goal. The success of such initiatives is limited, however. Research suggests that matching and subsidies are largely ineffective: customers enrolled in matching programs only increased savings by <a href="http://www.ideas42.org/wp-content/uploads/2015/11/Reimagining-Financial-Inclusion-Final-Web-1.pdf">one penny for every dollar matched</a> by the U.S. Government. IDAs have been shown to modestly increase savings, but their average cost of <a href="http://journals.sagepub.com/doi/pdf/10.1177/1049731505276077">$64 per participant per month</a> to maintain typically outweighs any potential benefit to the participant. Furthermore, there is limited evidence to indicate that these accounts change long-term behavior around savings (i.e. when the matching ends).

Financial literacy programs are also seen as tools to encourage savings, but studies examining the impacts of financial literacy programs on financial health find that they can only explain <a href="http://www.nefe.org/Portals/0/WhatWeProvide/PrimaryResearch/PDF/CU%20Final%20Report.pdf">0.1% of the variance</a> in financial behaviors observed, with the effects being even less noticeable among low-income consumers.
<h3>The Promise of Prize-Linked Savings</h3>
Considering such limits of financial incentives, behavioral observations from gambling turn out to have important implications for savings. Prize-linked savings (PLS) accounts are similar to standard savings accounts, but in lieu of accruing interest, interest is pooled from all account holders and divvied out based on lotteries. Typically, the number of raffle tickets an account holder receives is proportional to the amount deposited.

<a href="http://www.savetowin.org/">Save to Win</a>, first introduced in Michigan in 2009, was the first large-scale prize-linked savings program in the U.S. The program experienced broad appeal and attracted over 11,000 member accounts in its first year. The program has since experimented with prizes of different amounts to determine impact on savings and has found that prize size is largely irrelevant; prizes of any size increase regular savings of account holders. The prospect of winning any amount was just as potent as winning big.

PLS programs became legal nationally with the signing of the American Savings and Promotion Act in 2014. The Act, which enjoyed support from both Republicans and Democrats in Congress, authorized some financial institutions to conduct savings promotion raffles, while requiring state regulators to approve the type of games offered. Many larger banks have been slow to implement programs, but independent organizations such as Save to Win have spread throughout the nation, <a href="https://www.debt.org/2015/07/02/how-credit-unions-and-banks-are-gamifying-savings/">leading to $100 million in savings</a> since 2009.
<h3>The Impact of Prize-Linked Savings</h3>
These programs make a difference in three ways: they increased savings, substitute for other behaviors (saving money that would have been gambled), and contribute to long-term financial health.
<ul>
 	<li><a href="http://www.hbs.edu/faculty/Publication%20Files/08-061_17c22e32-fe06-4b4a-8b5e-e09227fc8104.pdf">Experimental evidence suggests</a> that individuals participating in the Save to Win program were enticed to save at a higher rate compared to people with a standard interest-bearing savings account. Demand was highest among low-income, underbanked or unbanked individuals, precisely the demographic that traditionally has the lowest levels of savings.</li>
 	<li>A study of the <a href="http://econweb.umd.edu/~ozbay/savings.pdf">MaMa program in South Africa</a> found that participants’ lottery expenditure decreased after enrolling in the program, suggesting that participants put a portion of this money into savings. Prize winnings also had an impact on future savings, with prize winners depositing more money into their accounts on average compared to non-winners. Surprisingly, prize-winners often deposited an amount in excess of their winnings into their account.</li>
 	<li>Although evidence is limited, some early research suggests that prize-linked savings are more effective in increasing savings among low-income individuals and less resource-intensive compared to incentive schemes and financial education.</li>
</ul>
To encourage greater uptake, governments should encourage programs by reducing or eliminating regulations related to lotteries within financial institutions. Furthermore, mainstream banks and other FSPs should consider introducing prize-linked savings as a strategy for reducing the cost of serving low-income customers.

While chances of winning the Powerball jackpot may be slim, we can all still win.

For more applications of behavioral science to financial inclusion, check out <a href="https://cfi-blog.org/2017/08/30/harnessing-behavior-change-to-end-extreme-poverty/?ct=t%28CFI_Blog_Digest_+September_14_2017%29&amp;mc_cid=f16ed19ca7&amp;mc_eid=%5BUNIQID%5D"><em>Harnessing Behavior Change to End Extreme Poverty</em></a> and <em><a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/innovations-in-financial-capability">A Change in Behavior: Innovations in Financial Capability</a></em>.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/03/28/mobilizing-savings-among-microfinance-institutions-in-latin-america/">Mobilizing Savings among Microfinance Institutions in Latin America</a>

<a href="https://cfi-blog.org/2017/03/29/dollar-by-dollar-or-goat-by-goat-how-financial-health-translates-across-oceans/">Dollar by Dollar or Goat by Goat: How Financial Health Translates Across Oceans</a>

<a href="https://cfi-blog.org/2016/05/06/a-change-in-behavior-innovations-in-financial-capability-an-interview-with-elisabeth-rhyne/">A Change in Behavior: Innovations in Financial Capability - An Interview with Elisabeth Rhyne</a>

&nbsp;

Hitting the Jackpot: The Impact of Lotteries on Savings

Eric Noggle

Senior Research Director 

Alissa Fishbane

Danielle Piskadlo

Elisabeth Rhyne

Emma Morse

Ignacio Mas

Jacqueline Foelster

Jeremy Gray

Pablo Anton-Diaz

Peer Stein

Priya  Punatar

Tanwi Kumari

Yanina Seltzer

Thailand

Aging and Older Adults

Alternative Data

Appropriate Product Design and Delivery

Customer Centricity

Financial Technology

Human Centered Design

Over-indebtedness

Most of Mexico’s people lack access to a formal bank account. Accion has worked in Mexico for decades to create a thriving and competitive financial sector that embraces innovation and protects its clients.

Lauren Hendricks

<em>&gt; Posted by </em><em>Saborni</em><em> Poddar and Brett Hudson Matthews, Associate at MicroSave and Executive Director at My Oral Village</em>

<img class="alignright wp-image-23841" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/07/thumb_3da9c48c10dc4eaaae3adb8d6c737ff5-1.jpg" alt="" width="315" height="210" />The financial inclusion industry often asks the question of how can we best configure mobile money products and services to support increased adoption and usage. But how about when prospective users are illiterate and innumerate (unable to decode large written numbers), as is the case for many unbanked individuals at the base of the pyramid?

In search of insights into designing mobile wallets for such <a href="http://blog.microsave.net/lessons-from-orality-for-digital-financial-services-development/">illiterate and innumerate (oral) populations</a>, we traveled through the Indian states of Punjab, Uttar Pradesh and Bihar, interacting with potential users. As our conversations got underway, and we began to understand the implications of designing a mobile wallet that an oral individual can use with ease, we could visualize why a conventional mobile wallet design would not be as clear to a daily-wage unskilled laborer as it is to the readers of this blog.

