Dear Symposium attendees,
Thank you for joining us in Kigali for our fourth annual MasterCard Foundation Symposium on Financial Inclusion. I am pleased to share this report with you, looking back at the highlights of the Symposium.
Universal access to finance can be achieved if disadvantaged people have access to safe, affordable and convenient financial products and services. This can occur only if financial service providers truly understand the complex financial lives of poor people and the contexts in which they live.
The 2016 Symposium focused on insights from behavioural economics to help those in the sector better understand the unique needs of disadvantaged clients. It also focused on strengthening financial service institutions’ operations, primarily through partnerships, to deliver better services to their clients.
Together, we can lead change within our sector. As we work towards the 2020 goal of universal financial inclusion, we need to strengthen our efforts to put clients at the centre of everything we do.
We encourage you to read this report, revisit the sessions that resonated with you and share them with colleagues and others within the sector. We look forward to the next Symposium and hope you will continue to share your thoughts on new ways to advance financial inclusion, keeping clients at the centre of our work.
The Symposium on Financial Inclusion (SoFI2016) brought together more than 300 leaders in the financial inclusion sector to discuss successes, challenges and ways to move financial inclusion forward.
This year’s Symposium built on the concept of client centricity by focusing on how disadvantaged clients make decisions and how strategic partnerships can help organizations serve clients better.
SoFI2016 also provided practical examples to the financial services industry on how to drive client centricity and demonstrate that it is beneficial for both client and institution.
In her opening remarks, Ann Miles, Director of Financial Inclusion at the Foundation, reminded the audience that client centricity has been a central theme of the Symposium over the last four years. She asked attendees to think about how people’s needs evolve as their lives change and as the financial ecosystem changes with them. She emphasized that we need to think about financial services not just for today, but for the next generation.
Below are a number of insights from the Symposium.
The 2016 Symposium built on themes of previous symposia by exploring the mental barriers disadvantaged clients face in making financial decisions.
Behavioural scientist and co-author of Scarcity: Why Having Too Little Means So Much, Eldar Shafir opened the Symposium with a keynote on the benefits of a deep understanding of clients’ lives.
Shafir explored how scarcity – of time or sustenance, for example – can undermine poor clients’ ability to make decisions and solve problems in a way that is in the best interest of their financial lives. Behavioural science can help the sector create behavioural “nudges” so poor clients are more likely and better able to use financial products and services.
“One of the main issues is limited bandwidth,” he said. “We often don’t have enough mental or cognitive capacity to think about our decisions carefully.”
Shafir explained that it is a particular problem for the poor as they juggle numerous challenges in their lives. He said that better support, often in the form of better-designed financial instruments, can enable clients to focus on other aspects of their lives and do better overall.
“When you’re struggling with limited resources, you’re constantly in survival mode,” he said.
He also emphasized that managing delivery of services within the context of people’s lives, both in broad terms and also at the moment they interact with the product or service, is vital for clients.
“Just [having assistance to] fill out a form when my life is complicated makes a big difference,” he said.
In a later session, “Knowing Ourselves and Our Clients Through Behavioural Experiments,” Managing Director at ideas42, Saugato Datta, also emphasized the need to understand the context of people’s lives.
Datta said that the way people react to certain situations, what they value and their behaviour depends on the context of their lives, how various options are framed and what else is happening in their lives.
He also demonstrated the effort it takes to overcome our immediate responses via the Stroop Test.
“It's difficult for us to override our automatic way of thinking and do what our deliberative or more considered mind would like us to do,” Datta said. “You need to exert a certain amount of mental and cognitive resources to actually overcome your instinct.”
The panel on "Client Protection" on day one of the Symposium looked at how we can ensure that clients are protected as part of client centricity.
Moderated by CGAP’s Kate McKee, the panel consisted of Celine Awuor from the Consumer Information Network, Kenya; Madalitso Chamba from the Reserve Bank of Malawi; and Nejira Nalić from MI-BOSPO in Bosnia.
The panel discussed challenges in client protection that might unintentionally result in exclusion, such as the lack of information disclosure, like Terms and Conditions, when a client is signing a loan contract.
Panelists also discussed how understanding regulations in the context of clients’ lives can lead to improvements in product delivery.
Nalić discussed how MI-BOSPO works with women as well as their husbands in order to meet the regulatory requirements for proof of income for a loan.
The conversation about ensuring that women are financially included continued during the afternoon keynote on day two of the Symposium.
Group CEO of Kenya Women Holding, Dr. Jennifer Riria, delivered an inspiring address describing both the challenges and opportunities in ensuring women are financially included.
Riria explained that the issues for women in being included haven’t changed significantly over the last 40 years. Issues such as asset ownership and cultural norms among communities mean women are left behind. Riria said there is a particular opportunity for technology to be a disrupter as long as it is tailored to women’s needs.
She described how a phone is often a man’s property within a household, so women can lack access. She encouraged the sector to empower women by giving them a phone as a loan “and teach her how to use it.”
“Financial exclusion is financial injustice!” she said.
