A household budget, saving for a business investment, or managing an unforeseen emergency can cause stress in the most adept household, let alone those experiencing the vulnerability and volatility of poverty. Learning to navigate financial systems and products is a long-term endeavor.

Building financial capability — that is, the knowledge, skills, attitudes, and behaviors needed to make sound financial decisions to support well-being — can take time and creativity. The ultimate goal is to equip all people with the skills to navigate financial services safely and effectively and allow them to accrue their benefits. For poor and rural communities, this can mean increasing resiliency and reducing exposure to economic shocks, improving income growth and investment, and promoting more sustainable and equitable development. And for women, in particular, the accrued benefits can mean navigating financial choices with confidence, seeing themselves — and being seen — as financial clients, and accessing and using technology with ease.

While overall progress has been made in advancing financial inclusion, progress for women continues to lag. Globally, <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer">male ownership is likely to be higher than female ownership of accounts</a>, with a gap of nearly 7 percent, which has persisted despite the overall rise in account ownership. The gender gap is much worse in some countries, where <a href="https://www.cgap.org/blog/how-social-norms-men-restrict-womens-financial-inclusion" target="_blank" rel="noopener noreferrer">social norms govern financial access and decision-making</a>. For instance, in Pakistan, while account ownership doubled since 2011, most of the growth was driven by accounts owned by men. Similarly, in Ethiopia, account ownership by men increased by roughly twice the size of the increase among women since 2014.

We must invest in building women’s financial capability to close this gap and make meaningful progress in women’s access to and usage of financial services. Doing so will require a deeper understanding of the economic and social constraints women face in accessing financial services. Yet existing tools for building financial capability have a mixed track record and there is scarce evidence on which approaches and delivery channels are likely to produce lasting impact.

This publication examines how best to share information, build capability, and enable lasting behavior change in a context in which women may have limited say in their own economic choices or require additional support or flexibility to overcome trust and care responsibilities. We examine the characteristics and success of existing approaches to building women’s financial capability and find a gap in programming that sufficiently accounts for women’s preferences, which are largely influenced by gendered social norms.

Readers of this report will come away with:
<ul>
 	<li>a stronger understanding of the role of gender norms that constrain women's financial capability</li>
 	<li>an overview of current women's financial capability initiatives, including classroom-based initiatives, technology-led financial education, and high-touch financial capability approaches</li>
 	<li>recommendations on how to ensure women are meaningfully and successfully engaged with financial services.</li>
</ul>

Building Women’s Financial Capability: A Path Toward Transformation

Just over one year ago, I joined the Center for Financial Inclusion (CFI), and what a year it has been. <a href="http://financialinclusionweek.org" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a> presents a great time for me to reflect on this past year and to share with you CFI’s plans for our next chapter. We are using Financial Inclusion Week to feature the work of so many of our partners. And we are also using the week to focus attention on the themes we have identified in our new strategy as the pillars for this week’s <a href="http://financialinclusionweek.org/event-calendar-2020" target="_blank" rel="noopener noreferrer">calendar of events</a>.

CFI emerged from the rubble of the financial crisis to spearhead the most pressing issue the inclusive finance field needed at the time: improved consumer protection. We are now well into our second decade and our industry is reeling from the ravages of the COVID-19 pandemic. It is perhaps the right time for CFI to reenergize its mandate and spearhead what we believe is needed to “build back better” as the saying goes. As tragic as the pandemic’s consequences have been and continue to be, it has at least laid undeniably bare the failures of the status quo and has created a heightened sense of urgency, for financial services to build back better.

CFI was founded at a particular moment when it was becoming more apparent that market forces alone would not ensure positive outcomes for financial inclusion, and that sustained intentionality would be necessary. The coronavirus pandemic has, at the September 2020 time of writing, infected more than 33 million people and killed nearly 1 million. Beyond the rapid and catastrophic spread of illness and death, the pandemic has devastated global economies. Millions of micro, small, and medium enterprises (MSMEs) around the world have seen revenues plummet and have suspended operations or gone out of business altogether. Hundreds of millions of families have lost jobs and incomes, and many of them live in countries where social safety-net protections are patchy at best. The pandemic also reversed, seemingly overnight, social and economic development gains that had taken decades to achieve: the World Bank estimates that 70 million people are at risk of falling back into poverty. Women and children have been among those most affected: children because schools around the world have been shuttered, and women because they are more likely than men to lose their jobs and to shoulder the responsibility of supervising and homeschooling children.