To start with, almost everyone we talked to had a feature phone, but most used it only for voice calls and were unfamiliar with basic syntax and navigation rules. Most could not use an address book; each time they make a call, they dial numbers from scratch. This gave us a first-hand glimpse into the potential intimidation caused by technology.

When we showed popular mobile wallets, respondents understood few icons. Even core ones like ‘add’, ‘send’ and ‘request’ money, were not well understood by many. We learned that the abstractions (communication shorthands) widespread in oral communities are oftentimes not the same as <em>literate </em>abstractions – which evolve over generations or centuries in cultures where writing is widespread. For example, for ‘send money’, one approach is to use the rupee symbol ‘₹’ inside a wallet outline, with an arrow pointing outwards. However, this is a literate abstraction, and many participants did not recognize the '₹' symbol, remarking that it looks vaguely like the Hindi ‘R’ or the Hindi numeral '2'. For a mobile wallet, ₹ is an essential symbol, but there are design tricks to help users learn its meaning.

So, how did we approach such obstacles?

Our team conducted a series of tests that applied oral iconography for the task of sending money on a wallet prototype we created. Our literate biases dominated at first. We designed an icon with two <em>gullaks </em>(Indian version of piggy banks) with arms coming out of them exchanging some green notes. While most respondents recognized the image, some indicated that gullaks are predominantly used by kids to save their change. Next we thought, how about two brown wallets with arrows indicating money going from one to the other? Participants countered with the question: but which wallet is mine? Further, we learned that women are not typically using wallets. They indicated that they typically tie up money in a cloth and stash it away in a box, hiding it in the folds of their clothing or even in their bosom. Therefore, for them, a wallet seemed like a man’s business.

Through such trial and error we eventually noticed a cultural practice important for designing an oral icon for sending money: the giver is at a higher position and the taker at a lower. We took this cultural tip, and in order to make it gender neutral, we did away with the wallet icon and worked on a third iteration: a hand giving money, with its palm down-turned, seeming like the money is being given from a higher position, a position of power. What we essentially had to understand was the power structure that the exchange of money brings with it. <em>Dene wala </em>(the giver) will always have an upper hand (literally) than the <em>lenewala </em>(the taker). Everyone, literate or illiterate, male or female, finally got it!

<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/07/gullak.png"><img class="aligncenter wp-image-23831" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/07/gullak.png" alt="" width="615" height="360" /></a>Another insightful revelation was regarding hierarchies of content. Some designers claim that hierarchy is an abstraction and that oral cultures do not understand abstraction. While we agree that hierarchy is an abstract concept, we learned that oral individuals struggle only with literate abstractions, not oral ones, and that hierarchy exists as both an oral and literate concept.

The hierarchies contained in market-leading mobile wallets are usually cluttered. For example, the home page of a bank’s mobile application might place 10 major propositions for the user, and several subsidiary ones. Behavioral economist Shlomo Benartzi argues that mobile screens cannot convey more than 4-6 main propositions without generating cognitive discomfort – and this is assuming a literate user. These interfaces typically rely heavily on text to convey far greater precision – and support far greater complexity – than would otherwise be possible.

<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/07/interface-2.png"><img class="alignright wp-image-23832" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/07/interface-2.png" alt="" width="330" height="398" /></a>We tested a prospective hierarchy of content that does away with such conventions. In the figure at right is a wireframe design for a mobile wallet’s home page. It centers on five main propositions, all supported by oral icons tested carefully for guessability and memorability:
<ol>
 	<li><strong>The wallet balance:</strong> The oral market segment faces very tight cash constraints and wants to be fully in control of this variable at all times. Since most cannot read 4+ digit numbers with confidence, the numeral string is accompanied by a clear image of the cash equivalent.</li>
 	<li><strong>The most recent transaction record</strong>, and a hyperlink to the detailed transaction record through an image of a wallet.</li>
 	<li><strong>A pathway to add money</strong></li>
 	<li><strong>A pathway to send money</strong></li>
 	<li><strong>A pathway to request money</strong></li>
</ol>
The six subsidiary pathways on the upper and lower strips include:
<ol start="6">
 	<li><strong>Home</strong></li>
 	<li><strong>Personal profile</strong></li>
 	<li><strong>Help </strong></li>
 	<li><strong>Mobile recharge</strong></li>
 	<li><strong>Bill payment</strong></li>
 	<li><strong>Merchant payment</strong></li>
</ol>
Our team conducted a usability test for this prospective hierarchy of content with a group of illiterate women to a large degree of success.

Additionally, we took them through the registration page, which had multiple fields to fill. They were briefed on the flow from the top to the bottom. One field required them to pick an image for a security question. Everyone chose the saucepan -- something they could readily connect with. After a time gap, we tested recall by asking them to register themselves without help. They did not start at the top; instead, they instantly went to the saucepan option. This revealed two things: 1) The image is relevant to their daily lives, and 2) The top-down information architecture was difficult to grasp.

When the blank input fields on each page were reduced to two, navigation was satisfactorily clarified. Another alternative is to reduce each page to <em>one </em>input field, eliminating any need for user choice. But in that case, even repeated use would offer no support in learning top-bottom protocols.

Of course, amongst many learnings, we did verify that one common misconception about <a href="http://www.microsave.net/resource/mobile_wallet_design_for_oral_users">design principles</a> is that it is all about making a product look beautiful. Great designs must get colors, typography, layout and graphics right, but as Don Norman observed in <a href="https://www.amazon.com/Design-Everyday-Things-Donald-Norman/dp/1452654123"><u>The Design of Everyday Things</u></a>, this is only one ingredient. Designs must be easily learned and easily used by the target market.

<em>For more on MicroSave’s work in designing mobile money services to fit the needs of illiterate and innumerate clients, </em><a href="http://www.microsave.net/resource/digital_wallet_adoption_for_the_oral_segment_in_india_concept_development_for_mowo_mobile_wallet_for_oral"><em>click here</em></a><em>.</em>

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/03/01/mobile-money-in-myanmar-going-directly-from-cash-to-digital/">Mobile Money in Myanmar: Going Directly from Cash to Digital</a>

<a href="https://cfi-blog.org/2017/02/07/modelo-peru-whats-next-for-the-groundbreaking-mobile-money-platform/">Modelo Peru: What’s Next for the Groundbreaking Mobile Money Platform?</a>

<a href="https://cfi-blog.org/2015/09/11/five-ways-to-get-frontline-staff-excited-about-mobile-money/">Five Ways to Get Frontline Staff Excited about Mobile Money</a>

Not Just a Pretty Interface: Designs Must Be Easily Learned and Used

Rafe Mazer

<em>&gt; Posted by ideas42</em>

<em>The following post was <a href="http://www.ideas42.org/blog/pathway-better-retirement-mexico/" target="_blank">originally published</a> on the ideas42 blog.</em>

<a href="https://www.flickr.com/photos/worldbank/2652381865/in/album-72157606068898904/"><img class="aligncenter wp-image-20045" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/11/2652381865_b1e561877c_o.jpg" alt="" width="616" height="395" /></a>It’s simply a fact that many products, policies, and services created specifically to benefit everyday people are either under-used or not used at all. Whether it’s helpful savings tools, financial aid for education, or comprehensive health insurance plans, many of us simply never enroll or use them despite intending to do so. So what’s going on?