The importance of data in understanding client behaviour was emphasized during the CNBC Africa live television session, “Deploying Data to Better Understand Clients.”
The panel, featuring Rose Goslinga from Pula Advisors; Paul Kweheria of KCB Group; Herman Smit from Cenfri; and moderated by CNBC Africa anchor Nozipho Mbanjwa, focused on alternative data sources. One of the key topics discussed was the necessary trade-offs between gathering data from clients, analyzing it and applying insights versus the need for consumer protection and privacy.
Smit noted that “we don’t yet understand what the ultimate benefit to the client can be from using this data. We don’t know what we’re trading off.”
During the first day’s afternoon keynote, “Client Centricity and the Power of Digital Services,” Nick Hughes, Co-Founder and Chief Product Officer of M-KOPA, demonstrated just how powerful the right kind of data can be by detailing how M-KOPA derives customer insights and uses them to offer services.
“Digital is right at the core of what we do at M-KOPA … data can shape the very proposition that you offer the customer,” he said. “In fact, if you don't go in to offer a proposition that's based on real observations and data, you're going to get it wrong.”
Hughes told the audience that using data to build real and deep insights into client behaviour can build trust and allow organizations to deliver better customer service. Hughes used the example of an M-KOPA customer who is a shopkeeper who told them he was only getting two or three hours of light from his lamp every evening instead of the advertised eight. By looking at the data, the M-KOPA customer representative was able to see that the lamp was being used during the day by the shopkeeper’s staff to charge phones as a side business. The shopkeeper started locking the lamp away and his problem was solved.
“We wouldn't have been able to determine that if we didn't have that level of visibility inside the units,” Hughes said.
“Coming up with a scalable model is all about trust in that customer, especially low-income people who only have a small amount of money that's disposable to them,” he said. “You've got to build trust, and data underpins that trust, as well as contact; regular, boots-on-the-ground contact with the customer.”
Data was also a central theme to the panel, “The True Value in Customer Lifetime Value.” The panel featured Chandula Abeywickrema of Banking with the Poor and Kwame Oppong, a DFS consultant. The panel was moderated by Hala Kosyura from the Boston Consulting Group.
Oppong emphasized the role of data in understanding clients and tapping into their needs and numerous points of view over their lifetime.
“You have to understand your customers better, and you can only do that by really harnessing the data that is available to you,” he said. “[Our experience in Ghana] began to tell us what data could do in terms of changing our mindset, making different decisions, and the ultimate results … the fundamental thing is … the need for institutions to rethink and change our orientation as to how we approach customer lifetime value.”
Day two’s panel on “Becoming Client Centric: The Challenges of Change Management” provided two case studies on change management for implementing customer-centric models and positioned the change process as a key operational challenge of financial services delivery.
Moderated by CGAP’s Gerhard Coetzee and Tashmia Ismail from the Gordon Institute of Business Science, the panel was made up of Berniece Hieckmann from Metropolitan Retail; Paul Musoke, from FSD Africa; and Grace Obuya from Commercial Bank of Africa.
Ismail detailed the research that the Gordon Institute conducted into change management within organizations, noting that many change management initiatives fail due to the difficulty in changing an organization’s habits.
Ismail said that they noticed that companies in the early days of a change process tried to navigate change with their old systems, processes and tools, whereas organizations that successfully implemented change were able to do so by breaking down silos to work “cross-functionally” and using new tools such as storytelling to assist them.
Ismail also spoke about the “organizational anxiety” that occurs when implementing change.
“People want to hang on to ways in which they know how to do things,” she said. “When we ask people to change the way they do things, it's seen as a threat … But, if you're able to … empower your frontline staff, if you're able to put the customer first, create these cross-functional work flows, build an empathetic culture and an innovation-driven organization, this is what we hope to see. We hope to see you genuinely put the customer at the centre.”
Hieckmann and Musoke took the audience through their experiences with change management at their respective organizations.
Hieckmann said that they needed a catalyst to create change at Metropolitan Retail, and decided a shift to client centricity was the catalyst to change their strategy. In making that shift, the organization found it needed to alter the way its finance department worked. It needed to be more in line with their customers’ needs. Metropolitan Retail also found that customer service representatives required training on the needs of their clients in order to help those clients to get back on track when “life derails them.”
Musoke shared anecdotes from FSD Africa’s change management process. He told the audience that they provided coaching to employees who were struggling with the organizational changes, which led to the creation of a broader market for coaching in Africa.
The “Leveraging Partnerships to Address Business Priorities” panel on day two focused on examples of financial service providers that have established successful partnerships to drive financial inclusion through client centricity.
Moderated by Mercy Corps’ Leesa Shrader, the panel featured Craig Heintzman from Arifu; Eric Luyangi from Commercial Bank of Africa, Tanzania; Benjamin Makai from Safaricom; and Noel Mazoya from Vodacom.
Mazoya and Makai detailed how a partnership between Vodacom, the Commercial Bank of Africa and Arifu allowed the organizations to understand client behaviours among those who used M-Pesa and leverage their understanding of those behaviours to successfully roll out M-Pawa in Tanzania.
