Going to where the Women are: Insights from the Making Finance Work for Women Summit in Berlin, Germany

By Ursula Dalinghaus, IMTFI Postdoctoral Scholar

BMZ Berlin, Germany (Photo Ursula Dalinghaus)

On November 11th and 12th I attended the Making Finance Work Summit in Berlin, Germany, co-hosted by Women’s World Banking and the BMZ (Federal Ministry for Economic Development and Cooperation). At a time when Germany is responding to its own financial inclusion challenges with regard to integrating refugees from war-torn Syria, the agenda of closing the gap in formal financial inclusion globally could not be timelier.  

In his welcoming remarks, Thomas Silberhorn, Secretary for the Federal Ministry for Economic Development and Cooperation, began with an oft-cited quote in Germany by Fyodor Dostoyevsky, “Money is coined freedom,” noting that "access to this freedom, access to money is key” for addressing the summit topic of making finance work for women where global access to financial services is uneven and unequal between men and women.

Speakers across the panels emphasized the importance of getting to know women’s priorities as entrepreneurs and for their households. Research cited showed that women made 70% of household decisions and invested 90% of their income in the household. And yet as some speakers pointed out, the reason for the summit was the paradoxical statistical finding that women still remain largely underrepresented in, and excluded from, formal financial channels and services, from the boardrooms and decision-making entities of financial service providers, and from impact investments.

The story of women entrepreneurs who conduct business literally at the doorsteps of banks and yet do not have bank accounts was picked up by many at the summit as a powerful metaphor for showing the gap in formal financial inclusion as one not only of access but acknowledgement of a whole constellation of women’s concerns around access, empowerment, and autonomy.


"A BETA Way To Save Pilot"

A BETA Way To Save (Photo Women's World Banking) 

Several panelists also emphasized a need for financial products and services that target and reflect women’s priorities and needs, especially for saving and greater autonomy over household income. Diamond Bank and Women's World Banking's pilot study, “A BETA Way to Save,” stood out as a successful case of a commercial bank adapting to this market segment and their existing practices. Low-income self-employed women vendors in the Balogun market in Nigeria continued to rely on informal financial services for savings and short-term loans. But the problem was not only one of access; women experienced emotional distance too. The BETA Savings product moved the bank closer, physically and emotionally, to where women already are. By bringing the doorstop of the bank to the women, with regular visits by BETA agents to the market stalls, women vendors no longer faced the logistical problem of leaving the market stall to deposit savings in the bank and the time-consuming security measures this required.

In the session, How Can Technology Drive Financial Inclusion for Women, Anna Gincherman (Women's World Banking) explained how the BETA Savings pilot “developed a product that mimicked the informal sector.” BETA “replicated” the informal susu system found in Nigeria and West Africa. Adapting the informal financial practices of savings deposit schemes known as “susu,” or here “ajo" (“daily contribution scheme”), she noted that we can learn from the informal sector “in creating a better proposition by employing a sales force of ‘BETA friends’ collectors that go around every day opening accounts using mobile technologies, so it's solving that issue of mobility.” BETA (or “good”) saving accounts integrated the face-to-face interactions of agents (BETA Friends) with the opening and maintenance of accounts using mobile technologies and other financial tools.

Photo Diamond Bank

Accounts were easy to open and maintain, enabling interpersonal deposit and withdrawal transactions in addition to traditional and mobile-based channels (such as ATMs and mobile transfers). Women could check and observe how their accounts were updated in real time, building trust in the system. Women earned interest on their deposits and could enter lotteries for cash prizes and other rewards by keeping money in the system. The bank created its own platform rather than partnering with MNOs to create a multichannel hub that could provide a seamless user experience. Marketing of the project used simple everyday language rather than “bank” language and BETA agents had a variety of means available to educate clients about the product and technical use, supplemented by financial education, “BETA Talks.” BETA Friends agents were the key success factor. The technical aspects worked because human agents could explain, connect, and build trust with clients, supplementing technology with face-to-face interaction. From the provider perspective, the scale and incentives for local agents who interact with clients was an important part of the design, one that is hoped can be scaled up.