For CFI, the pandemic has reenergized our purpose. Financial services are critical to reducing low-income populations’ vulnerability and helping them to recover from this and other recurring crises in their lives. We believe we have a leadership role to play in this intensified global effort. We have more than a decade of recognized global leadership in understanding the financial needs and behaviors of low-income vulnerable populations. Complementing this demand-side expertise, our recent <a href="https://content.centerforfinancialinclusion.org/mix-and-cfi-announce-strategic-integration-to-drive-industry-knowledge-for-inclusive-finance/" target="_blank" rel="noopener noreferrer">integration</a> with MIX brings supply-side expertise to the table, as they have been studying and reporting about financial service providers for the past 20 years. These complementary strengths, combined with our history of thought leadership and our role as conveners, positions CFI to pursue an ambitious three-year strategy made all the more urgent in the context of the pandemic.
<blockquote>The pandemic has reenergized our purpose.</blockquote>
The strategic plan which will guide CFI’s work through 2024 focuses on four thematic areas. All of them, to significant degrees, have either been exacerbated by the pandemic or have been revealed by this crisis as urgent and under-attended priorities. The common thread among the themes is that progress in these areas is essential to ensuring that all people have the financial tools needed to improve their lives and to prosper.
<h2>Financial Services to Respond to the Risks of Climate Change</h2>
Just as the pandemic’s effects have been most severe on those who were already the most vulnerable, so too are the effects of climate change. Low- and moderate-income countries (LMICs) in the Global South are likely to experience longer, hotter heat waves and more extreme storms which in turn will create income loss, food insecurity, adverse health effects, and displacement that will hit already-vulnerable LMIC populations hardest.
<blockquote>Financial services are an indispensable tool to help prepare for climate-related shocks and recover.</blockquote>
CFI recognizes that climate change is ultimately an issue requiring long-term systemic changes to entrenched patterns of production and consumption. In the short term, however, financial services are an indispensable tool to help low-income vulnerable people prepare for climate-related shocks and recover from them when they happen. Our work in this theme will focus on understanding what those people need and the constraints they face, uncovering product innovations that can help, and then pilot testing such innovations and scaling-up lessons learned.
<h2>Women’s Financial Inclusion</h2>
Around the world, in many different geographies and socioeconomic contexts, women occupy a “last in, first out” position of vulnerability. The fall-out from the pandemic has made this abundantly clear. Whether it is a workplace where the more recently hired woman is let go before the more senior man, or a financial system that only prioritizes women’s needs when times are good, women’s economic inclusion is seen as a nice-to-have rather than a must-have. Women’s financial inclusion is powerfully shaped by broader societal norms, the unspoken assumptions and values governing men’s and women’s roles. CFI believes that efforts that focus solely on process fixes or product design will not succeed in women’s financial inclusion unless those efforts also seek to transform, rather than merely acknowledge, the underlying norms.

Our work in this area will accordingly include an intensive focus on research into successful norms-transformative initiatives, and how those might be scaled up. We will also work to improve the digital and financial capability of subsegments of women customers, and to influence the policy environment for women’s financial inclusion.
<h2>Data Risks and Opportunities</h2>
The pace of change created by the technology revolution is much faster than law, policy, or social mores can match. Although data privacy and protection regimes have begun to emerge, especially in wealthy countries, data by its nature is universal. To date, there is no universal framework setting forth who even owns personal data, much less governing how it can be used, by whom, and under which circumstances. The COVID-19 pandemic has provided a powerful illustration of both the risks and the opportunities of digitized data. The public health benefits of documenting and following diagnosed COVID-19 cases, and of tracing patients’ contacts, are obvious. But the risks to patients of stigmatizing, discrimination (whether of access to insurance, housing, employment, or otherwise), and other abuses are also very real.

