Monday, October 24, 2016

Mobile Phones, Insurance and a Funeral: A Closer Look at South Africa’s Mobile Micro-Insurance Market

By IMTFI Fellow Christopher Paek 

About halfway through my fieldwork in Cape Town, South Africa, tragedy befell Goodwill Nxusani for the second time. He had been one of my key sources and interlocutors, connecting me to local residents of his township, Khayelitsha. Earlier that year, his grandmother had passed away and he was generous enough to invite me to her funeral. Just a few months later, he received word that his father-in-law, who lived in the Eastern Cape, had also passed. As the only income-earning household in the immediate family, Goodwill’s family was responsible to pay for the whole funeral.

A traditional Xhosa funeral in Khayelithsa, South Africa (Photo credit: Christopher Paek)    

Funerals are sacred among the Xhosa. Whether poor or rich, families do whatever they can to ensure that their beloved kin are sent off properly in death so that their souls can join with the ancestors. Goodwill’s father-in-law, the male head of household, was to be honored, as customs dictated, with a slaughtered cow. Since he died near Cape Town, transportation would also have to be arranged so that his body could be returned to the Eastern Cape, a common story for many Xhosa who had migrated to the Western Cape in search of work.

Between the transportation costs, the livestock, food, and the funeral ceremony itself, Goodwill faced a price tag of R42,040 ($3,123). If Goodwill had spent every rand he earned, which was R2,000 ($148) per month, it would still take him nearly 2 years to fully pay for the funeral. Fortunately, Goodwill was among the lucky few who had taken out a funeral insurance policy that covered R14,000 ($1,040) of the cost. Still, the death of his father-in-law posed a considerable financial burden on his family. As he broke the bad news, he informed me how he and his wife had gone three days without food in order to pay the first installment on the cow.

Economists and insurance professionals see Goodwill’s story, which is fairly common in communities across South Africa, as a story about financial risk. In their view, the financial toll imposed on a grieving family can be alleviated by finding ways to extend financial services into low-income spaces…no easy feat. Insurance, widely considered a grudge purchase, is a hard sell to even middle-upper class people. How do you convince the poor to spend what little they have on insurance?

South Africa is unique in this regard because demand for micro-insurance (insurance products designed for low-income clients) is high, driven by the cultural imperatives placed on funeral rituals. Of the nearly 62 million lives insured by micro-insurance on the African continent, South Africa alone accounts for more than half of these lives, making it one of the world’s largest micro-insurance markets.

While microfinance enthusiasts might see these numbers with unbridled optimism, there is an important caveat to consider. Micro-insurance sales in South Africa are almost exclusively driven by funeral insurance policies. Other products including life, health, and asset insurance have found no success in the low-income market. Many are hopeful that exposure to high-quality funeral insurance products can serve as a sort of Trojan horse into this market, but this is yet to be seen.

As might be expected, building profitable micro-insurance markets presents a number of challenges, especially the need to achieve scale, since the sustainability of insurance operations relies heavily upon building a sizable risk-pool. Fortunately, the advancement and proliferation of technology across the developing world, particularly mobile phones and its networks, have been a game-changer for many industries including micro-insurance. Since mobile penetration is deep in South Africa (mobile phone subscriptions per capita stand at 1.47, according to the World Bank), insurance companies have partnered with mobile network operators (MNOs) to tap into this expansive distribution network. Insurance products that are sold through and with mobile operators are commonly referred to as mobile insurance, or m-insurance for short.

By overlaying their operations upon a mobile infrastructure, insurance companies have been able to generate efficiency gains across the entire micro-insurance value chain from product design, marketing and sales all the way to enrollment and claims administration. From the MNO perspective, m-insurance is an appealing product insofar as it stimulates average revenue per user (ARPU) and reduces churn, i.e. increased loyalty/retention. And for the end-client, efficiency gains translate into affordable premium rates that compare favorably to traditional micro-insurance products or even their informal sources of insurance coverage. Sensing the market opportunity, insurance companies and MNOs launched several varieties of m-insurance products including (but not limited to):

1. Loyalty Based Models- Clients receives “free” coverage paid for by the MNO if the client behaves in an incentivized way (e.g. more airtime usage, data purchases, etc.)
2. Airtime Deduction Models- Clients can make their premium payments with their airtime balance.
3. “Dumb Pipe” Models- The mobile phone is used only for data capture, enrollment, and communications functions, but not for premium collection/payout.