Key Takeaways
I was impressed with how the ‘BETA’ case study resonates with the findings of many IMTFI projects affirming how social relationships and new technologies work together. Eric Osei-Assibey’s related research in Ghana on Susu collectors and mobile money also showed the importance of face-to-face interaction as the basis for trust in savings and repayment strategies that could not be captured by the phone. Mobile phones and other new financial technologies reflect and remake women’s social relationships. New forms of inclusion empower women, such as making the household budget a subject of intra-household dialogue between men and women. Greater inclusion may also create new hierarchies and tensions in the household that women must negotiate anew. The importance of “the human factor” for how low income earners are adopting new technologies requires ongoing research as new products and services are designed.*

Another key takeaway for me from this panel on digital inclusion, then, is that programs like the BETA pilot which take into account these local practices may only be sustainable in the long term if they can be scaled up, and only if they can provide an affordable and reliable service for users while also making money for the bank. On the same panel, Liz Kellison (Bill & Melinda Gates Foundation) underscored that "the solution to inclusion is digital. Without it, it will not be possible to reach the necessary scale." Developing products with women’s needs in mind means they can be “accelerators” but this depends on "making sure we have the rails in place to offer digital financial services -- the rails, the rules, the regulations. As soon as we do that then we have to think about the players that could be using this ecosystem.” Kellison noted that conditional cash transfer and support programs like those in South Africa and India show how digital payments can scale up to connect governments and citizens.

This goes hand-in-hand with the rollout of identity and biometric programs that can ensure women’s ability to open and access their own accounts. Louise Holden (Master Card) reminded listeners at the summit of the startling statistic that women are not only financially but also legally excluded, with even more women without the legal identity (or in some cases eligibility to secure one) necessary for transactional banking. “Legal identity and digital identity are fundamentally linked. It’s fundamental.” Holden views Fintech as a solution and described the South African case where multiple welfare programs could be linked through technology available on and offline and provide “proof of life” identity checks necessary for pension payouts, as one example.

Worn-down fingerprints of Rickshaw pullers in Delhi 

illegible to biometric scanners (Photo Mani Nandhi/Liz Losh)

The importance of IDs for accessing formal financial services is crucial and one that IMTFI researchers have also been documenting. But like digital inclusion, the challenge is not only one of access. In India, where a national biometric ID program  (AADHAAR) continues to be rolled out, programs seeking to formally include every citizen must take into account how biometric cards pose important questions about “stable identities” or how some forms of labor erase the physical signs by which unique identities are verified.

Greater digital financial inclusion also raises new questions about data protection as a public good. In the Q&A one participant asked how end users might monitor how their data is used. Louise Holden noted that data integrity is reputation; “data allows the network to be secured.” Tom Delucca (AMP Credit Technologies) added that paradoxically, the greater a “data subject’s ability to pick and choose what data is used, the less reliable for us who wish to use it for purposes which are beneficial to you as the data subject.” Paying attention to women clients’ needs and preferences, as well as to the gendered and social relations of which financial technologies are a part, is important to answering these questions, improving design and adoption, but also observing how women are negotiating these new credit and data relations.

The importance of collaboration, partnerships, and shared incentives between commercial providers, states, and regulators was an important theme throughout the summit. Low-income women, the target segment for these entities, should be seen as a partner. In an earlier panel on targeting women as a new growth segment, Debra Mallowah (Unilever Africa) picked up the thread about “who owns the customer?” saying, “Don’t tell her you own her. You need to get in a relationship. Create the love. Understand her influence and power.”

The Making Finance Work for Women Summit generated a productive forum for fostering dialogue around client-centric design and how it is working on the ground, from different provider perspectives. I was encouraged by how the partnerships showcased across the panels, as well as the careful research being done on the ground by product developers, service providers, and analysts from a variety of institutions, are placing target communities front and center. Going to where the women are means empowering while taking seriously locally specific needs and practices in the collaborative endeavor to close the financial inclusion gap.

