Can you help me find some positive deviants?

I guess I should explain the term first. I’m not talking about an optimistic misfit, or an affirming nonconformist, or a heavy metal band with uplifting lyrics. Instead I’m using one of <a href="https://positivedeviance.org/">my favorite terms</a> from behavioral science. Positive deviants are individuals or groups who find better solutions to problems than their peers, without having more resources or facing easier challenges than others.

A positive deviant is someone who succeeds when others are failing, a person who finds a way out when everyone else is stuck. The purpose of studying these deviations from the norm is to learn from the strategies of the positive deviants to see if others can adopt them and get similar results.

I recently was selected as a <a href="https://www.centerforfinancialinclusion.org/2019-cfi-fellows">CFI Research Fellow</a> to study positive deviance in the banking industry. Specifically I will be looking at banks that provide accounts for clients receiving social welfare payments from the government (G2P payments), seeking to find banks that invest in serving this client base.

In countries around the world, governments distribute regular cash payments to those living below the poverty line. Sometimes these payments come with conditions, like keeping the children in school and receiving regular medical checkups. Sometimes they come as part of a public works project. And sometimes they have no conditions at all.

<a href="https://publications.iadb.org/publications/english/document/How-Conditional-Cash-Transfers-Work.pdf">Studies</a> have shown that these payments, even when very small (US $20 to $50 per quarter), can help families move out of poverty by stabilizing incomes. In addition, these payments can <a href="http://www.fao.org/3/a-i5157e.pdf">reduce the intergenerational transfer of poverty</a> by increasing the chances that parents can afford to send their children to school so that they may have better job opportunities than was previously possible.

Years ago, governments made these payments in cash. That’s right, a big truck loaded with cash would pull up to a local government office and drop off a bundle of bills. Local officials would distribute this cash to those on the government social welfare rolls. As you can imagine, much of this money never made it to the right people.

Today, governments use a quicker and less leaky method. They set up bank accounts for each beneficiary and deposit the money directly in their account. Now, in most cases, these accounts serve as a mailbox for those receiving the payments—as soon as the money comes in, its owner will go to the bank or an ATM and withdraw the full amount.
<blockquote>Why don’t recipients of social welfare payments keep money in the bank?</blockquote>
Why don’t recipients keep any money in the bank? Research by Guy Stuart of Microfinance Opportunities, and a CFI Fellow, looked at this question from the demand side and <a href="https://www.centerforfinancialinclusion.org/government-to-person-transfers">found</a> that the people receiving these payments:
<ul>
 	<li>Don’t trust the banks – Why should they leave their money with rich people they don’t know when they can keep it at home?</li>
 	<li>Don’t know about other products and services the banks have that might be useful to them.</li>
 	<li>Don’t see any benefit to leaving money in their account – especially when getting the money out requires a long walk to a bank branch or ATM.</li>
</ul>
<a href="https://www.centerforfinancialinclusion.org/bio/larry-reed">My research</a> will look at the supply side of this challenge. I can make a business case for why banks should invest in this customer base as part of a long-term strategy for building profits. It goes like this:
<ul>
 	<li>Banks accounts tend to be very "sticky." (A UK <a href="https://www.theguardian.com/money/2013/sep/07/switching-banks-seven-day">study</a> that found that people there changed spouses more frequently than checking accounts.)</li>
 	<li>Governments disburse social payments to large numbers of people, essentially handing over a ready-made client base.</li>
 	<li>Banks that offer products and serve these clients well will earn their loyalty.</li>
 	<li>Over time, many of these people will move out of poverty and have <a href="https://www.womensworldbanking.org/insights-and-impact/women-mexico-digital-g2p-financial-inclusion/">more active accounts and larger balances</a>.</li>
 	<li>This gives the banks that offer these accounts a chance to acquire large numbers of customers long before their competitors become interested.</li>
</ul>
<h2>A Different Perspective on G2P Payment Customers</h2>
Unfortunately, most banks do not see it this way. Since the money does not stay in the bank very long, they don’t see a way to make money on these accounts. They will set them up if the government will pay the cost of operating them, but they don’t want to invest resources into this customer base. This means that they don’t offer the types of products that meet the needs of these customers and they don’t take the time to help their customers learn how to use their accounts. Lack of <a href="https://strategiccfo.com/customer-profitability/">customer profitability</a> becomes a self-fulfilling prophecy.

So, I'm on my search for positive deviants, looking for banks that go against the grain and see these customers as part of their strategy for generating profits over the long term. The key criteria for banks to qualify as positive deviants in this area are:
<ul>
 	<li>Actively pursuing clients receiving social welfare payments from the government</li>
 	<li>Developing products designed for the needs and aspirations of these clients</li>
 	<li>Helping their clients learn how to make the best use of these products</li>
 	<li>Showing results in clients using more banking services over time</li>
</ul>
One of the banks I will be visiting is BHD Leon Bank in the Dominican Republic. They have <a href="https://www.povertyactionlab.org/evaluation/leveraging-government-transfers-offer-low-risk-microcredit-dominican-republic">invested in serving people receiving social payments</a> through Progresando con Solidaridad (PROSOLI), the government’s primary anti-poverty program. PROSOLI organizes its payment recipients into savings groups. BHD Leon provides savings accounts for these recipients, with debit cards for the account holders. BHD Leon also provides accounts a range of financial services to the owners of <em>colmados</em>, the small convenience stores where most people shop. It has set these stores up as banking agents, so those receiving G2P payments can use their debit cards to purchase food and supplies while also making their deposit for their savings group. This drives more traffic to those stores that bank with BHD Leon. By seeing the G2P payment recipients as part of a larger financial ecosystem which includes savings groups and convenience stores, BHD Leon has found a way to provide neighborhood service to the PROSOLI recipients while also expanding its business with the owners of neighborhood stores.

So how about it, have you come across any banks that deviate from the norm in this way? If so, please let me know in the comments below.

Thanks for your help.

<em>Have a listen to the <a href="https://www.centerforfinancialinclusion.org/webinar-meet-the-2019-cfi-research-fellows">CFI webinar</a> I recently participated in to learn more!</em>

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