Similarly, in financial services, data is the key that can unlock access to a full range of personalized, effective products that can help low-income people achieve their goals. The risk is that many LMICs have no effective consumer data protection regimes in place and that even where those exist, people with low levels of digital and financial sophistication may, in their eagerness to receive financial services, sign away their rights without even fully understanding them.
<blockquote>CFI will focus on means to bring transparency to data practices in DFS.</blockquote>
CFI’s work in this area will focus on means to bring transparency to the data practices of digital financial service (DFS) providers. We will also study how financial service providers use algorithms, which can be biased against already-underserved populations, in automated decision-making. We will monitor emerging frameworks around the world to document what does and does not work to advance financial inclusion while safeguarding data privacy, portability, and other consumer rights.
<h2>Consumer Protection in the Digital Economy</h2>
As the inclusive finance landscape evolves, so too must the approaches to consumer protection. Social platforms, ecommerce giants, fintechs, and pay-as-you-go providers are all relatively recent entrants into the field, and this means a multi-pronged approach is necessary to ensure safe practices are the norm. This is especially true since many of these business models fall beyond the scope of existing banking regulation. Consumer protection is an evergreen challenge, and one where CFI has long been active.
<blockquote>Consumer protection is an evergreen challenge.</blockquote>
We plan to devote intensive study to the practice of government-to-person (G2P) digital cash transfers, since these are often the on-ramp to digital financial services for low-income populations. We want to understand the risks that digitized G2P transfers present and how governments are mitigating those risks. We also want to document innovations around redress of grievances, financial capability-building add-on services, resolution of connectivity issues, and other relevant lessons learned.

In addition, CFI will partner with regulators and supervisors to test new technologies, such as chatbots or algorithmic audit tools, that can allow supervisors to be in direct dialogue with consumers, without consumer voices being mediated via the financial service providers. Such a dialogue can ultimately improve customers’ experience with financial services and democratize the financial sector by involving customers in the development of financial sector policies. To date, much of the recent work in regulatory technology (RegTech) and supervisory technology (SupTech) has prioritized the data reporting and compliance, but CFI believes its potential for advancing consumer protection has been underappreciated.
<h2>Conclusion</h2>
CFI developed its three-year strategic plan by weighing the needs of the inclusive finance industry against what we see as our own comparative advantages. We recognize that the four thematic priorities we intend to pursue are not an exhaustive list of everything that needs to happen to ensure positive outcomes for low-income people, and we also recognize that other individuals and organizations are doing excellent work in the areas we intend to pursue. We look forward to collaborating with all stakeholders who share the vision of a world where all people are able to equitably participate in the economy and are able to use financial tools to improve their lives and to prosper.

We hope you will participate in the rest of Financial Inclusion Week, which is packed with amazing speakers, events and activities. And, we want to hear from you. Please participate and tell us what you think about CFI’s thematic priorities.

Reflecting on the Past and Charting a New Direction

Over the past year, I’ve been paying close attention to how financial service providers (FSPs) are using technology to optimize their <a href="https://www.findevgateway.org/topics/agent-networks">agent network</a> models. Why? Because technology offers them an opportunity to make agent models more efficient and productive distribution channels. This isn't a surprise.

The unfortunate reality, however, is that many <a href="https://www.findevgateway.org/topics/agent-networks">agent networks</a> still leave much to be desired. Long lines, cash shortages and manual processes are just a few encumbering problems.

In our recent report, <a href="https://www.centerforfinancialinclusion.org/leveraging-technologies-to-improve-the-quality-and-maximize-the-productivity-of-agent-models">Leveraging Technologies to Improve the Quality and Maximize the Productivity of Agent Models</a>, Amin Khairy of the <a href="https://www.iif.com/">Institute of International Finance</a> and I explain how institutions can benefit from technology solutions to optimize their agent models. We interviewed 23 representatives of financial institutions, fintechs, and other entities to explore the role of technological innovation in improving the quality and maximizing the productivity of agent networks. This the final report from our six-part series on how FSPs are innovating to reach the base of the pyramid, <a href="https://www.centerforfinancialinclusion.org/program_teams/mainstreaming-financial-inclusion">Mainstreaming Financial Inclusion: Best Practices</a>, in partnership with <a href="https://www.metlife.com/corporate-responsibility/metlife-foundation/">MetLife Foundation</a>.
<h2>The Storytelling Approach</h2>
I love conducting qualitative research, but I also got to explore a different approach in this report: storytelling. We decided to employ this approach to illustrate commonly cited challenges and bring to life the three main stakeholder groups in agent transactions: financial institution representatives, agents, and customers. Teresa, a senior manager at the fictitious Sahil Bank; Amar, a Mumbai shopkeeper eager to add Sahil’s agent banking services to his offerings; and Manisha, a seamstress looking to try out money transfers at an agent’s shop, are fictitious characters with vastly different backgrounds but a common interest in making agent networks work. The narratives we use to tell their stories are juxtaposed with real-world scenarios of how technological integration and innovation has served to improve and streamline processes within agent networks.

