> Posted by Sonja E. Kelly and Ruben Marquez, CFI and Bancomer
“What’s in a name? That which we call a rose by any other name would smell as sweet.” – Shakespeare
While Juliet’s musings on the essence of her Romeo might be poetic, she is quite wrong. Words determine a great deal about how we think about things—and one word change could change hundreds of thousands of people’s use of financial products.
In Mexico, if you were to ask those at the base of the pyramid whether they save, they would likely tell you no. CFI’s Country Profiles show the Global Findex Data in the figure at right.
When asked whether they had saved any money in the past year, roughly 14 percent of people in the bottom 40 percent of the economy in Mexico answered yes. This same group of people in all upper middle income economies (of which Mexico was a part at the time of the survey) were about twice as likely to say yes to this question.
Does this mean that the poor in Mexico just don’t prioritize savings? Probably not.
In Mexico, there is a difference between the word for “saving” (ahorrar) and the word for “keeping” (guardar). When you ask people at the base of the pyramid whether they “keep” money for the future, they are much more likely to answer yes.
The Findex survey (the source of the above data) may have inadvertently run into this problem in Mexico. The difference between two words could explain the low incidence of saving reported at the base of the pyramid compared to countries with a similar income level.
When we take this language difference into account, there are implications for institutional knowledge, financial education, and product marketing.
On this front, Bancomer in Mexico has found that there is a reorientation to be done within the bank itself—while Bancomer is listening to clients, for listening to be effective it must be listening for the right language. Within the bank, integrating the vernacular of low-income clients has led to new views on this income segment. Past market research has included the question of whether potential clients are saving—with dismal results. With the recognition that this population is saving, but just calling it something else, there is a different perception of the kinds of products that customers might be interested in.
By listening in the right ways, Bancomer has realized that not only are people at the base of the pyramid saving by “keeping” money for the future, they are also saving by investing in commodities. For example, in Mexico it is quite common for low-income families to buy construction material, even when they have no immediate home-improvement plans. This is an inflation-proof savings strategy, as materials can be sold in the future at current market prices.
When it comes to working with clients, financial education must involve affirming that “keeping” money is the same as “saving” and “buying raw materials” is a form of both saving and investment. If low-income customers were to recognize this, it would significantly change the way they approach products offered at any institution. Imagine a prospective customer seeing a “money-keeping account” and thinking “Oh, that’s what I need. It will help me keep my money safe.”
Finally, from the bank’s perspective, how products are marketed is critical. Bancomer already has an arsenal of marketing around certain products. The promotion above, which offers a free pressure cooker if you open a savings account, might not be seen as relevant to someone at the base of the pyramid because it uses “ahorrar” instead of “guardar.” The ad may be sending a message from the bank to low-income consumers that the bank is not for them, keeping the bank from a potential market segment.
As we move forward with our understanding of people at the base of the pyramid, and the ways financial services can empower them to improve their lives, we must remember that the words we use—and the words we hear—are not arbitrary. They are integral to moving financial inclusion forward.
* “Poorer” is defined as those in the bottom 40 percent of the economy, and “richer” is defined as those in the top 60 percent. Figure includes both formal and informal savings mechanisms.
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