A non-exhaustive typology of m-insurance products on the South African market    

It would seem, then, that South Africa, with its high demand for micro-insurance, a corporate commitment to m-insurance, and high levels of mobile penetration, would be fertile ground for the wide-scale uptake of mobile-based micro-insurance. But it came as a surprise to many in the industry when the anticipated m-insurance market failed to achieve scale. What happened? And what does this mean for other financial service providers who are looking to break into the low-income market through mobile channels?

The research I conducted in Khayelitsha, a large township outside Cape Town, indicated that a major reason why this market failed to materialize had to do with trust. Even longtime micro-insurance clients who were well familiar with how insurance worked, would not trust using their mobile phones to conduct financial transactions. What drove this mistrust?

To answer this question, it’s important to understand clients’ experience with m-insurance within a much wider context of mistrust in which they live and operate. For township residents, in particular, this environment is typically characterized by high crime rates, lack of formal legal recourse, a lack of consumer advocacy and education, countless experiences with money/phone scams, and high unemployment. Anthropologist Erik Bähre observed how, in the midst of such a volatile environment, township residents would seek out and form “islands of trust” where they felt safe enough to keep/grow their money (i.e. informal financial mutuals).

Filtered through this perspective, it’s useful to see m-insurance products as operating outside the boundaries of these islands of trust. M-insurance was instead interpreted through a lens developed and used over time to guard against fraud. For example, many respondents dismissed m-insurance because of their past experiences dealing with phone and money scams. When they come across so-called “free” insurance coverage (i.e. loyalty-based m-insurance), they are understandably skeptical.

What may have been the most unexpected finding was the extent to which even very poor clients were willing to pay a higher premium to deal with insurance sales staff face to face. When presented with an m-insurance product that had a stronger monetary value than traditional retail insurance, clients often expressed how important it was to them that their premium payments and claims were being administered in an office. An office is tangible, it can’t disappear in the night; it is, for lack of a better phrase, Bähre’s “island of trust.”

A funeral m-insurance product. 
A partnership between an insurance company, Hollard 
and a clothing retailer, Pep (Photo credit: Christopher Paek)    
Among m-insurance developers, there is an on-going debate as to the virtues and drawbacks between “high-touch” products, which incorporate sales agents into their models and “low-touch” products, which are typically passive models that eliminate sales agents in order to lower cost. Results from this project seem to suggest that at least initially, a more high-touch approach is required to first develop trust, especially in environments where the use of mobile phones to cross-sell financial products have become synonymous with fraudulent activities.

A related example may reinforce this point. When ATMs were first introduced into South African townships, initial reports suggested that there was widespread mistrust among residents. It took concerted time and effort—i.e. bank tellers would walk through each step with individual customers again and again—for clients to eventually trust ATMs enough to deposit their hard earned cash. Examples like this demonstrate that trust in m-insurance products can eventually be earned, but that an initial investment in time and financial resources may be required to do so.

As this research shows, efficiency, convenience, and price are necessary but not sufficient factors in building a successful m-insurance market. If the trust gap can be overcome, insurance companies may be in a good position to fully leverage the potential of mobile phones and networks to deliver financial services at a meaningful scale.

Read Christopher Paek's Final Report

Monday, October 17, 2016

Object-Centered Focus Group Discussions: Stimulating Conversations On Mobile Money Practices And Culture

By IMTFI Researchers Milcah Mulu-Mutuku (Egerton University, Kenya) and Castro Ngumbu Gichuki (Nanjing Agricultural University, China)

Conversations on personal financial practices are sensitive and many times difficult for researchers to actualize in the field. As many researchers have documented, personal financial practices are private. Getting people to talk about them often times requires great effort. Adding culture to these conversations creates a further challenge that seems almost insurmountable. Yet, even with all of these challenges, it is essential to understand how culture influences mobile money practices if appropriate policies and programs are to be put in place.