We chose to channel our creativity in order to highlight the dynamic role that humans have in contributing to the healthy functioning of FSPs in developing markets.

Take, for example, how <a href="https://www.bai.org/banking-strategies/article-detail/bank-branches-coming-to-a-cafe">several commercial banks</a> in developed markets are experimenting with converting branches into consumer hangouts – for example, coffee shops – in response to the tremendous uptake of online banking. This new setup repositions tellers as bank ambassadors. We see them stepping out from behind the counter to directly engage with customers by leading money management sessions and other non-financial activities. In many markets, <a href="https://www.centerforfinancialinclusion.org/how-artoo-helped-ujjivan-unlock-the-power-of-data">fintech platforms</a> are obviating the need for traditional loan officers to do time-intensive calculations or assess the risk of prospective borrowers. Today’s loan officers now have increasing time to provide in-depth support to their customers.
<blockquote>Banks as "customer hangouts"  positions tellers as bank ambassadors.</blockquote>
We also consider how the agent model will evolve over the long-term in light of the diminishing role of cash as a payment form and an increasing readiness of institutions to embrace digital transformation.

We hope you enjoy stepping into the shoes of our characters. And we hope, no matter if you’re a financial institution, researcher, or just someone with a general interest in agent networks and financial service operations, that you benefit from this report.

Telling a Human Story of Tech in Agent Networks

Picture this scene: hundreds of people cram into a financial service provider’s storefront, arriving seemingly out of nowhere, mobile phones in hand. They act excited, as if they are about to attend a dance party. Curious passersby stop to see what the buzz is about.

This technique, which organizers call a flash mob, is one innovative approach for generating sign-ups and interest in a new product aimed at underserved clients. The flash mob attracts people otherwise hard to reach to FINCA Pakistan’s mobile service, Sim Sim.

Creative approaches, powered digitally, are transforming the customer experience – hopefully for the better. Digital processes can dramatically increase convenience, speed and variety of the services available to the previously unserved. But digital products and processes succeed only with good design – and with the strategic use of human touch.

In our recent report, <a href="https://www.centerforfinancialinclusion.org/charting-the-customer-journey-in-the-digital-age">Charting the Customer Journey in the Digital Age</a> , Amin Khairy of the <a href="https://www.iif.com/">Institute of International Finance</a> and I explain how mainstream financial institutions create effective digital customer journeys for underserved clients. With support from <a href="https://www.metlife.com/corporate-responsibility/metlife-foundation/">MetLife Foundation</a> and CFI’s founding partner, <a href="https://www.credit-suisse.com/us/en.html">Credit Suisse</a>, this report explores how the three main phases of the customer journey evolve through digital transformation and provides examples of how innovative financial institutions are creatively addressing challenges for emerging customers. It’s the penultimate report from our two-year partnership, <a href="https://www.centerforfinancialinclusion.org/program_teams/mainstreaming-financial-inclusion">Mainstreaming Financial Inclusion: Best Practices</a>.

Creative Solutions to Digital Mainstreaming

<h1>Introduction</h1>
Financial services are going digital. Digitization will change the way financial institutions organize themselves to relate to their customers, and it will dramatically change how customers experience financial services. These changes will be especially profound for traditionally underserved customers who are the targets of financial inclusion efforts.

The good news is that digital delivery models make it possible—and profitable—for banks to serve many people who were previously excluded because their incomes were too low or their locations too remote to reach through high-touch models. The high operational costs associated with physical buildings and staffing only makes sense if the branches break even and provide a satisfactory return within an acceptable timeframe. Low-income customers with thin credit histories borrowing small amounts of money have long presented a challenge to the analog way of doing business. Thus, serving the underbanked customer segment through digital channels presents an opportunity—by lowering operational costs and increasing customer engagement—to transform financial inclusion into a sustainable business. Additionally, digitization allows thin-file customers to have their creditworthiness assessed through alternative scoring models that incorporate other types of behavioral records.

