Friday, March 15, 2013

Starting a Conversation on Financial Inclusion and Design in China

Attending Reboot’s publication launch of "Embracing Informality: Designing Financial Services for China's Marginalized," February 28, 2013.
by Ivan V. Small

Panel Discussion on Designing for Financial Inclusion, from left to right: Nicole Stubbs CEO First Access; Patrick Ainslie, Reboot Embracing Informality co-author; Tricia Wang, Global Tech Ethnographer; Panthea Lee Reboot Embracing Informality co-author; Ethan Wilkes, Reboot Director of Communications

On a cold February Thursday night, a crowd gathered at GreenSpaces loft in New York City’s Tribeca neighborhood near Chinatown for the launch of Reboot’s publication on Embracing Informality: Designing Financial Services for China’s Marginalized. The report is based on field research conducted in China by Panthea Lee and Patrick Ainslie, supported by the Institute for Money, Technology and Financial Inclusion (IMTFI). Panthea and Patrick were part of the third cohort of global researchers studying issues examining the role and challenges of mobile money for promoting greater financial inclusion for the world’s poor. Mobile money, which potentially makes value storage, transfer, and payment easier for those who are dealing with small amounts across distances and involved in a precarious and often unbanked economy, is looked upon as a hopeful tool for poverty alleviation. Yet perspectives gained from three cycles of IMTFI supported global research on mobile money (over 100 projects in 36 countries thus far) demonstrate that mobile money uptake is not as simple as providing telecommunication services and infrastructure. Local monetary ecologies, financial practices, and histories must be taken into account when developing new mobile money systems. When they are not, mobile money services may fail to reach those that might be most helped by it.

In China, mobile money is often seen as the domain of “rich people.” Business-men with fancy smart phones and linked bank accounts may be riding the emerging trend of mobile money in the country, but the majority of rural and urban poor do not have access to smart phones or bank accounts. Reboot queries how we might better design services to engage the “bottom billion” who remain financially excluded. There are a lot of regulatory issues involved of course, particularly when it comes to cash out services, but Panthea and Patrick challenge us to look beyond and below the macro to how such services might better respond to micro needs at a local level. Chinese rural to urban migrants, who face many obstacles including in the first place their very right to migrate under China's Hukou household registration policy, are limited in their ability to send remittances home by the practical challenge of how to physically move their money from point A to B. Formal remittance and banking services are limited, costly, and often intimidating. Reboot’s report begins with the story of one migrant worker who was robbed of an entire year of savings when boarding a train to bring his hard earned money back to his family in the countryside.

After gaining insight into migrants’ experiences with and needs for financial services in China, Reboot came up with recommendations on how one might design a domestic remittance service in China using mobile money for greater financial inclusion. The researchers at Reboot suggest that for such a service to appeal to economically marginal potential users, it must build upon rather than compete with existing informal financial services. Specifically, service must be convenient, practical to use, and build on existing trust networks. The report is filled with a range of ethnographic examples drawn from interviews, participant observation, and focus groups in rural, peri-urban, and urban areas of China. For the full report click here.

The importance of engaging ethnographic design for effective development was highlighted at the publication launch event Reboot hosted at Green Spaces NYC. To feature this, Ethan Wilkes, Director of Communications at Reboot hosted a lively public discussion with Panthea and Patrick, two of the study’s co-authors, along with global tech ethnographer Tricia Wang who specializes in ethnographic design and technology in China and Nicole Stubbs, CEO of First Access who specializes in credit and microfinance in informal economies. Starting with a video taken of migrant workers in the field, each of the panelists engaged in a lively conversation on financial inclusion, design, and ethnography before turning to discussion with the audience. Taking advantage of Reboot’s location in New York City, home to many social entrepreneurs, international policy experts, financial inclusion advocates, and technology start-ups, the organizers had invited a wide range of attendees and potential issue stakeholders with diverse institutional backgrounds ranging from Kiva to Social Science Research Council to IBM. Attendees asked about the investment and legal environment in China, how to think about credit histories in the informal sector, and the challenges and potentials of ethnography in development research design. For many, the chance to meet others interested in the still emerging field of financial inclusion issues was invaluable.

With cold Tsing Tao beers and hot dumplings added to the mix, the launch was altogether an enjoyable and informative evening. Who knew that going to a financial inclusion round table on a wintery Tuesday night could be so fun and productive?! IMTFI looks forward to Reboot’s research dissemination and sharing efforts going forward as they continue to provoke and catalyze discussion about not only financial inclusion, but the importance of ethnography in designing services and products for the poor – illustrating that such attention is compelling not only from a development perspective but from an emerging consumer market one as well.

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