Participants during the Focus Group Discussion
Our IMTFI sponsored research involves determining the influence of mobile money on women micro-entrepreneurs’ control of productive resources. In many communities in the developing world, control of productive resources is a subject deeply entrenched in cultural practices rooted in money and land as the preserve of men. As we are realizing through our research, control also depends on the context of resource use. In this era of technological advancements, a slight change in external factors surrounding productive resources alters significantly the way control of these resources is experienced by those involved. For example, the use of mobile money significantly impacts the dynamics of resource control. However, this depends largely on the type of resource (e.g. money, land, information) under consideration and the importance attached to it by the people concerned. Money is probably the most highly rated productive resource in terms of its importance by our target group of women micro-entrepreneurs. How this resource is controlled and managed has a direct impact on their business performance.

Stimulating conversations on money, control and culture

To get women micro-entrepreneurs conversing on these matters, we designed two charts: a static one (Fig. 1) which we used to prompt participants to think through their financial practices (without intervention on our part) and an interactive one (Fig. 3) which required participants to perform some activities. Our approach was inspired by the IMTFI Fellows workshop held at the IMTFI Insight and Impact Conference on April 22, 2016 and by object-centered interview methodologies featured in IMTFI’s Consumer Finance Research Methods Toolkit (the toolkit is free and available for download here).

Fig 1: Mobile Money Services Chart
The Mobile Money Services Chart (Fig. 1) aimed to stimulate conversations on mobile money services utilization at personal, family and business levels. The participants were expected to view a representation of a mobile money service or product on the chart then rate the usage of these services and products. We then used a flip chart to record the responses (Fig. 2). Using this chart, we explored the benefits and challenges of using these services as experienced by the participants. The main benefits of services frequently used included autonomy and time saving while major challenges to uptake and use were interference with family relations due to practices of secrecy and disclosure related to the personal identification number (PIN). 

Fig 2: "Services used and
not used"
The Productive Resources Control Chart (Fig. 3) aided us in discussing women micro-entrepreneurs’ control over productive resources and the influence of mobile money services on control and decision-making processes. Participants were asked to place color-coded sticky notes or plasticine (modeling clay) next to the person who makes decisions about the acquisition, management, and use of various productive resources. Choices included self, husband, brother/father, and friend(s).  

After the exercise, we counted the sticky notes or plasticine mounds to determine who had the highest control of a particular resource, which we then discussed with participants. We also discussed how mobile money has influenced this control and explored gender dynamics in table banking group activities in this era of mobile money use. Interestingly, fathers and brothers no longer interfere with women’s control of productive resources, whether single or married. In addition, mobile money services have provided women with a discreet method of controlling finances.

Fig 3: Productive Resources Control Chart

Our experience in using Object-Centered Focus Group Discussions

This being our first time to use such a technique in data collection, we did not know what to expect. Much as the idea of using objects in Focus Group Discussions excited us, and of course we were looking forward to it, we were alive to the possibility that our ability to communicate to the participants through these charts might not work as we hoped. However, our anxieties were immediately settled as soon as we began the first session and observed the respondents’ excitement. Discussions were lively, diverse, engaging and quite informative. This came as a surprise to us because we did not realize beforehand that visualizing mobile money services would trigger such diverse thoughts in the minds of the participants and therefore diverse conversations. One chairlady of a table banking group summed up her experience in the discussions, remarking, “na leo mmetuchangamsha kweli kweli! Tumejifunza mambo mengi leo!” (You have really excited us today! We have learnt many things today).

Mobile Money Services Chart in use
Much as we intended to collect data for our research, we also ended up raising awareness about available mobile money services. Participants discussed some mobile money services depicted in the first chart that they never thought were meant for them. One lady pointed at the Pesa Point ATM booth image and remarked, “hii huwa naiona town kila wakati ni kienda lakini sijawahijua inaweza kunisaidia”! (I always see this one every time I’m in town but I have never known it can assist me). Such remarks opened our eyes to the role of such data collection techniques in educating participants on matters otherwise taken for granted, and in creating awareness about services and products.