When done effectively, the returns to digital transformation can be significant. For example, DBS Bank, a financial services group in Asia named <a href="https://www.euromoney.com/article/b18k8wtzv7v23d/world39s-best-digital-bank-2018-dbs">“world’s best digital bank” by Euromoney in 2018</a>, has seen digitization contribute to rising shareholder value. DBS customers who process more than half their transactions remotely bring in more revenue than traditional customers. <a href="https://www.economist.com/finance-and-economics/2018/03/08/how-digitisation-is-paying-for-dbs">Two-thirds of DBS’s gross profit currently comes from digital customers</a>. A DBS staff member told us, “The cost-to-income ratio for digital customers is just 34 percent, compared to 55 percent for traditional customers. The return on equity from digital customers is, impressively, at 27 percent.” Numbers such as these make it attractive to reach new customer segments. But if the transition from face-to-face to digital is to succeed, financial institutions will need to understand and address the special characteristics of these segments and get the digital customer journey right—for both their own operations and the customers’ experience.
<h2>Walking vs. Flying</h2>
For customers, the difference between a traditional and a digitized customer journey can be as dramatic as the difference between walking and flying in an airplane. The traditional customer journey includes traveling to branches to talk with a customer service representative, assembling pages of paper documents to meet KYC requirements, and then waiting for days to receive decisions. With digitization, customers can discover and apply for products on their phones and receive funds into mobile wallets, all in a matter of minutes.
<blockquote>The difference between a traditional and digitized customer journey can be as dramatic as the difference between walking and flying in an airplane.</blockquote>
In order to produce such a streamlined journey, financial institutions must address technical and operational challenges and regulatory issues. And, as we discuss in this report, the journey they construct needs to work well for customers—especially when those customers are new to their services. Digitization can bring enormous gains in speed and convenience to customers, but it can also create gaps as it shifts from familiar, person-to-person interactions to interactions that take place on a digital device.

Charting the Customer Journey in the Digital Age

Although financial services are rapidly going digital, some customers, especially those new to the formal financial system or with lower levels of education, may still desire to interface with people—to build trust, to troubleshoot problems, and to receive advice on their financial lives. CFI Fellow Misha Sharma is exploring the question of effective human touch in digital financial services as India transitions to a digital age.

Webinar: Agents of Change: The Human Touch India

CFI Fellow <a href="/programs-a-projects/cfi-fellows-program/782#AlexisBio">Alexis Beggs Olsen</a> investigates Kenya’s digital financial services (DFS) landscape, the reasons why customers still desire human touch, and the innovative ways in which FSPs integrate human interfaces into their digital product offerings to better serve customers. In <em>Uniting Tech and Touch: Why Centaur Products Are Better for Consumers and Providers</em>, <em>Evidence from Kenya</em>, Alexis takes us along the customer journeys of Kenyan DFS users to illuminate the circumstances where they prefer human touch, the variations in customer preferences across demographic characteristics, and the particular pain points of low-touch digital loans, savings and insurance products.

Alexis finds that although Kenyans are comfortable conducting transactions digitally, other key aspects of the financial service customer journey are not adequately handled by digital means alone. Based on 104 in-depth qualitative interviews, Alexis discovers that Kenyans particularly want human touch for three reasons:

1. To verify the legitimacy of the FSP
2. To fully understand the product
3. To resolve problems or complaints

To address these needs, Alexis recommends “centaur” solutions—ones that combine human and digital interfaces—to provide valuable human interaction to customers where it is needed most, while improving customer acquisition and retention in the process. FSPs, their customers, and the financial inclusion community can benefit from leveraging centaur solutions that combine the best of tech and touch to convert customers who are currently uncomfortable with these digital interfaces into regular digital financial services users.

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<img class="alignnone size-large wp-image-29309" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2017/04/Technology-Inequality-Inforgraphic-330x1024.png" alt="" width="330" height="1024" />

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Uniting Tech and Touch: Why Centaur Products Are Better for Consumers and Providers - Evidence from Kenya

Mbugua, owner of a restaurant, a butchery, and a dry goods store in Nairobi, Kenya has actively used financial services to grow his businesses from the meager beginnings of a small stall selling boiled cow heads. He is currently juggling four digital loans and two microfinance loans. Whenever possible, Mbugua prefers to interact with his financers digitally to save time. Yet, like most of the Kenyans my research associate and I spoke with as part of our <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program">CFI Fellows</a> research project, Mbugua considers in-person interaction to be critical at certain stages. “Face-to-face is tiresome. There’s a time factor,” he said. “But it’s 100 percent perfect. Your questions will be exhausted. And you can’t negotiate with the phone.”