One major factor is that most of these underutilized programs have been designed according to a "traditional" view of human behavior, in which designers assume that we always take the time to consider all of our options, choose what’s rationally the best option for us, and then act on it.

Behavioral science, however, breaks from this traditional model. We find that in reality, we don’t always carefully compare our options, if we even think about them at all. Likewise, if we do make a good choice, we may not necessarily follow through on it. So in order for solutions to be truly effective, they must be designed for how people <em>really </em>are, rather than how we <em>imagine</em> they should be.

This was one of the main things ideas42 kept in mind when approaching the problem of low retirement contribution rates in Mexico. <a href="http://www.ideas42.org/blog/tackling-low-retirement-savings-mexico/">Regular readers of our blog may remember</a> that under the current pension system, Mexican workers stand to retire on just 40 percent of their current salary, unless they make additional individual contributions—yet the overwhelming majority of Mexicans aren’t taking these crucial steps to improve their savings.

With funding from the MetLife Foundation, we worked with key members of the Mexican retirement system to dive deeper into the behavioral barriers influencing low voluntary contributions. We conducted interviews with stakeholders and account holders across major cities in Mexico, as well as in-depth analyses of administrative materials and data. Based on the <a href="http://www.ideas42.org/blog/tackling-low-retirement-savings-mexico/">insights we uncovered</a>, we designed a variety of behavioral solutions and recommendations for the Mexican pension system:
<ul>
	<li>Create an opt-out system linking accounts to paychecks or bank accounts<strong> to make retirement savings automatic and effortless</strong>.</li>
	<li>Use visualization exercises, goal-setting activities, and reminders to <strong>make retirement feel vivid.</strong></li>
	<li>Tie contributions to actual benefits and re-frame messaging to <strong>lessen the feeling of loss</strong> associated with saving for the future.</li>
	<li><strong>Make retirement savings visible and commonplace </strong>by demonstrating that most community members believe they should save more for a comfortable retirement.</li>
</ul>
These recommendations and potential behavioral solutions make up our new report, <em><a href="http://www.ideas42.org/wp-content/uploads/2015/11/I42_571_MexicoPensionsReport_ENG_final_digital.pdf">Using Behavioral Science to Increase Retirement Savings</a>. </em>The report, <a href="http://www.ideas42.org/blog/project/increasing-retirement-savings/">available here in English and Spanish</a>, was unveiled this week at an event hosted by CONSAR, MetLife Foundation and ideas42 in Mexico City.

Behavioral solutions like the ones outlined in our <a href="http://www.ideas42.org/blog/project/increasing-retirement-savings/">report</a> have the potential to increase retirement savings for millions of people, but it is crucial to test any solution in the field to evaluate its effectiveness. We’re currently engaging with key members of the pension system to implement various testable interventions in Mexico and Latin America. It is our hope that our report and ongoing work in Mexico over the coming months will inspire others to approach long-term savings from a new perspective—one that better aligns with the realities of human behavior—to improve financial health for millions of people worldwide.

<em>Image credit: <a href="https://www.flickr.com/photos/worldbank/2652381865/in/album-72157606068898904/">World Bank</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/06/05/tackling-low-retirement-savings-in-mexico/">Tackling Low Retirement Savings in Mexico</a>

<a href="http://cfi-blog.org/2015/05/27/would-you-like-a-pension-with-that/">“Would you like a pension with that?”</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/" target="_blank">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

A Pathway to Better Retirement in Mexico

Smita Aggarwal

<em>&gt; Posted by María José Roa Garcia, Researcher, Centro de Estudios Monetarios Latinoamericanos (CEMLA)</em>

<a href="https://www.flickr.com/photos/56796376@N00/6321480751/"><img class="alignright wp-image-17667" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/03/6321480751_0072505aca_b.jpg" alt="" width="300" height="225" /></a>In the past decade, a group of key empirical studies have argued that a lack of education and financial knowledge can lead individuals to miss opportunities to benefit from financial services. Some may fail to save enough for retirement, others may over-invest in risky assets, while still others miss out on tax advantages, fail to refinance costly mortgages, or even remain outside of the formal financial sector completely. These studies suggest that such behavior is based on the reality that making financial decisions has become increasingly complicated. At the same time, as a result of sweeping changes in the economic and demographic environments, individuals have become increasingly responsible for their own financial decisions and the consequences of such decisions over the long-term. Changes in public pension plans, an increase in life expectancy, and an increase in the cost of health insurance have placed on the individual the weight of momentous decisions such as whether to take out private retirement insurance, or how much to save. Easier access to credit, a general increase in the accessibility and complexity of products and services, and a number of other factors make a range of financial decisions more consequential – and harder.

Governments, financial services providers, and related stakeholders have responded accordingly in recent years developing financial education programs and initiatives, but the results have been mixed. The bulk of the evidence available <a href="http://journals.cambridge.org/action/displayAbstract?fromPage=online&amp;aid=8403921&amp;fileId=S1474747211000448" target="_blank">confirms</a> that, in general, the level of financial literacy throughout the world is very low, especially among the more vulnerable groups: those with very low education or income such as senior citizens, young women, and immigrants. The lack of financial literacy within these groups has proven to extend beyond economic effects and produce negative consequences on health, general well-being, and life satisfaction. Many of the programs that have been introduced were part of empirical studies that evaluated the impact of financial education programs on subsequent financial behavior. There are <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6419.2011.00705.x/abstract" target="_blank">many such studies</a> that show that financial education improves financial decision-making.

Nevertheless, a body of work has opened an intense debate over whether financial education and information can truly affect the financial behavior of individuals (see <a href="http://www.dartmouth.edu/~alusardi/Papers/Literacy_Information_Education.pdf" target="_blank">here</a>, and <a href="https://www.fca.org.uk/static/fca/documents/research/fsa-crpr69.pdf" target="_blank">here</a>). In many cases, despite the availability of financial education, persistently high rates of debt and default, and low rates of saving and financial planning for retirement have been shown to persist. The empirical evidence obtained from surveys and experimental work often shows that individuals pay little attention to the information and that their capacity to process it is limited. Most of the empirical literature to-date indicates that traditional financial education – clients receiving information in a classroom style setting or through printed materials - does not necessarily translate into behavioral changes, especially in the short-term.