This experience was exciting and enriching for both researchers and respondents. Within the context of the activities, it was easy for respondents to talk about their personal financial practices and provide information, which under normal circumstances might be difficult to share. For instance, one participant shared with participants about her secret business money saving practices. In order to avoid interference and misuse of business money, she “hides” it in an M-Shwari Deposit Account, a paperless micro-savings product (offered by Safaricom in partnership with Commercial Bank of Africa and operated through M-Pesa). She reasoned that it is easy for her husband to track her savings on her M-Pesa Account but not so easy with her M-Shwari Deposit Account. This way, she is able to control her business finances without interference. However, she has never used the M-Shwari micro-credit product. She finances her business activities through her table banking group and through other micro-finance institutions such as Small and Micro-Enterprise Program (SMEP).

Productive Resources Control Chart in use
Almost all participants indicated they do not use the M-Shwari micro-credit product to finance business activities in spite of the favorable facility fee (compared with micro-finance institutions’ interest rates). Participants gave two major reasons for not utilizing this service. One, the amount of credit that can be accessed through M-Shwari depends on points earned through the usage of a M-Shwari Deposit Account, M-Pesa and other Safaricom services. These being the ‘base of the pyramid’ customers, earning points that would guarantee a sizeable amount of credit does not come easy. Much of the time, the amount of credit they can access through this service is too little for their business needs. Two, though the service providers have ensured that information on terms and conditions of use for the M-Shwari micro-credit product is in the public domain, participants reported lack of information about the product, making them apprehensive of the service. Many participants expressed a desire to understand how Safaricom calculates the points that determine the amount of credit they can access through the M-Shwari micro-credit product.

Concluding remarks

All in all, our experience in using Object-Centered Focus Group Discussions taught us that this is an excellent way of collecting data on sensitive topics. However, researchers must be alert and sensitive to remarks coming from the participants, which can be probed to yield more information and reveal unexpected details. In addition, depending on the topic of discussion, researchers need to be careful not to be sidetracked by the excitement of participants as they discuss their own subjects triggered by the images and writings on the charts.

Stay tuned for Milcah Mulu-Mutuku and Castro Ngumbu Gichuki's final report based on their IMTFI funded research. 

If you would like to leave feedback about this blog post and the Consumer Finance Research Methods Toolkit, see here.

Erin B. Taylor and Gawain Lynch, with Ursula Dalinghaus (2016). Consumer Finance Research Methods Toolkit. IMTFI.

Monday, September 26, 2016

Money Matters: New Educational Display at the British Museum

By Ben Alsop and Mieka Harris – The British Museum 

For millennia money has been a constant in human society. It is a persistent thread that entwines with politics, faith and warfare to allow us a window into past societies. For good or ill we all have a relationship with money. The emotions that it instills in contemporary society, from happiness to fear and everything in between, are not dissimilar from those felt by someone thousands of years ago.

In 2013 the British government added elements of financial education into the national curriculum. This decision was compelled in part by a realization that whilst people may have a grasp of what money is, there are many facets to the monetary system that remain uncertain and even a mystery. ‘Money Matters’ is a new display, supported by Citi, in gallery 69a at the British Museum that explores some of the most important aspects of the monetary world. Objects from the British Museum collection are used to illustrate important concepts such as money creation and economic cycles as well as looking at the sociological aspects of money through the millennia. The display acts as a complement to the themes addressed in the permanent exhibition in Room 68, the Citi Money Gallery.

Money and society photographs 
produced in collaboration with local school groups

The display is a collaborative project between the Department of Coins and Medals and Learning and National Partnerships. The co-curation has enabled work from a variety of audiences to be embedded in the display. School groups were invited to the museum to explore the concept of money and how it is used in society. They then translated what they felt money looks like in their local communities by taking photographs, which include a new housing development and litter on the street. A project was also undertaken with New Horizon Youth Centre where young people provided everyday words that are used interchangeably with 'money', such as 'racks' and 'wonga'. From working with community groups to provide a contemporary take on the modern financial world, to commissioning an original artwork to act as a focus for the exhibition, Money Matters acts as a companion piece to the established Citi Money Gallery education programme. These visual elements included in the display are deliberately designed to be conversation starters; encouraging visitors to challenge their views and perceptions of money by considering those portrayed by various school and community groups. 