<a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/782">Our research</a> seeks to understand when and why customers prefer human over digital interfaces across their financial services customer journeys – and vice versa. We focused on value-added financial services, including loans, savings, and insurance, and we chose Kenya because of the country’s deep penetration and market maturity of mobile phone-based financial services. We conducted in-depth qualitative interviews with 104 respondents.

We discovered that a “centaur” solution—one that unites the strengths of both tech and human touch—offers the most promise for both customers and financial service providers (FSPs) targeting the base of the pyramid.

Digital interfaces outperform human interaction in a number of areas: digital services are often more convenient (once you learn how to use them), more predictable and consistent (with the exception of loan approvals and rejections, which are often opaque), and less stressful for customers during collections. However, most Kenyans – even those who already use low-touch digital products – prefer to interact with a person face-to-face at key stages in their customer journey. We found that while Kenyans are very comfortable conducting <em>transactions </em>digitally, other key aspects of the financial service customer journey are not adequately handled by digital means alone.

Like most of our respondents, Mbugua wants to interact directly with a person to accomplish three critical tasks:

<strong>1. To verify the legitimacy of the provider</strong>

Eunice, who owns a clothing boutique in Nairobi, explained, “When it comes to smaller amounts, the smartphone has taken it all. But for larger amounts I will not trust [the phone]. Money is sensitive. There is a lot of personal detail. If it is not done face-to-face, there will somehow be fear.”

<strong>2. To fully understand the product</strong>

Nearly everyone (90 percent) who uses a feature phone preferred to get product information from a person. Perhaps this is no surprise, but so did 60 percent of smartphone users. William, a farmer and produce seller in rural Western Province explained, “I would go [in person] to receive hard information first. It has a thinner margin of error. And I could ask questions about the hidden specifics of the product.”

<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/figure-12.png"><img class="aligncenter wp-image-24639" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/figure-12.png" alt="" width="540" height="580" /></a>

<strong>3. To resolve problems or complaints</strong>

Nine out of 10 rural dwellers preferred to resolve problems face-to-face and so did nearly as many urbanites. “When it comes to money matters, be there,” advised Leah, an owner of a plumbing part retailer in Nairobi. When asked which interface she preferred when needing to solve a problem, Leah said, “I’d rather be there and then follow up with a phone call. There are things you just don’t do over the phone. You can forget about a phone call. But you can’t forget face-to-face.” When asked the same question, Emmanuel, a private school founder and principal in rural Kiambu County, said, “With the bank people I visit face-to-face, you can read the feelings. On the phone I can’t see. Face-to-face it’s easier to build trust.”

<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/figure-9.png"><img class="aligncenter wp-image-24641" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/figure-9.png" alt="" width="330" height="559" /></a>Through face-to-face interaction, FSP staff can explain products in a way that puts customers at ease, encourage them to ask all their questions, and enable them to leave the encounter confident in their ability to use the product. FSP staff can not only offer assurance and empathy, but also ascertain with greater clarity the financial context of the customer—determining, for instance, whether or not a repeat loan is a result of a growing business or overindebtedness. In this way, human interaction can also reduce risk for the FSP.

However, at the same time, human interaction can also be significantly flawed. Six out of 104 respondents had lost savings due to fraud, and several others had experienced or witnessed harsh in-person collections efforts. Here, digital interfaces could be advantageous: minimizing opportunities for unethical or inappropriate staff behavior, informing customers of account status, communicating about consumer rights and redressal mechanisms, and soliciting feedback. And by digitizing contextual customer data, FSPs gain not only better control of their business but also a valuable resource through which to differentiate themselves from competitors.

[caption id="attachment_24645" align="aligncenter" width="600"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/figure-11.png"><img class="wp-image-24645" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/figure-11.png" alt="" width="600" height="579" /></a> (click to enlarge)[/caption]

Using these insights, FSPs can build “centaur” products that offer a savvy fusion of human and tech-based interaction, to attract and retain more customers and better serve their financial needs.