“There has never been a better time to be involved in financial inclusion and partnerships will absolutely get us there,” Mazoya said.
The second half of the panel detailed a partnership between Safaricom and Mercy Corps on DigiFarm, a mobile phone platform to provide information and, eventually, financial services to farmers.
Makai said that through the partnership they were able to test their assumptions of what smallholder farmers wanted and deliver a product that was more relevant and better suited to their needs.
on day two, the symposium was opened by rwandan central bank governor, john rwangombwa, who detailed the country’s journey to almost 90 percent financial inclusion through both formal and informal mechanisms.
Rwangombwa said that through partnerships between the Rwandan government, the National Bank of Rwanda and Access to Finance Rwanda, as well as a commitment to inclusion through national policy and strategy, Rwanda has been able to address low financial literacy levels and low trust in financial institutions.
The Governor also detailed the challenges Rwanda faces in reaching its goal of 100 percent inclusion by 2020. These include the gender gap and levels of poverty, but he said that the government was addressing these challenges through their national financial inclusion strategy.
The following panel, “The Rwanda Experience,” moderated by Olga Morawcynski from The MasterCard Foundation, further showcased Rwanda’s successes in financial inclusion.
The panel consisted of Patrick Buchana of AC Group; Jean Claude Gaga from RSwitch; Eric Rwigamba from the Ministry of Finance and Economic Planning, Rwanda; and Bilal Zia from the World Bank. It further emphasized the cooperative nature of the government’s approach as well as the value of digital financial services to reach 100 percent inclusion.
Zia said Rwanda’s success with financial inclusion has been driven by a “reform-oriented” government and financial inclusion sector. “They know what they want,” he said. “They're committed to creating an innovative financial inclusion sector.”
Ivan Murenzi of Access to Finance Rwanda explained that, since 2012, inclusion in Rwanda has largely been driven by digital finance, with savings groups helping to fill the gaps, particularly in remote areas.
The Symposium debate addressed the motion, “digital finance is the most effective way to build the financial health of low-income clients.”
Moderator Tilman Ehrbeck opened the debate by detailing the two main elements of the motion, effectiveness and financial health. He then polled the audience and found it was evenly divided, with 34.5 percent agreeing with the motion, 34.5 percent disagreeing and 30.9 percent unsure.
Amanda Donahue from Tala and Sabine Mensah of UNCDF MM4P argued that digital finance is the most effective way to build the financial health of low-income clients. Donahue, kicking off the opening remarks, said that the fundamental question in financial inclusion is how to reach the excluded when 85 percent of any given population lives outside rural areas. She said the answer is digitization.
“With digitization, we are able to shape families and communities in ways we haven't done before – by offering choice, control, security, opportunity and improvement in a person's daily life,” she said. “With digitization, we are able to provide access to services never before available to those in rural areas due to logistics and cost.”
Mensah asked the audience to picture “the low-income woman. She has a phone and it has changed her life,” Mensah said. “With one click she has access to a loan to invest back into her business and grow her income for her and her family.”
Stephen Mukweli from Postbank Uganda and William Derban from Fidelity Bank Ghana took the against side. Derban argued that many people have digital accounts but only 20 percent use them on a regular basis. He also said that with reliance on digital, many women remain excluded because they often don’t have access to the household phone as it is usually considered the property of the man.
He explained that offering digital services is still inaccessible to smaller organizations due to cost.
Mukweli brought up the issue of connectivity in rural areas. “It is very difficult,” he said. “You are going to need other channels where you can interact with the community, raise their level of understanding and teach them how to select products that work for them.”
“Until the challenges of literacy levels, connectivity and electrification are addressed, digital financial services will not be an effective way to bring low-income people into the financial sector,” Mukweli said.
After compelling arguments from both sides, and questions and comments from the audience, the lively debate came to a close. A new survey of the audience found that 44 percent disagreed with the motion that digital finance is the most effective way to build the financial health of low-income clients. A total of 42 percent agreed with it, and 13 percent were unsure about how they felt.
The MasterCard Foundation 2016 Clients at the Centre Prize winner was decided and announced at the Symposium.
The US$150,000 prize is awarded to an organization working in financial inclusion in developing countries that best ensures that client centricity is central to their business strategy.
More than 75 organizations in 35 countries applied and were judged on the following criteria:
Symposium attendees heard pitches from the finalists: Fourth Generation Capital (Kenya), a loan company focused on micro-entrepreneurs; Artoo IT Solutions (India), a digital lending business; and Hello Paisa (South Africa), a remittance and mobile money transfer company working with migrant populations.
The audience voted on the most client-centric organization based on the finalists’ pitches, awarding the 2016 Clients at the Centre prize to Hello Paisa.
We would like to thank all those who participated in the 2016 MasterCard Foundation Symposium on Financial Inclusion. We look forward to the 2017 Symposium where we will deepen the understanding of the client experience and continue to put clients at the centre of our work.