‘Money Matters’ looks firstly at the material culture of money – the stuff that we hold in our hands and pass from one to another. Monetary supply has always been a concern for those in power. One of the earliest quantitative theories relating to money comes from Qi state in China over two thousand years ago.  The concept recorded in the Guanzi extolls the virtue of the manipulation of monetary supply and defines money as having heavy and light properties, heavy when stored and light when in circulation. The provision of money is still a concern for governments, how much to pump into circulation and the attendant risks of under and over supply.

However money is not, nor has it ever been, solely the preserve of a central issuing authority. There have been numerous attempts to answer societies’ monetary, and in some cases social ills, through unofficial means. The work of social reformer Robert Owen is highlighted through paper money created by the Equitable Labour Exchange, an organisation begun by Owen in 1832 that aimed to better reward labourers for their work. The notes, which would have circulated locally in central London, were produced not in the currency of the day, pounds, shillings and pence but in hours. 

Equitable Labor Exchange one hour note, 1832
© Trustees of the British Museum 

Public confidence in money is also a recurring theme, from the great debasement of Henry VIII where he systematically reduced the silver in his coinage to fund wars and the building of lavish palaces, to attempts by individuals to counterfeit currency. A particularly fine example is a counterfeit Swedish banknote that has been lovingly recreated by hand. Whether it worked or even if it was worth the time and effort we will never know. Someone felt compelled to try. 

Hand drawn counterfeit Swedish banknote, Sweden,
1868 © Trustees of the British Museum

The Euro, first issued in 1999 is often seen as the exemplar for the coming together of nation states and a shared single currency. It was however not the first time such an attempt had been made in Europe. To enable easier trade between European countries the Latin Monetary Union was formally created in 1865 between France, Switzerland, Italy and Belgium. This Union saw the creation of coinages of a similar weight and fineness which could be exchanged across borders.

The museum’s rich and varied collection discusses the functions of economies and their impact on society. From objects thousands of years apart that speak to one another like a Roman papyri referencing the repayment of a loan to a modern letter from a debt collecting agency threatening repossession.

Fritz Lang, 
Villa Hypthekenlust (Mortgage Joy), 1910
Small objects can often tell global stories. A countermarked 8 reales coin from the 18th century issued in Spain, minted using silver from South America, has stamps approving it for use on the Isle of Bute in Scotland and then latterly in China. The coin speaks to a financially interconnected world that we as a modern audience would recognize.

The exhibition does not just deal with the global financial world but also hopes to encourage visitors to reflect on their own relationship with money.  A print by German artist Fritz Lang titled ‘Mortgage Joy’ celebrates the purchasing of a new home and sheds light on what some societies think of as important assets. Similarly Roman bankers tallies from the 1st century BC are used to highlight a banking system which offered the wealthy numerous opportunities for loans whilst the poorer members of society had to use money lenders at a much higher personal cost.

This access to money and banking systems is fundamental to the changing nature of society. A point exemplified by a leaflet donated to the museum by Mani Arul Nandhi through the IMTFI, which shows a man in the city sending money via mobile phone to his family who live in rural India. It is the role of technology that is discussed by the central object created especially for the Money Matters exhibition by artist Olga Bagaeva. Fiat Coin is an attempt to represent the confusing, labyrinthine intricacies of the modern financial system. In doing so suggesting that money lives a double life. From our personal interactions with commercial banks and their products, to the abstract, distant mechanism of investment banks, hedge funds, data centres and regulating authorities.

                        Left: Eko India financical services leaflet, Mani Arul Nandhi through the IMTFI, 2013
                        Right: Olga Bagaeva, Fiat Coin 2016 © Trustees of the British Museum

Then there are the consistently controversial elements to the financial world such as tax. While some taxes are broad, others are far more focused. In the late 1600s, in an attempt to modernize Russian society and discourage the growing of facial hair, Peter the Great introduced a beard tax. Those who wished to grow a beard were taxed and given a token as proof of payment. Conversely a group of leaflets from Camden Borough Council explaining Poll Tax in the 1990s end with a note of resignation that does much to support Benjamin Franklin’s famous assertion that ‘In this world nothing can be said to be certain except death and taxes’ – ‘Poll Tax, no-one likes it but we all have to pay it.’ 