<em>For more insights, read the new report, <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/782"><u>Uniting Tech and Touch: Why Centaur Products Are Better for Consumers and Providers, Evidence from Kenya</u></a>.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/07/06/what-does-effective-human-touch-look-like-in-kenyas-digital-age/">What Does Effective Human Touch Look Like in Kenya's Digital Age?</a>

<a href="https://cfi-blog.org/2017/02/27/kopo-kopo-building-on-the-rails-of-mobile-money-in-kenya/">Kopo Kopo: Building on the Rails of Mobile Money in Kenya</a>

<a href="https://cfi-blog.org/2017/10/03/how-mobile-money-is-closing-the-agricultural-finance-gap-for-women-in-kenya/">How Mobile Money Is Closing the Agricultural Finance Gap for Women in Kenya</a>

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Watch Out Unicorns: Centaurs Are the Future of Financial Inclusion

CFI Fellow Alexis Beggs Olsen investigates Kenya’s digital financial services (DFS) landscape, the reasons why customers still desire human touch, and the innovative ways in which FSPs integrate human interfaces into their digital product offerings to better serve customers. In Uniting Tech and Touch: Why Centaur Products Are Better for Consumers and Providers, Evidence from Kenya, Alexis takes us along the customer journeys of Kenyan DFS users to illuminate the circumstances where they prefer human touch, the variations in customer preferences across demographic characteristics, and the particular pain points of low-touch digital loans, savings and insurance products.

Alexis finds that although Kenyans are comfortable conducting transactions digitally, other key aspects of the financial service customer journey are not adequately handled by digital means alone.

Webinar: Uniting Tech and Touch Kenya

Building the right channels to serve the financially excluded is one of the most important (and daunting) challenges facing senior executives, boards and investors in the financial inclusion space. They are not alone. As digital technology disrupts a wide swath of industries, leading global consulting firms have engaged in research to understand how best to help companies configure and prioritize digital and human-based customer engagement channels. While affirming the importance of digital innovations and ongoing investment therein, Accenture also sees a need for curbed enthusiasm. “Customers aren’t as predictable as we like to think,” cautions <a href="https://www.accenture.com/_acnmedia/PDF-10/Accenture-Strategy-GCPR-Digital-Profitabilty.pdf">a recent Accenture Strategy paper</a>. “Profitability resides in the digital / physical blur.” Verint also <a href="http://www.verint.com/digital-tipping-point/">commissioned research</a> in twelve countries that found customers want “a human element” to remain part of customer service and that “those who receive more ‘human’ or traditional customer service display more positive behaviors toward brands.”

But what about financial inclusion, where digital interfaces aren’t a luxury, but rather a model that drives financial inclusion, particularly in sub-Saharan Africa? As part of the <a href="http://www.bit.ly/CFI-Fellows">CFI Fellows Program</a>, I have been exploring the role of effective human touch in Kenya’s digital age. Ten years after the advent of M-Pesa, Kenya is arguably inclusive digital finance’s most mature market and one of its ongoing innovation epicenters. More than 20 providers offer digital loans, and the market has witnessed a number of advances in savings and insurance.

But even in Kenya, fintechs as well as traditional banks and microfinance institutions adopting digital technology strain to provide the right mix of speed, convenience, reliability, and price. And the most client-centric of these lenders are also thinking carefully about the role of effective human touch in developing strong relationships with customers based on mutual gain and trust.

As part of this research, my associate, Veronicah Viata, and I have spoken with eight service providers and about 100 customers to explore questions including:
<ul>
 	<li>How are financial services providers integrating human touch into digital products? Is it improving client outcomes?</li>
 	<li>Where is human touch critical throughout the customer journey?</li>
 	<li>Who within the target population will want and need that human touch more than others?</li>
 	<li>What are these customers trying to accomplish at moments when they desire human contact?</li>
 	<li>How should financial service providers build this human contact into their process?</li>
</ul>
We knocked on quite a few doors, and are excited about the insights and openness of our participating providers. They span the spectrum from low touch to high touch, and include Tala, MyBucks (Haraka), <a href="https://cfi-blog.org/2016/10/25/building-trust-and-growing-digital-financial-services-a-look-at-jumo/">Jumo</a> (Kopa Cash), 4G Capital, Musoni, Vision Fund, as well as insurers including ACRE Africa, Britam, and APA.