However, this research also showed opportunities in the way financial education information can be transmitted, particularly, methods that factor in psychological aspects such as individuals’ cognitive biases are key to transforming financial behavior over the long-term. The existing information is often excessive and tough for individuals to process completely. These studies concluded that in order to improve individuals’ financial decision-making ability, the financial decision-making process must be simplified, and barriers for processing information must be reduced. For example, this might take the form of narrowing the number of options available or delivering text messages that may influence behavior at key moments. The latter falls within a group of practices identified as behavioral “nudges” by organizations working with behavioral science, like ideas42. In short, current research indicates that with financial education, effectiveness is largely a question of taking into account the psychological makeup of individuals.

In fact, nowadays there is a broad consensus among psychological, social, and economic studies that cognitive characteristics affect social and economic behaviors. Notwithstanding this, these studies tend to conclude that cognitive characteristics only predict a small part of personal behavior. Non-cognitive or personal characteristics seem to have a role as significant as that of cognitive skills. B.W. Roberts, a leading personality psychologist, defines¹ personal characteristics as “the relatively enduring patterns of thoughts, feelings, and behaviors that reflect the tendency to respond in certain ways under certain circumstances.” Psychologists have sketched a relatively commonly-accepted taxonomy of personal characteristics known as the Big Five: Openness to Experience, Conscientiousness, Extraversion, Agreeableness, and Neuroticism. The papers² of J. Heckman, T. Kautz, and their research team (2013) review the recent evidence obtained by economists and personality psychologists regarding how cognitive and personal characteristics can be used to predict educational attainment, labor market success, health, criminality, and financial decisions.

Interestingly, these studies show there is hard evidence that both personality and cognitive characteristics are not "set in stone" and can change over the life cycle. Specifically, while genetics have a significant influence, parents, education, and social environments shape individuals, especially in the early years. However, there is some evidence that personality traits are more malleable than cognitive characteristics at later ages.

Financial education intervention programs should thus be based on these results. In particular, measuring personal characteristics makes it possible to identify people who tend to show weaker financial habits - high rates of debt, high default, low rates of long-term savings, etc. – and design tailored interventions. In addition, researchers conclude that most successful intervention programs are not as effective as the most successful early childhood programs. Consequently, as changing behaviors is not simple, teaching healthy financial behaviors from an early age allows the foundations to be laid for the development of strong lifelong money management.

Given the importance of these factors in effecting change, here are a few points that the research suggests would help financial education become more effective in supporting adults and older people.
<ul>
	<li>Personalized counseling</li>
	<li>Opportunities to gain experience by putting lessons into practice</li>
	<li>A focus on small changes in financial behavior, taking into account the individual’s disposition to change</li>
	<li>Programs that acknowledge the individual’s socioeconomic situation</li>
	<li>Continuing and ongoing education, support, and motivation</li>
</ul>
As factors that influence behavior are increasingly understood, a major challenge remains to incorporate those features into the design and delivery of financial education programs.

<em>Image credit: <a href="https://www.flickr.com/photos/56796376@N00/6321480751/" target="_blank">McKay Savage</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/02/13/financial-education-for-seven-million-colombians-via-facebooks-internet-org/" target="_blank">Financial Education for Seven Million Colombians via Facebook's Internet.org</a>

<a href="http://cfi-blog.org/2014/10/27/gender-dynamics-in-rural-china-illuminate-the-need-for-financial-education/" target="_blank">Gender Dynamics in Rural China Illuminate the Need for Financial Education</a>

<a href="http://cfi-blog.org/2014/08/21/embedded-education-taking-financial-education-to-scale/" target="_blank">Embedded Education: Taking Financial Education to Scale</a>

[1] Roberts, B.W. (2009) “Back to the Future: Personality Assessment and Personality Development”, Journal of Research in Personality, vol. 43, 137-145.

[2] Almlund, M., A.L., Duckworth, J. Heckman, and T. Kautz (2011) “Personality Psychology and Economics”. In: Hanushek, E., S. Machin, and L. Woessmann (eds), Handbook of the Economics of Education, vol. 4. Amsterdam: Elsevier, 1-181.

Individually Tailored Financial Education: What Research Tells Us Is Possible

John Gitau

<em>&gt; Posted by John Gitau, CEO, Kenya Financial Education Centre</em>

[getty src="153947344?et=GSV9ZkQrSjF2uWTbszP6VQ&amp;socialOnLoad=on&amp;sig=vaRL_hro1kihWTH6Y_Eczhj-WRzMj_vXuE2ERSb7Zto=&amp;caption=true" width="594" height="396"]

Written in 1910, a tiny book, <em>The Science of Getting Rich</em> by Wallace D. Wattles has relevance today in our financial inclusion efforts.

In one of the chapters, “How To Use the Will,” the author writes, “What tends to do away with poverty is not the getting of pictures of poverty into your mind but getting pictures of wealth into the minds of the poor. You are not deserting the poor in their misery when you refuse to allow your mind to be filled with pictures of that misery. Poverty can be done away with, not by increasing the number of well to do people who think about poverty, but by increasing the number of people who purpose with faith to get rich. If you want to help the poor, demonstrate to them that they can become rich; prove it by getting rich yourself.”

These words were written at a time when the American Titans of Industry – Cornelius Vanderbilt, Andrew Carnegie, and John D. Rockefeller – were generating millions of dollars from oil, steel, and commodities trading. The existence of poverty alongside such epochal abundance must have shocked Wallace Wattles deeply. He must have also witnessed the proliferation of poverty eradication efforts through charity and noted their failure or absence of impact.

His conclusion that the solution to poverty lay in the minds of the poor was bold and radical. He suggested that the poor needed inspiration to build pictures of wealth in their minds. That was not new, though. The very rich, in their biographies, acknowledge that they use the same resources accessible to everyone else to build their wealth. One thing they generously confess to and which is often doubted is that their wealth started with the pictures they built in their minds. Wallace must have known this, just like the rich during his era.

Fast forward 100 years, and here we are, advocates of financial inclusion with our financial capability recommendations for the poor. We are telling them that to come out of poverty they need to seek, among a raft of other services, formal financial services. Fortunately for us, we are more and better equipped with satisfactory amounts of data about poverty and the poor than poverty eradication experts a century ago.

The literature on poverty eradication efforts over the last 30 years reveals a plethora of intriguing developments. First, poverty has not disappeared. Second, charity has mushroomed. There are more philanthropists giving away lots of money than ever before. Foundations and trusts set up by the Titans continue to churn out millions of dollars to charitable efforts. Third, experts in poverty eradication, who recommend myriads of solutions, have multiplied. We in the financial inclusion field have joined the fray with our top down recommendations of tackling poverty through financial capability.

