Financial Inclusion InsightsResearching Financial Services for the Poor

February 27, 2015

Photo from Indian village during focus groups. Courtesy of IMRB.

What is financial inclusion?

Financial Inclusion: financially included individuals are those with a bank, non-bank financial institution

or registered mobile money account at an institution offering financial services beyond credit/lending.

More than 50 countries’ governments across Latin America, Africa and Asia have committed to increasing access to financial services via the Maya Declaration.

Image from the Alliance for Financial Inclusion website. www.afi-global.org

Why does financial inclusion matter for people?

Living on <$2.50/day

Cash only transactions

Saving is difficult

Paying bills time consuming, costly

Save50¢/week X 52 weeks

=$26

Through financial inclusion

Cover unexpected expenses

More time for work

More time for family, personal development

Less time, money spent paying bills

Financially excluded people are often Allows them to

Save for marriage, children’s education

Why now? Why measure it?

There are more than 2.7 billion unbanked individuals in the world, 1 billion of

whom own mobile phones.

Formal financial service providers frequently don’t have the financial incentive to

open bank branches that can readily serve these communities.

Mobile banking and mobile money services are an opportunity to provide these services without a brick-and-mortar bank branch.

Data on financial inclusion helps Policy makers to track goals, support objectives with facts

Financial service providers better understand consumers and their needs

• InterMedia is an independent, global consultancy with expertise in research and evaluation, particularly in conflict-affected and hard to reach low- and middle-income countries.

Who is InterMedia?

What research are we doing on financial inclusion?

InterMedia-Gates Research on Financial Services, Financial Inclusion

Haiti Mobile Money

Tracker (HMMT)

Tanzania Mobile Money

Tracker (TMMT)

Financial Inclusion Tracker

Surveys (FITS)

Financial Inclusion Insights

Program (FII)

2011 2011 2012 to present 2013 to present

Provides timely, demand-side data and

practical insights into:

• Digital financial services (DFS)

• Mobile phone usage

• Financial Literacy

• Economic vulnerability

• Financial behaviors

• Track access to and demand for financial services generally, and the uptake and use of DFS specifically;

• Measure adoption and use of DFS among key target groups (females, BOP, rural, unbanked, etc.);

• Identify drivers and barriers to further adoption of DFS;

• Produce actionable, forward-looking insightsto support product and service development and delivery, based on rigorous FII data

Financial Inclusion: financially included individuals are those with a bank, non-bank financial institution

or registered mobile money account at an institution offering financial services beyond credit/lending.

Background on the FII research

“What is the situation on the ground, and what characterizes different

segments of the population?”

“Are there year-on-year changes in individuals’ behaviors, preferences?”

“What do we need to know or do to help individuals be financially stable, responsible and

productive”

“How can our collective knowledge help inform smart strategy for DFS in the

marketplace?”

Key questions we seek to answer for Gates, other stakeholders

FII program countries

Conducting similar research in other countries in the near future

Methodology – what are key components of ours? What alternatives might

we have considered?

Large samples

Long questionnaires

Face-to-face Interviews

Nationally representative

Small samples

Online, telephone, computer-assisted

Not nationally representative

Short questionnaires

FII Methodology Potential Alternatives

What are issues we’ve faced in the field through FII or other research

programs?

Logistics Challenges

• Holidays

• Weather

• Lack of infrastructure

• Subcontractor fraud

• Cultural concerns

• Threats of violence against researchers, team

• Political unrest

• Terrorism/violence

• Corruption

Issues of anti-Western sentiment, threats of violence near training and

interview sites in Northern Nigeria during InterMedia’s 2014 health research. (Photo courtesy of Scott Gardner)

Flooding during India fieldwork made travelling to interview

locations difficult. (Photo courtesy of Gayatri Murthy)

Key findings

Urban men above the poverty line are most

likely to be financially included.

Nigeria

Bank Dominant Mobile Money Dominant Mix of the Two

Tanzania

India

Indonesia

Kenya

Bangladesh

Regardless of poverty level, financially included

individuals are more likely to be able to generate

savings, prepare for financial shocks

Agricultural Sector Workers in Uganda

42%

24%

35%

Own or work on a farm

Employed but not on a farm

Farm workers or owners in Uganda (Shown: percentage adults ages 15+, N=3,000)

34% report their main

job is working on or

owning a farm

What can we learn?

Source: InterMedia Uganda FII Tracker survey (N=3,000, 15+) June-July 2014.

Unemployed

58%

72%

77%

57%

49%

89%

Common financial behaviors of Indonesian youth vs older adults(Shown: Percentage of adults aged 15 to 35, n=2,399; adults over 35, n=3,601)

Adults over 35 Youth (adults 15 to 35 years old)

Pay bills

Purchase airtime

Send/receive remittances

Indonesian Youth

59%

5%

84% 80%

Employment and mobile ownership of men vs women(Shown: Percentage of men, women)

Can access a mobile phone Employed

(in income-generating activity)

Men

(n=3,144)

Women

(n=2,856)

66% of unemployed women rely on

their spouse as the main source of money

for daily expenses. Conversely, just 2%of men are in a similar situation.

Men

(n=3,144)

Women

(n=2,856)

18% of women without access

do not have it because their

spouse does not allow them to.

Pakistani Women

*Youth as defined by the ASEAN Youth Forum.

Source: InterMedia Indonesia FII Tracker survey (N=6,000, 15+) August-November 2014.

Source: InterMedia Pakistan FII Tracker survey (N=6,000, 15+) September-December 2014.

…diving deep into relationships

The most likely

financially

included:

Men in urban

areas, above the

poverty line and

better educated

Employment is

important in

Tanzania, but not

so much in

Uganda and

Kenya

Active registered

mobile money use

Poverty status

PREDICT

Registered

use of formal

full-service FIs

Level of education

Gender

Urbanicity

Employment status

…technical competency…

When controlling for demographics

Active registered

mobile money

use

Diversity of

activities

performed on

a mobile

device

Ability to

perform

activities on a

mobile device

WITHOUT

help

Basic

operations

on a mobile

phonePREDICT PREDICT

Understand-

ing text

messages

(SMS) from

organizations

Frequency

of sending/

receiving

text

messages

(SMS)

…and financial behaviors and literacy

When controlling for demographics and access to a mobile

device

Financial knowledge, skills and behavior

Defined by indexed constructs:

• Financial plans

• Financial behaviors

• Financial numeracy

Predict

Active registered

mobile money

use

How has the FII research been used to push dialogue, change?

• “…I want to look at it from the ‘demand’ perspective – the

characteristics and expectations of the new consumer of financial

access, who is the target of the inclusion strategy. A recent consumer

survey carried out by InterMedia, titled ‘India: Financial Services Use

and Emerging Digital Pathways’, provides a basis for this.”

• “Mobile money and digitized payments have few takers: lack of

awareness and difficult access are the main hurdles.”

• “Research by Microsave, InterMedia and CGap has documented the

prevalence of agents charging unauthorised fees during over the

counter transactions where customers hand over their money to the

agent to transact on their behalf. Female customers also report

reluctance to provide their phone numbers to agents for fear of

harassment.”

~Subir Gokarn, Brookings India

~Live Mint from the Wall Street Journal

~Tanaya Kilara of CGap

via The Guardian’s “14 ways to promote more

responsible financial inclusion”

In the Media

InterMedia’s Gayatri Murthy presenting to central bank and other

stakeholders at Access India Summit 2014.

How can you access the FII data?

•

•

• Caldwell Bishop bishopc@intermedia.org

• Colleen Learch learchc@intermedia.org