In working with each provider, we’ve spoken first with the front-line thinkers—senior leaders, operations and customer experience managers, and (if applicable) field staff— who live and breathe these questions every day. Then we’ve asked each provider to put us in contact with eight of their customers—four active customers and four former or inactive customers.

We’ve also conducted about 40 independent customer interviews to obtain perspectives on a wider range of products and experiences.

The customer conversations have been in-depth qualitative interviews that usually last about 90 minutes. During that time, we’ve scanned customers’ current and past use of loans, savings, and insurance products. We’ve asked what stands out about each provider, usually by asking which animal the product is most like. Customers’ answers have been illuminating, and have included, “a giraffe because he’s up high and he sees all your things there. He knows your business,” “a chameleon because they are always changing,” “an ostrich because they take you far,” and “a cow that doesn’t have milk because I took the loans but they didn’t help.” We’ve also asked when each product was most recently used and (for former or inactive products) the reason the respondent stopped using it.

We’ve then selected one product salient to the research focus and engaged in a customer journey mapping exercise. The concept of a “customer journey” as articulated by (then <a href="https://www.frogdesign.com/sector/social-impact">Frog Design Innovation</a> Specialist) Adam Richardson in <em><a href="https://hbr.org/2010/11/using-customer-journey-maps-to">Harvard Business Review</a></em>, has been a useful lens to examine motivations and barriers in digital financial inclusion.

The discussion has involved asking a series of questions for each stage of the customer journey which interviewers have then illustrated on a series of sticky notes. The drawings have allowed us to delve more deeply into “wow factors” and “pain points,” and the role of human touch in the experience.

We’ve also asked respondents whether they prefer to talk to a human being or to interact directly on their mobile phone for each stage of their customer journey.

The resulting customer journey maps from interviews facilitated by the financial service providers are proprietary to those organizations, and several providers have already begun to make changes based on the findings.

Collectively, the 90 maps and interview responses thus far have generated interesting and, in some cases, surprising insights, which we expect will be fully released in Fall 2017 after the data collection and analysis is complete.

In the meantime, what are some of the initial findings?

Predictably, customers have said they want to talk to a human being when they have a question or concern. However, we’ve been surprised by how many respondents have said that they feel they need to express a concern face-to-face in order for it to be taken seriously. We’ve also been surprised by how many people, at varying levels of education, have wanted to talk to a person face-to-face to “get the full picture” needed to comfortably adopt a product. Many respondents have repeatedly ignored texts or social media ads for products until they spoke to a friend who vouched for the product or explained how to use it.

We’ve been intrigued by the interplay between human touch and speed of service. For customers, speed is king and the provision of credit in mere minutes is clearly a “wow factor.” Traditionally high-touch providers are innovating with credit scoring and digital field applications to provide fast turn arounds—ranging from minutes to 24 hours.

At the same time, customers of digital providers describe cultivating “a relationship” with their lenders, often through continuous borrowing. Similarly, fintechs describe a desire to become “full financial partners” with their customers—and seek to build a relationship based on reliability as well as customer service that recognizes that human relationships can be formed digitally.

As we finalize our last rounds of interviews, we’re excited to delve deeper into these themes and to share our learning with the field. Because the Kenyan market is further down the road than many, it provides a unique view of innovations and pitfalls, as well as the opportunities afforded by a savvy combination of both technology and human touch.

<em>Image credit: <a href="https://www.flickr.com/photos/134037448@N03/30302946185/">WorldRemit Comms via Flickr</a></em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/12/13/introducing-our-2017-cfi-fellows/">Introducing Our 2017 CFI Fellows</a>

<a href="https://cfi-blog.org/2017/06/07/the-competition-authority-of-kenya-opts-for-pricing-transparency/">The Competition of Kenya Opts for Pricing Transparency</a>

<a href="https://cfi-blog.org/2017/02/27/kopo-kopo-building-on-the-rails-of-mobile-money-in-kenya/">Kopo Kopo: Building on the Rails of Mobile Money in Kenya</a>

&nbsp;

What Does Effective Human Touch Look Like in Kenya’s Digital Age?

Julia Arnold

Jayshree Venkatesan

Mayada El-Zoghbi

Jacqueline Foelster

Pablo Anton-Diaz

Amin Khairy

Misha Sharma

Shreya Chatterjee

Alexis Beggs Olsen

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