Our efforts, though well intended, are likely to face challenges due to some fatal assumptions we continue to make. Some of them are:

<strong>1. Studying the poor leads to understanding them</strong>. A mere observation of poor people’s behavior within their environments or while sampling synthetic financial products in controlled environments doesn’t lead to understanding them. Behavioral economists’ efforts are yet to bear reliable fruit. On the downside, the hypotheses we construct and our desire to test are already filters that distort the accuracy of our findings. We end up seeing what we want to see and making the wrong conclusions. So, when financial services providers use our findings to design products for the poor, they fail in the intended uptake and impact. Some products, such as microcredit, end up harming many users who become over-indebted.

While Financial Diaries reveal useful information on how the poor generate and manage their little money, it is doubtful if financial product designers are capable of translating the data into useful financial products, especially if they perceive serving the poor as unprofitable. Formal financial institutions to whom we assign the role of designing pro-poor products hardly participate in our discussions - evidence enough of their apathy.

<strong>2. The poor are poor because of economic conditions they find themselves in</strong>. In academic circles, it is increasingly reported that poverty creates a mindset of scarcity, un-deservingness, and inability. Would psychologists be able to suggest financial product features that have a bearing on desire for wealth, longing for a better life, self esteem, and deservingness?

<strong>3. The poor are different from us, their advocates. </strong>Most of us in the financial inclusion profession are learned members of the middle class. But if we are subjected to a financial capability test, we may not score significantly better than the poor. If we were good savers, personal debts would not be soaring as they are across the world. If we were better in budgeting, we would have more assets than liabilities in our books. We would be buying homes with big down payments, using debit cards, and driving cars we bought in cash from showrooms. We would be earning incomes from our multiple investments, and seeing our careers as personal fulfillment.

Therefore, we need to put our houses in order before telling the poor what to do or not to do. And before we forget, the poor are not specimens from another planet, but our brothers, sisters, cousins, uncles, and aunties whom we know quite well, though living in different circumstances from us. They do visit us, and we at times celebrate family events together. We need to be humble and learn from them how to manage little and erratic money.

<strong>4. Financial products have to be designed and sold to the poor</strong>. Financial services providers find it easy to design products for those with regular incomes. Financial products for the poor are difficult to design due to their irregular and tiny incomes. For providers, serving them presents logistical challenges due to the expected fragmentation of financial products to suit their needs.

If we start working on our assumptions and approach the poor to define what financial services they want, then we shall start to become worthy solution finders in the fight against poverty. And like Wallace Wattles said, we perhaps need to work ourselves out of poverty and become rich so that we can teach the poor how to come out of poverty. Before then, we might consider ourselves as the quasi-poor.

<em><img class="alignleft wp-image-14980" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/05/skmbt_c35140204162400_0001-v.jpg?w=119" alt="" width="90" height="113" />John Gitau is an independent financial education consultant and trainer and is the CEO of <a href="http://financialeducationcentre.co.ke/" target="_blank">Kenya Financial Education Centre</a>, an independent centre that supports and promotes financial inclusion efforts among the Kenya poor living in low-income neighborhoods. He does that using his home grown financial literacy curriculum, Practical Financial Literacy Counseling (P-FLC) adopted from the Global Financial Education Program (GFEP) developed by Microfinance Opportunities, Citi Foundation, and Freedom from Hunger.</em>
<p style="color:#5e514d"><span style="font-weight:bold">Have you read?</span></p>
<p style="color:#5e514d"><a href="http://cfi-blog.org/2014/12/11/the-earnings-component-of-financial-capability-experts-exonerated-from-ignorance/">The Earnings Component of Financial Capability: Experts Exonerated From Ignorance</a></p>
<p style="color:#5e514d"><a href="http://cfi-blog.org/2014/05/21/beyond-giving-hope-religions-contribution-to-financial-capability/" target="_blank">Beyond Giving Hope - Religion's Contribution to Financial Capability</a></p>
<p style="color:#5e514d"><a href="http://cfi-blog.org/2014/01/17/contemplating-scarcity-and-its-implications-for-microfinance-and-poverty-alleviation/">Contemplating Scarcity and Its Implications for Microfinance and Poverty Alleviation</a></p>

The Poor Need Inspiration. Is There Room for It in Financial Inclusion?

<em>&gt; Posted by Alissa Fishbane and Allison Daminger, Ideas42</em>
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What does it take to successfully design, pilot, and scale an effective new financial product or service? Much more than most would realize! That’s why CFI’s recent <a href="http://cfi-blog.org/2014/11/18/applying-behavioral-insights-inside-latin-american-financial-institutions-what-happened-at-our-workshop/#more-16644">behavioral insights workshop</a> in Bogota, Colombia, had a clear focus: understanding the challenges of applying behavioral science to the operations of Latin American financial institutions. CFI asked ideas42 to kick off the day with an overview of behavioral science and its implications for the design and scale-up of financial products.

At ideas42, we use insights from behavioral science to diagnose behavioral bottlenecks preventing people from taking their desired actions, and design remedies that help organizations overcome them. We then measure the impact of these remedies through a randomized evaluation before they are fully scaled. Any successful program that hinges on people’s decisions and actions, as nearly all consumer finance initiatives do, requires a behavioral approach.

We’ve found that many promising financial programs underperform simply because people often don’t behave the way we expect. As humans, even when we know what’s best for us, we don’t always follow through. We put off applying for a program that will help us save for retirement, or a loan to expand the family business. And when we do make it through the initial sign-up process, we often fail to save consistently or make monthly payments on time. Whatever the specific challenge may be, the result is that resources aren’t used efficiently. Because of this, neither financial organizations nor the individuals they serve see the returns they could be seeing from a product that accounts for these human tendencies.

But while behaviorally informed product design is an essential piece of the puzzle, there is much more to it, as our recent <a href="http://www.ideas42.org/publication/view/driving-positive-innovations-to-scale-in-the-financial-services-sector/">white paper</a> on scaling financial products found. Institutions have to find pathways to achieving profitability, overcoming any organizational impediments, and navigating often-complex regulatory environments. Solid design alone cannot protect a financial innovation from the many structural challenges it will face.

What’s more, it is rarely acknowledged that the people who are responsible for driving this process within financial institutions will have the same behavioral biases as their intended audience. For example, whether we are playing the role of consumer or provider in a particular setting, we all selectively interpret information; are overconfident about future outcomes; and underestimate how long it will take to get something done. These can make the structural challenges even more difficult to overcome.