Peter the Great ‘Beard Tax’ token, Russia, 1705© Trustees of the British Museum

Money Matters, supported by Citi, is on view in Room G69a at the British Museum until 9th October 2016.

Search the British Museum for more IMTFI money objects here.
View previous blogpost, Haiti's mobile money at the British Museum.

Monday, September 19, 2016

Review Post: Monetary Practices of Traditional Rural Communities in Ethiopia: Implications for New Financial Technology Design

By IMTFI Postdoctoral Scholar Ursula Dalinghaus

In this blog post I review an exciting new publication by IMTFI Fellow Mesfin F. Woldmariam, co-written with Gheorghita Ghinea, Solomon Atnafu and Tor-Morten Groenli. The article is based on Woldmariam's IMTFI supported research and appears in the journal, Human-Computer Interaction. The post ends with a brief update on Woldmariam’s latest research endeavors, together with IMTFI fellow Ndunge Kiiti.

In their path-breaking and provocative research article, “Monetary Practices of Traditional Rural Communities in Ethiopia: Implications for New Financial Technology Design,” the authors propose novel design applications for digital money and mobile money information systems with illiterate and low-literacy users at the focal point. Grounded in a fieldwork-based case study on the money practices of several village communities in Ethiopia, and in the context of religious and social practices, the authors make a case for incorporating peoples' existing practices and values into the design of dematerialized money forms. The authors, like many in the financial inclusion space, anticipate a time when all money is digital and no longer needs to be "cashed out" of an e-money system.

What challenges does this present, not only now but also in the near future, for rural populations like the low-literacy communities studied in Ethiopia whose techniques for managing and embedding money in social practices depend upon the material aesthetics of money? Cash money features—such as color for sorting value and visible piles to budget amounts—are important for navigating the daily use of money and in fulfilling religious obligations and social performances. Especially in the context of extending money gifts, the materiality of cash enables individuals to decide when money amounts should be hidden or visible, and even to refuse a money gift based on its source or moral quality (is it "clean" or "dirty?")

Rather than assuming a "one-size-fits-all" approach, the authors argue that these values and practices should be integrated into the design of new mobile money platforms. Failure to take local and population-specific needs and values into account will mean that illiterate users will be further excluded or may even reject the adoption of new technologies. While the authors are careful to connect their design ideas to the specific case at hand, they argue that similar types of needs can be found in many other parts of the world. More grounded research is therefore needed to ask the right questions in developing locally specific and context-appropriate e-money applications that support existing social practices. The larger and crucially important question the authors of this article raise is this:

"who gets to decide what 'value to people' looks like, what 'legitimate uses' of money are?" (p. 511)

The insights and applications presented here will be invaluable for professionals and researchers alike in the financial inclusion space, as well as for anyone interested in the qualitative design implications represented by digital money futures. (The full article can be accessed here)

In a blog post for IMTFI Woldmariam wrote early on about the importance of metadata and information in conceptualizing how material money might be translated into digital form. His case study on cash management techniques in Ethiopian rural marketplaces has also been featured in IMTFI’s Consumer Finance Research Toolkit.

Mesfin Woldmariam talks with smallholder 
farmers from a DigitalGreen Project
More recently, Woldmariam has been collaborating with IMTFI Fellow Ndunge Kiiti on a project supported by the Institute for African Development at Cornell University to assess mobile money awareness and use/usage among smallholder farmers in rural Ethiopia. This project places research and on-the-ground dialogue with smallholder farmers and other stakeholders at the beginning and forefront of potential design and implementation of new technologies. Drawing on their respective field experiences and areas of expertise, Kiiti and Woldmariam's work emphasizes the importance of carefully assessing and documenting smallholders' existing practices and needs to develop appropriate and empowering solutions.     

To read more about Mesfin Woldmariam’s and Ndunge’s IMTFI research, their project pages can be found here and here.


Mesfin F. Woldmariam, Gheorghita Ghinea, Solomon Atnafu and Tor-Morten Groenli
"Monetary Practices of Traditional Rural Communities in Ethiopia: Implications for New Financial Technology Design." Human-Computer Interaction. Volume 31 (2016): 473-517

Monday, September 12, 2016

How is digital payment working for women in rural India?


