By Erin Taylor and Gawain Lynch
These days, it seems that everywhere we turn in consumer finance–banking, microfinance, mobile money, payments–we're told that we need to be more customer-centric. But people are immensely complex, and consumer finance is changing fast. How can we possibly hope to understand people's financial behaviors?
|Photo by Ken Teegardin|
Sitting in a trendy café in downtown Manhattan, a forty-something professional logs into her Bank of America account using her smart phone. She glances at the balance in her checking account, makes a payment on her credit card, and sets up a direct debit to pay her new cleaner.
Over 7,000 miles away, a young man living on the outskirts of Nairobi signs up for M-PESA. He had never had a bank account and he needs an alternative to sending money home to his family who live in a remote area of rural Kenya. A cousin gave him his old mobile phone when he moved to the city, meaning that he can now, for the first time in his life, access a formal financial service.
These two scenarios are often held up as typical scenarios of banking in wealthier and poorer countries. Stories like these help us envisage global inequalities in access to financial services. They represent a real need for financial inclusion programs to focus their efforts upon under-served regions of the world.
But they are also, in some ways, completely wrong.
In fact, we can flip these stories around to paint an entirely different picture:
Sitting in a café in uptown Manhattan, a middle-aged man remembers that he has to cash a check. He heads off to an exchange house around the corner where he makes his transaction for a fee. This service would be cheaper in a retail bank, but he hasn't had a bank account for years. Unhappy with the services they provided and unable to find time, he abandoned formal banking for more expensive, but far more convenient, shop-based services.
Back in Nairobi, a wholesaler shuts up shop for the day. She heads to the bank to deposit her cash takings, which are far less than they used to be as more and more customers pay her using mobile money. While waiting in line, she uses M-PESA to transfer some money to her nephew, who has just moved to the city. She also sends money to her daughter, who has recently relocated to New York to attend college.
While we might intuitively know that these stereotypes are wrong, our consumer finance research tends to reinforce their geographical and technological assumptions. In fact, the more that financial services go global, the harder it is to draw “typical” stories about people using financial services. We are even less likely to make comparisons between users of different kinds of financial products. For example, we don't normally compare retail banking customers with mobile money customers or informal financial services such as rotating savings associations with smart phone financial applications in Manhattan.
Are the ways people use financial products really all that different? If we start making global comparisons, across populations and financial product types, could we learn anything useful that would help us to understand changes in global consumer finance today?
Advancements in technology, financial infrastructure, and global regulation mean that customers and providers everywhere are facing similar issues: more products, more consumer choice, uneven use of technology, and changing markets. So we certainly do stand to improve our understanding of people by looking beyond our national borders and our own areas of expertise.
Our project, Consumer Finance Research: Global Approaches and Methods, is investigating how different sectors–development, commercial, academia, and government–are innovating to understand the consumers of financial products. It's clear that no one method–ethnography, interviews, data analysis–is enough to provide us with adequate profiles of people using these financial products. Our key idea is that sharing knowledge across different sectors of consumer finance research will benefit us all.
We are producing knowledge products aimed at anyone working to understand financial consumers, including researchers, user insights specialists, designers, managers, and development workers.
• A provocation paper that outlines major challenges in consumer finance research (Click here)
• A toolkit that showcases qualitative and quantitative methods being used to understand consumers
• Blog posts here on the IMTFI's website
• Discussions on our Google Group and Twitter hashtag (#IMTFI)
Given that the aim of the project is to share knowledge, we can't do it alone. The more people we have involved, the better our global comparisons will be, and the more we can all benefit. We encourage you to share your stories:
• Your insights from your research and engagement
• Your innovations in methods
• Your perspectives on global changes in consumer finance
• Your ideas for better tools and collaborations
So, please join in the conversation. There are lots of ways that you can link up to the project. You can join the discussion right here on our blog posts, and you can contact Erin by email at firstname.lastname@example.org. If you have any ideas, feel free to share them or even start your own initiative!
We look forward to working with all of you to develop the future of consumer finance research.