At the workshop, Colombian financial inclusion professionals were eager to share lessons from their own experiences. Our resulting conversation centered on four key recommendations:
<ul>
 	<li><strong>Have a “champion” at the top. </strong>Without an influential senior leader to protect it throughout the process, any innovation is even more vulnerable to budget cuts and internal priority shifts.</li>
 	<li><strong>Involve representatives from many departments early on. </strong>Though the role of the sales or legal teams might not be obvious in the early stages of product development, these and other departments may flag important concerns that could derail the innovation if discovered later on. Of course, working across a dozen departments presents a myriad of challenges, and therefore an effective project leader, nominated from the top, is also needed to motivate and communicate within and across specialized teams.</li>
 	<li><strong>Make the business case at the outset of a new project. </strong>Ensuring that a product will be economically viable at scale doesn’t just enhance profitability; it increases the likelihood that a product will be championed and supported by individuals and departments across the institution.</li>
 	<li><strong>Plan for scale from the start. </strong>Without a clear vision of how an innovation will later be scaled, a project is likely to be derailed by lack of resources in the budget, resistance from departments not involved in the pilot, distributional hurdles that didn’t exist on a smaller scale, or simply by lack of momentum.</li>
</ul>
These insights echo findings outlined in our recent <a href="http://www.ideas42.org/new-white-paper-driving-positive-innovations-to-scale-in-the-financial-services-sector/">white paper</a>, and it was exciting to see our analysis reflected in the real-world experiences of Colombian financial institutions. The workshop in Bogota proved to be a successful exchange of ideas and practices between financial providers and behavioral experts. As ideas42 continues to build our work in the financial inclusion space, we are taking a deeper dive into examining the economics of product models from a provider perspective. Stay tuned to the CFI blog and the <a href="http://ideas42.org">ideas42 website</a> for more insights early next year.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/11/18/applying-behavioral-insights-inside-latin-american-financial-institutions-what-happened-at-our-workshop/">Applying Behavioral Insights Inside Latin American Financial Institutions: What Happened at Our Workshop</a>

<a href="http://cfi-blog.org/2014/07/03/financial-capability-stakeholders-join-j-p-morgan-in-new-solutions-lab/"> Financial Capability Stakeholders Join J.P. Morgan in New Solutions Lab</a>

<a href="http://cfi-blog.org/2014/04/10/smart-design-for-policy-and-practice-consider-bandwidth-insights-from-harvard-kennedy-schools-rethinking-financial-inclusion/">Smart Design for Policy and Practice: Consider Bandwidth – Insights from Harvard Kennedy School’s “Rethinking Financial Inclusion”</a>

Beyond Design, Behavioral Science for the Pilot and Scale of Product Innovations

Financial Inclusion 2020

<img class="alignright wp-image-16660" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/11/fin-fin-cap-cap-photo1.png" alt="" width="290" height="386" />In my breakout group at CFI’s workshop last week in Bogota, everyone talked at once. With eight voices coming at me, my brain’s very basic ability to understand Spanish shut down. The workshop participants were bursting with ideas they urgently wanted to express. But, as my colleague Sonja Kelly pointed out, a situation where everyone is speaking and no one is listening is an apt metaphor for the problem the workshop sought to address.

The workshop focused on the challenges in integrating insights from behavioral economics into the operations of financial institutions. Two organizations that leverage behavioral economics for product design, ideas42 and Innovations for Poverty Action, presented the research perspective. Closely connected with academics at Harvard, Yale, MIT, and Princeton, both organizations start from the research finding that a number of cognitive and emotional biases cause people to make decisions that depart from rationality, and that these biases can significantly affect the use of financial services. Ideas42 focuses on identifying features in product design and delivery that, while not overruling choice, nudge people in a desirable direction – features such as commitment savings accounts or reminder messages to encourage savings. IPA promotes the same kinds of nudges, but focuses on the testing of these innovations through randomized controlled trials.

Most of the participants represented a cross-section of the financial inclusion sector in Colombia – many banks, several microfinance institutions, and the public sector Banca de las Oportunidades program were present. The financial inclusion market segment is increasingly contested territory in Colombia, and every major bank has had some experience trying to create products and channels to reach it.

To launch the conversation, we asked several experts to recount their experiences in introducing “client-centric” innovations, bringing in the work of additional organizations, this time associated with the U.S. West Coast – Stanford and Silicon Valley. Included were proponents of human centered design and Juntos Finanzas, an entrepreneurial start-up that uses data analytics to provide tailored financial capability messages to clients of financial institutions. Finally, two more homegrown experiences from the Accion Latin America network were represented – one involving savings and the other financial education for microinsurance.

Some lessons immediately popped out. In several cases, well-crafted products, designed with deep understanding of client behavior were not implemented due to snags encountered inside the implementing financial institutions. And even those that succeeded faced major challenges before gaining a secure place within their organizations. Challenges ranged from changes at the CEO level, to pressure for faster return on investment, to unsupportive frontline staff.

We thought this needed further exploration, so we posed some hypothetical products with integrated behavioral insights and asked participants in small groups to assume the roles of various actors within a financial institution. Each group’s task was to design and roll out the proposed products. It was at this point that participants began to talk over each other. The legal department and the IT department, the HR department and the finance department, the product department and the marketing department – everyone had crucial and legitimate issues, each needing solutions before the product could proceed. At that stage the behavioral experts in each group tended to step back and watch the simulated institutions battle it out internally as questions about behavioral economics took a back seat to the practicalities of implementing change inside institutions.

The overarching takeaway of the day was that no matter how inspired or close to the client, good product design is only the first step toward a successful offer. Experts who bring important new insights cannot assume that their work ends with product design. As Gerhard Coetzee <a href="http://cfi-blog.org/2014/11/14/expecting-change-where-the-odds-are-seemingly-against-it/" target="_blank" rel="noopener">wrote</a> in this blog space on the very same day as this workshop, a new product is primed for success only after thorough analysis of the inner workings of an institution and a plan is aligned with the interests of its various areas. Behavioral insights and other customer-oriented product features must make it through the “noise” within the institution, competing with all of the other things a bank must attend to in order to survive.

From my (perhaps biased) position as someone who has worked at Accion, this kind of analysis and planning is exactly the know-how Accion has built up over the years as it has worked to build healthy microfinance institutions. Accion, for its part, has not particularly embraced behavioral economics insights. So opportunities for mutual learning exist.

Many specific lessons emerged from the day’s discussion, and we would like to continue to share them with you. CFI will assemble them into a brief note within a few weeks. Please stay tuned.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/11/05/kate-mckee-on-the-behavioral-economics-of-poverty-and-implications-for-financial-inclusion/" target="_blank" rel="noopener">Kate McKee: On the Behavioral Economics of Poverty and Implications for Financial Inclusion</a>

<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/2014/07/03/financial-capability-stakeholders-join-j-p-morgan-in-new-solutions-lab/" target="_blank" rel="noopener">Financial Capability Stakeholders Join J.P. Morgan in New Solutions Lab</a>

Applying Behavioral Insights Inside Latin American Financial Institutions: What Happened at Our Workshop

<em>&gt; Posted by V. McIntyre, Freelance Writer for the Harvard Kennedy School</em>

<em><a href="http://www.centerforfinancialinclusion.org/programs-a-projects/financial-inclusion-2020"><img class="alignright size-medium wp-image-8784" style="border: 0;margin-bottom: 15px" src="http://centerforfinancialinclusionblog.files.wordpress.com/2012/11/fi2020_antilogo2.jpg?w=300" alt="" width="300" height="66" /></a></em>

<em>The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/financial-inclusion-2020" target="_blank" rel="noopener">Financial Inclusion 2020</a> campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.”</em>

“Know your client” is a popular phrase in conversations about financial inclusion and business in general. But where does such knowledge come from? Does it end with your client’s expressed needs and desires? Can it also incorporate behavioral research insights or consumer protections that the client may not even demand?