References

*p. 11, Osei-Assibey, Eric (2014) What Drives Behavioral Intention of Mobile Money Adoption? The Case of Ancient Susu Saving Operations in Ghana. IMTFI Working Paper

For Women’s World Banking blog posts on the summit panels, see the Women's World Banking Blog and to view panel videos from the summit, see Quick Cuts from the Making Finance Work for Women Summit 2015 

Saving for a rainy day – in alternative ways: part 2

Research by IMTFI Fellows Sibel Kusimba and Nithya Joseph are featured in Part 2 of The Guardian series

"Compelling research shows most adults save money, yet few use a bank or other formal institution to do so, preferring to barter gold or give funds to family members. Here, women and financial experts weigh in on how banks might better capture this market."

Part 1 showed the ways in which many in developing countries save money via creative means. This installment takes look at Kenya’s mobile-based matriarchal brokerage system and where women use gold as a credit source in India and some lessons from the field on how banks can better serve the poor and women.

These women pictured in 2012 in Naitiri, Kenya, are closely connected by mobile money ties of mutual support. Photograph: Sibel Kusimba

Mobile-based money transfer service M-Pesa, launched in 2007, saw a 26% growth in value of transactions in the last financial year to $40.1bn, servicing 13.86 million customers. M-Pesa users send and receive money and pay bills electronically, without needing a bank account.

"Anthropologist Sibel Kusimba found that an interesting savings method has emerged from this trend: women, grandmothers in particular, work as brokers to recirculate mobile money funds in ways that benefit their entire families...'Kenyan women see themselves as responsible for others in their family, church and community – providing this security to others brings them prestige. Through reciprocity, they can rely on these people when needing that assistance. This social relationship is a form of savings...'"


"Gold and other precious metals have also long performed as a credit source. At the Institute for Money, Technology & Financial Inclusion (IMTFI), researcher Nithya Joseph traced gold as a form of savings in a silk-reeling town in Karnataka, India...'That gold continually rises in value makes the metal an ongoing attractive form of savings for this community,' Joseph says. 'Pawnbrokers are often family-run businesses, so interactions between broker and seller become tight. Even nationalized and private banks offer loans against gold as a service, while other companies have formed around gold-based loans.'"

Sibel Kusimba is currently an Anthropologist in Residence at American University. As an IMTFI fellow in 2014 she undertook research titled: "Mobile Money and the Coming of Age in Western Kenya." The research focused on how people in Western Kenya use mobile money technologies to pool resources for kin, friends, and co-workers. Learn more about Kusimba's work and the project here and the networks that were mapped visually and videos that emerged out of the project here.

Nithya Joseph is studying the politics of production and reproduction across the silk industry in Karnataka, India. As an IMTFI fellow in 2013, Nithya Joseph undertook the research "Silk Societies, Gold Stories: Using Gold-Based Life Stories to Study Gender, Financial Inclusion, and Work Vulnerability in South Indian Sericulture." Learn more about her work and the project here. The blogpost of her research findings can be found here.

Saving for a rainy day – in alternative ways: part 1

Research by IMTFI fellow Janet Arnado featured in The Guardian Visa Partner Zone

Filipino pesos like these are likely to be stored in unusual places around a home or invested in community festivals and family celebrations. Photograph: Stringer/Reuters

"According to the World Bank Global Findex database, while most adults save money, few use a bank or other formal institution to do so. This two-part report looks alternate savings methods – using unusual hiding places or recirculating funds within the community.

Can you gather $2500 in the next month for an emergency? If so, how would you finance it? Researchers at Gallup and the World Bank posed this question to about 150,000 adults in more than 140 countries as part of the 2014 World Bank Global Findex database – and found intriguing results.

Leora Klapper, lead economist at the Development Research Group, World Bank, says that three-quarters of those surveyed said they could come up with money, a higher number than she expected. And more than 30%, even those who squirrel away funds without formal bank accounts, said they’d use their savings to come up with the cash...