The Government of India is pushing its Direct Benefit Transfer (DBT) reforms by creating digital payment of social welfare transfer or pension payment directly into the accounts of beneficiaries. As the DBT rollout proceeds, the bigger question is how these payment flows work for women.

Why women? 
Most cash transfer welfare schemes in India are designed for women. For example, pregnant and nursing mothers in rural India are paid from the second trimester until the child attains the age of six months. Girls from rural areas are provided with special financial incentives with an objective to encourage families to retain a girl child, educate her and prevent child marriage.  Moreover, as the government is converting fuel, food, and other price subsidies into digital cash payments, some states in India are making the payment directly to women’s bank accounts. The female head of the household, some experts believe, is most likely to optimize the subsidies—in particular food subsidies—according to the desired intent. One research study tracked how women and men spent subsidy funds deposited in bank accounts. The study found that women used the subsidy for food purchases whereas men diverted the subsidy funds to pay for non-food items. Experts therefore believe the subsidies will have the greatest development impact when the funds are transferred directly into women’s bank accounts.

But using a bank is still inconvenient for women.

Take this case as an example. Under a conditional maternity benefit scheme named Indira Gandhi Matritva Sahyog Yojana (IGMSY), cash is directly transferred to accounts of beneficiaries (pregnant and lactating mothers).  A study found the scheme failed due to cumbersome banking procedures and delayed funds flow.  Women lived in remote areas, almost 22-24 km away from banks.  Banks took almost six months to open accounts for women. Although zero balance accounts are allowed under the scheme, banks and post offices insisted on a minimum deposit.

Worse, women were required to submit identification documents. 

A recent World Bank Report indicates that women in several countries still face additional documentation hurdles when trying to get a national identity card.  Hence, their absence acts as a barrier to accessing entitlements via banks even though the requirement of identity documents is not a direct criterion of any cash transfer scheme per se.

Furthermore, social, regulatory and cultural barriers prevent women from accessing financial services.  

Several studies have indicated women find interaction with male staff intimidating and in many cultures custom dictates that women should not communicate directly with male officials. A recent GSMA study indicated that women prefer twice the number of face-to-face interactions than men before they feel comfortable enough to use financial services technologies independently.  However, with a higher proportion of male banking staff and agents, women clients experience greater hurdles to learning more about the financial products.  

Experts argue that enlisting female agents may be the most effective way to reach women. Female agents are not only effective but also lucrative as they lead to increased sales, access to new markets and a stronger brand image based on more thorough product communication.

However, in India recruiting female agents has been a daunting task. As of 2015, there are more than 600,000 agents in India. The proportion of female agents has only declined over the years (15% in 2012, 13% in 2013 and 9% in 2015).

Is the Self Help Group platform an answer?

One platform that can be leveraged to create female agents is India’s women-based Self Help Group (SHG) network. SHG is known as both a community meeting grounds and a liaison facilitating access to banks, financial literacy training, and the benefits of government programs. Typically, SHG members are already integrated into the community and a relationship of trust already exists with other members.

Recently, NABARD-GIZ conducted two pilot projects to test the potential of establishing SHG members as female bank agents, known as ‘Bank Sakhis’. This study found Sakhis attracted more first time customers, especially women. The proportion of active savings accounts and the average balance maintained in the savings accounts was three times higher for Sakhis compared to conventional banking agents. Sakhis were more motivated to provide liability products to low-income customers at low commission rates while male agents were more motivated to work with richer customers and sell more lucrative credit products. The pilot study therefore recognized that there is a need for initial funding support through subsidized loans or capital support to reduce the financial burden placed on female agents in the initial implementation phase in order to make women agents’ ventures successful.


Despite the availability of initiatives and schemes to provide financial services to women, low levels of literacy and financial awareness continue to remain impediments to financial inclusion goals. A growing literature suggests that women often lack the financial literacy required in tackling the complex financial decisions they face. Financial counseling can improve women’s capability in making better financial decisions. At the same time, some experts point out that some of the responsibility lies on the provider side and suggest that providers and distributors can also benefit from financial literacy training to ensure better outcomes in their interactions with clients.