Shawn Cole of Harvard Business School opened the second day of “Rethinking Financial Inclusion” – a one-week program offered by Harvard Kennedy School Executive Education – with a question all providers might ask themselves when modifying existing products or developing new ones: “If you were the customer, would you go for that deal?”

Cole pointed out that products meant to “bank the unbanked” (i.e., first-time users) must be designed differently from products meant to tempt new customers away from competitors. He described <a href="http://www.hbs.edu/faculty/Pages/item.aspx?num=35055" target="_blank" rel="noopener">the experience of First National Bank of South Africa</a> in responding to government calls to encourage savings among the poor and draw black South Africans into the predominantly white formal banking sector. First National Bank decided to offer a lottery with large prizes to new depositors.

In debating whether a lottery would attract customers, participants cited examples from their own work, such as a mobile money account offering free insurance to savers who maintain a sufficient balance in their accounts. Recognizing that the poor are already saving, informally, the challenge is to develop products that draw them into the formal sector safely and responsibly. Another provider warned against complicated offers. “Structured products can be very esoteric.”

The concerns participants voiced fell into two categories: ones that apply to anyone (e.g. for nearly everyone a flashy new product loses its luster after the third page of terms and conditions), and ones that are specific to the poor (e.g. how do you draw people into banking, when even walking into the building itself is intimidating?). Both sets of concerns underline the need for financial capability development and customer-centered product innovation. The potential interest in formal financial products may be there, but uptake is obstructed by consumers’ lack of confidence, or poor understanding of the products’ components, or inability to surmount intimidating “barriers to entry” such as small print.

[caption id="attachment_14593" align="alignright" width="300"]<a href="https://www.flickr.com/photos/cfi_accion/10546313713/"><img class="wp-image-14593 size-medium" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/04/10546313713_6c71ce385b_b.jpg?w=300" alt="" width="300" height="199" /></a> Sendhil Mullainathan presenting at the FI2020 Global Forum[/caption]

In an effort to clarify the principles that govern how many low-income consumers make decisions, Sendhil Mullainathan – a behavioral economist and cofounder of ideas42 – laid down some core concepts about the psychology of the poor that program participants went on to use throughout the week. Mullainathan drew on his recent book, <em>Scarcity: Why Having Too Little Means So Much</em>, coauthored with psychologist Eldar Shafir. Their thesis is that scarcity – whether of time, or of money – has predictable effects on the mind. While there are benefits to scarcity (say, the heightened focus we experience when working on a deadline) there are also severe costs, as considerations beyond the immediate scarcity are neglected. His experiments with both rich and poor subjects in rich and poor countries – and some even with the same subjects in periods of scarcity and plenty – reveal how in the face of poverty, the mind jettisons certain important processes.

Mullainathan cited studies that prove that, out of necessity, the poor are “money experts” – for example, less likely to be duped by misleading price structures. On the other hand, he likened the mind operating under financial scarcity to a web browser functioning more slowly when multiple windows are open, and bandwidth is taken up by multiple tasks. He called this the “bandwidth tax.” The need for cash for a medical expense today falls within the poor client’s bandwidth; the high interest a moneylender will charge tomorrow, outside. Options that are more sensible but incur costs such as travel or fine print are ignored, not out of ignorance or laziness, but out of necessity.

Financial products meant for the poor are more likely to fail if they do not take both phenomena – the increased shrewdness of the poor and their decreased bandwidth – into account. “We think in terms of financial constraints,” Mullainathan said, “but we must design products for <em>bandwidth</em> constraints.”

In an afternoon session, Piyush Tantia, who works with Mullainathan at ideas42, presented several real-world examples of how behavioral questions come into design, such as how to get Nigerian farmers to buy flood insurance when they have a cultural disdain for insurance companies, and how to solve cash-flow problems for Indian villagers who prefer <em>not</em> to have cash on hand so they can’t be asked to lend it out to friends and relatives.

Tantia shared details of how CARD Bank, an MFI in the Philippines, <a href="http://cfi-blog.org/2014/03/28/behavioral-approaches-to-product-innovation-at-the-base-of-the-pyramid/" target="_blank" rel="noopener">succeeded in getting people to actually <em>use</em> the savings accounts they had</a>. The bank developed a new account opening process that allowed clients to set a specific savings goal, helped them make a savings plan, and gave them calendars to visually track their progress. The result, as shown in a randomized trial, was larger opening deposits, greater likelihood to make a second deposit, and a higher balance seven weeks later.

“The behavioral aspect is the hardest part of the design process,” Tantia concluded. “People are not rational economic models.”

By the end of the day, participants were already incorporating the behavioral lexicon. They were starting to think about customers in a new and, it is hoped, more insightful way.

<em>Rohini Pande and Asim Ijaz Khwaja of <a href="http://www.hks.harvard.edu/centers/cid/programs/evidence-for-policy-design" target="_blank" rel="noopener">Evidence for Policy Design</a> (EPoD) at Harvard Kennedy School will offer the “Rethinking Financial Inclusion: Smart Design for Policy and Practice” program again next May 10-15, 2015. Visit the <a href="https://exed.hks.harvard.edu//Programs/rfi/overview.aspx" target="_blank" rel="noopener">HKS Executive Education website</a> for details.</em>

<i>For more information on Financial Inclusion 2020, </i><a href="http://bit.ly/FI2020signup"><i>sign up for campaign updates</i></a><i>.</i>

<em>V. McIntyre is a freelance writer based in London.</em>

<i>Image credit: <a href="https://www.flickr.com/photos/cfi_accion/10546313713/" target="_blank" rel="noopener">The Center for Financial Inclusion</a></i>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/04/02/day-one-at-rethinking-financial-inclusion-smart-design-for-policy-and-practice-penicillin-versus-the-magic-bullet-or-why-data-is-not-a-mere-annoyance/" target="_blank" rel="noopener">Day One at "Rethinking Financial Inclusion: Smart Design for Policy and Practice" - Penicillin Versus the Magic Bullet, or, Why Data is Not Mere Annoyance</a>

<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/2014/01/17/contemplating-scarcity-and-its-implications-for-microfinance-and-poverty-alleviation/" target="_blank" rel="noopener">Contemplating Scarcity and Its Implications for Microfinance and Poverty Alleviation</a>

Smart Design for Policy and Practice: Consider Bandwidth - Insights from Harvard Kennedy School’s “Rethinking Financial Inclusion”

<em>&gt; Posted by Alexandra Fiorillo, Principal, GRID Impact </em>

With more than 2.5 billion people around the world remaining un- or underbanked and major fluctuations in activity and usage among existing accounts, the financial inclusion industry still has work to do to increase the uptake and adoption of new products and services while also increasing the number of regularly active clients.

