Overview
The large number of underbanked and underinsured people across the African continent continues to be a major focus for global donor organisations. We have been involved in various projects to unpack the attitudinal and behavioural drivers of this phenomenon – sometimes also in partnership with traditional banks or government agencies.
The Challenge
Given the nearly ubiquitous, largely unquestioned nature of banking and insurance services across Europe and the U.S., it is quite fascinating to understand the attitudes of people who don’t see any need for these institutions in their lives. Our enquiries normally start from a point of mapping the financial flows and planning behaviour of people who have found alternative ways of managing their money — ways that are mostly invisible to the traditional banking industry.
Our Approach
Given the large body of previous work in this area we would normally start with desk research and selected subject matter expert interviews before conducting deep dive ethnographic research. Another tool that has been very helpful is that of financial diaries where we encourage people to keep track of various financial touchpoints during a typical day/week/month. We also find co-creation sessions with consumers in their natural environment to be very helpful in terms of the packaging and messaging of financial service offerings to try and ensure that they resonate with the group in question. This will then normally lead to some product or service prototypes e.g. financial literacy campaigns that can be tested and rolled out with various stakeholders or partners in the ecosystem.
Key Insight
Apart from various cultural or religious reservations towards banking (e.g. high interest rates), there is an inherent tension in making the financial lives of underserved banking customers (e.g. in the so-called informal economy) more visible as many of them fear that the often untrustworthy state will intervene too much in their lives. Another interesting tension is between the attempts of banks vs. insurers that are trying to incentivise different types of behaviour: On the one hand lending products for consumption versus long-term financial planning and savings behaviour on the other hand. There is also another tension between the traditional financial system and the practices of underbanked populations on the African continent: Most people are managing their finances in groups (e.g. families, savings groups) and most banks can only lend to individuals based on their identity document and individualised credit scoring.
The Outcome
In our experience it has been successful to start with financial literacy programs through trusted intermediaries (e.g. savings group leaders, church groups) in order to improve the understanding of financial behaviours. Another good entry point is through the mechanism of insurance as it guards against the risks of everyday life (e.g. theft, fire, sickness) and as such builds more basic trust in the financial system through the rather familiar mutual mechanism. Another big area of attention should be around messaging and customer experience as the current banking touchpoints are quite exclusively designed.