(This blog post originally appeared on the Next Billion Financial Innovation web site on November 15, 2016).
For the past four years, The MasterCard Foundation has convened its Symposium on Financial Inclusion, and every year we have helped to move the needle toward greater inclusion for Africa’s poorest people. As many know, the event brings together the most thoughtful individuals working on behalf of financial service providers (FSPs) or other organizations to accelerate access to the products and services that will increase economic activity and create livelihoods in Africa.
This theme of client centricity has been at the heart of each Symposium. This year’s event, held Oct. 20-21 in Kigali, Rwanda, focused specifically on (1) research in the field of behavioural economics that can help inform the development of products and services that will enjoy greater uptake, adoption and retention; and (2) strategic partnerships that will help financial service providers deliver what poor people need, want and expect from them.
The presentations were filled with compelling content that many financial service professionals need in order to return to their corporate teams and advocate for approaches that place clients and client needs at the centre of their product and service offerings.
Princeton University’s Eldar Shafir, professor of psychology and public affairs, opened the Symposium with a discussion of how a scarcity mindset can affect the way that poor clients make financial decisions. Under stress and duress, individuals lack the bandwidth required to make the thoughtful financial decisions that help ensure their own economic well-being long-term.
Saugato Datta, managing director of ideas42, a non-profit think tank that studies behavioural economics, followed with a clever analysis of the audience’s own biases. He deftly demonstrated that just as important as offering the right product or service to a potential client is making that offer at the right time. His insights showed that decision-making isn’t separate from context and circumstance.
Indeed, what we saw throughout the two-day Symposium is that FSPs have adopted some approaches that are more closely tailored to the real needs of underserved clients, including moving away from rigid delivery models to flexible solutions like mobile money and mobile financial services. The high number of mobile phone users in many parts of Africa, particularly East Africa, has made those areas ripe for the introduction of new products and services.
Our Symposium strives, however, to answer not just the question of how to increase access to formal financial products and services, but what needs to be done to help end-users integrate new tools into their daily lives. It is not enough to simply create a new financial tool. The process must be taken to the next logical step – raising awareness of the tool and how it can be used appropriately to improve people’s lives.
What is needed is a mind-shift by financial service providers: a key performance indicator should not only be the initial uptake of a new product or service, but customer lifetime value. How do we achieve that? One word: trust. The client has to trust that the FSP has the customer’s best interests at heart; that the product or service will be beneficial in the long run; and that usage won’t cost more than any reasonable alternative.
Focusing on customer lifetime value is a step in the direction of a solid business case for any financial service provider. Those insights, and those products and services, can be at the heart of the relationship that a service provider has with their clients. More than for a few months or years – there can be lifetime value to both parties in excellent client relationships.
Ultimately, we worked at the Symposium to convey that financial inclusion is not an end in itself, but rather a vehicle to increase the economic resources and resiliency of the most disadvantaged, in turn leading to healthier and more prosperous families, communities and nations.
Ann Miles, Director of Financial Inclusion and Youth Livelihoods, The MasterCard Foundation