Many people understand the potential benefit of financial services and have the intention to use savings and loan products to improve their financial well-being. However, research shows that human beings do not always follow-through on their intentions. Frequently, we experience an intention-action gap due to psychological and external factors.

<a href="http://ideas42.org/content/Applying-BE-to-Improve-Microsavings-Outcomes.pdf"><img class="aligncenter wp-image-14437 " src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/03/img_3252.jpg" alt="" width="471" height="353" /></a>If we want to achieve full financial inclusion, we cannot simply offer more financial products and services to more people and hope they need, want, like, and use them. Instead, we should spend the necessary resources to ensure our products and services work for clients by doing two things:

1. Design products that meet the needs, desires, and preferences of our clients by collaborating with them on the design and delivery of these products.

2. Help our clients follow-through with the intentions and goals they have for their financial lives by focusing on taking action rather than just providing more information.

A new approach to product and service innovation, behavioral research and design, attempts to do just this. Drawing on insights from behavioral economics and principles from human-centered design, behavioral research and design attempts to uncover deep personal and contextual motivators and influencers to human behavior so we can better design products and services in a client-centered way. The goal of this method is not to focus on stated preferences and opinion or market research, but rather to develop deep empathy for human needs and desires while also making sense of observable behaviors - which may be contrary to people’s stated preferences. The tools often used in this approach involve in-depth interviews, behavioral and empathy mapping, customer journey maps, and other techniques focused on a small, indicative group of people. The multidisciplinary approach can help us better understand the motivations underlying people’s current behaviors and help us make more informed predictions about how people will behave when faced with new decisions in the future.

On behalf of ideas42, I recently led a project to improve microsavings outcomes among low-income clients of CARD Bank, Inc. in the Philippines. In collaboration with Grameen Foundation, my team used tools from behavioral economics and human-centered design to develop insights about people’s savings behavior. We used the market research and client segmentation CARD Bank, Inc. had already done to get a broad understanding of their clients and combined it with in-depth behavioral interviews, small focus groups, and rigorous quantitative analysis of transactional and administrative data to understand current savings challenges. The behavioral research we conducted informed the design of interventions to help people follow-through with their stated goals and intentions to save for their future. The outcome was surprising, and very successful!

Our behavioral diagnosis highlighted several key barriers to improving savings outcomes including two about savings goals and behaviors:

1. The savings “goals” clients have are distant and abstract, while immediate financial needs and temptations feel pressing.

2. Clients open new savings accounts with little intention or plan about how to use the account to reach their savings goals.

[caption id="14443" align="alignright" width="253"]<img class="wp-image-14443 " src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/03/savings-plan.png" alt="" width="253" height="364" /> Savings Plan created to help clients set goals and make a plan for savings behavior.[/caption]

To resolve these behavioral challenges, we designed four low-cost, easy-to-implement interventions that altered the account opening process and how clients engaged with their savings accounts. Most notably, we created a Savings Plan that incorporated goal-setting, plan-making, the feeling of having made a commitment and personalization to help clients overcome savings dormancy.

We conducted a randomized controlled trial to measure the impact of our interventions and we found that clients who were exposed to the behavioral interventions made initial deposits 15 percent higher than those who opened accounts using the standard process, and were 73 percent more likely to initiate a transaction in the new account. The intervention appears to have had the effect of increasing balances 37 percent compared to the control group over the course of the eight-week pilot.

Our project taught me some valuable lessons about improving financial behaviors at the BoP, which are relevant for other industries as well:

1. Developing a deep understanding of people’s intentions and the contextual or environmental barriers that prevent them from realizing their intentions, can support improved design and delivery. In the Philippines case, this meant we assisted clients in making concrete, aspirational savings goals with detailed, actionable plans for how they would meet that goal.

2. Using proven behavioral levers leads to successful design of savings products, which leads to improved savings behavior. In this case, we used several levers to incite improved savings such as goal-setting, the feeling of having made a commitment, specific plan-making, and personalization of the experience. Clients at CARD Bank, Inc. seemed to understand that saving was important for their families and would be helpful to them. They <em>wanted</em> to save but various things got in their way. As such, we could re-design specific features of how the savings products were presented and used to help clients realize their intentions.

3. Leveraging rigorous data analysis is an important component of developing a deep understanding of existing human behavior – and financial service providers need to support and develop this capability. Quantitative analysis allowed us to test several hypotheses about savings behavior that would have been hard to test with qualitative research alone. The combination of research methods resulted in a more holistic and comprehensive approach to product innovation.

While this project in the Philippines was successful, we’ve really just begun to scratch the surface of client-centered approaches to financial inclusion. Behavioral research and design attempts to understand the internal determinants (self efficacy, intentions, current knowledge, and behavior), social determinants (social norms and group identity), and environmental factors and obstacles (physical cues, architectural and spatial influences) influencing individuals’ experience. This depth of understanding can then be leveraged into products, services, and interventions that have the most potential for bridging the gap between intention and action.

This is not to say that every client has an intention-action problem and that this approach would solve his or her financial challenges. Instead, a methodology that focuses on understanding the specific behaviors, contextual challenges, and client experience will allow you to develop a bespoke solution for your clients’ particular needs. Additionally, more general market research and client segmentation tools help compliment the specialized and focused behavioral research method. This is yet another set of tools we can add to our toolkit to arrive at client-centered design and delivery of financial services.

<em>If you’d like to read more about the savings project with CARD Bank, Inc. in the Philippines, you can download the </em><a href="http://ideas42.org/content/Applying-BE-to-Improve-Microsavings-Outcomes.pdf"><em>white paper here</em></a><em>. </em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/01/17/contemplating-scarcity-and-its-implications-for-microfinance-and-poverty-alleviation/" target="_blank">Contemplating Scarcity and Its Implications for Microfinance and Poverty Alleviation</a>

<a href="http://cfi-blog.org/2013/10/16/scarcity-why-having-too-little-means-so-much/" target="_blank">Scarcity: Why Having Too Little Means So Much</a>

<a href="http://cfi-blog.org/2013/11/05/kate-mckee-on-the-behavioral-economics-of-poverty-and-implications-for-financial-inclusion/" target="_blank">Kate McKee: On the Behavioral Economics of Poverty and Implications for Financial Inclusion</a>

Behavioral Approaches to Product Innovation at the Base of the Pyramid