IMTFI fellow Janet Arnado, a Philippines-based sociologist with the Research Institute for Gender and Women Inc, found that because poor Filipino women living in the hinterland are far from a town and without transportation, few of them have bank accounts. 'So,' Arnado notes, 'they store coins in visible places like Coca-Cola bottles or short bamboo poles. They conceal more lucrative bills in clothing and pillows. They creatively protect their money in order to deceive thieves as well as their husbands while increasing their bargaining power within the household.'"

The piece also notes IMTFI's involvement in research where "women and men who lack access to formal banking channels frequently develop savings methods that work within their communities, even if financial experts view them as risky."


Mary Janet Arnado, PhD  is the founding president and CEO of Research Institute for Gender and Women, Inc. In 2010 as a research fellow at IMTFI she undertook her research titled, "Gender and Money: Case Studies from Philippine Indigenous Communities." Find more about her work and the project here.

Stay tuned for more featured IMTFI research in part 2, coming this week!

Mobile-izing Savings with Defaults in Afghanistan: Wins First Place for Next Billion's 2015 Most Influential Post Contest

by Michael Callen, Joshua Blumenstock, and Tarek Ghani

Photo Credit: Jan Chipchase

Editor’s note from Next Billion: As part of our Most Influential Post of 2015 contest, we are re-publishing the articles that made you think, made you act, or maybe even made your day. This article was the most-viewed post on NextBillion for November 2015. To see the full list of the most popular posts in 2015, click here.

Perhaps the most cited triumph of behavioral economics – that marriage of economics and psychology that has put terms such as “nudge” and “fast versus slow thinking” into the popular lexicon – is the automatic opt-in. For example, more people donate organs if they are automatically put on the organ donor list. And far more people contribute to retirement accounts when they are automatically enrolled by their employer. The power of the default option is part of why 401(k) plans are so popular in the United States. Savings programs that automatically enroll people by default, or that define a default savings amount, generally seem to help people save. By contrast, when employees must make an active decision to opt in, overall rates of savings are much lower.

Along with other aspects of financial inclusion – ubiquitous ATMs, reliable and accessible financial information – default savings programs seem to be the province of rich countries. But recently, the world has seen a dramatic drop in the numbers of unbanked citizens due to the spread of mobile banking, particularly in East Africa. The number of people with phones is far higher than the number of people who have easy access to traditional bank branches, especially among the rural poor. Until now, however, no one (to our knowledge) has tested whether mobile banking can facilitate default savings programs.

This is exactly what our team set out to do in Afghanistan. For the past few years, we have been testing financial inclusion products with Roshan, the country’s leading mobile communications provider (and largest taxpayer). Our recent investigations have focused primarily on the power of the default and the automatic opt-in. We were interested in understanding whether such innovations could work in a developing-country context, and also exploring whether low levels of savings is due to forces we see in the West (such as aversion to complex decisions and a tendency to procrastinate) or those particular to poor and unstable countries (distrust of banks among citizens, low amounts of cash on hand).

For the full post on Next Billion, click here.

For the 2015's Most Influential Post Winners, click here. Congratulations!!

IMTFI is pleased to have been able to partially support this research. To read more about the study, view the working paper. “Mobile-izing Savings with Automatic Contributions: Experimental Evidence on Dynamic Inconsistency and the Default Effect in Afghanistan.”[pdf]

Innovative and Interactive Ways to Improve the Savings Habits of Women

by IMTFI Researchers Deepti KC and Mudita Tiwari 

Sarala is a micro-entrepreneur with a bank account and access to banking services within 1 kilometer of her residence Dharavi, Asia’s largest slum in Mumbai. Yet, Sarala uses higher-risk and unregulated savings options such as chit-funds - a type of group savings mechanism where payouts are made using a lottery system. With Sarala’s husband often spending household savings on gambling or addictive substances, she continually strives for strategies to hide cash in food jars, piles of clothes, and among beauty supplies. Despite having bank accounts, she does not want to save with the bank. “I am not able to save enough to go to bank and deposit”, states Sarala.

A woman showing where she hides her money in the kitchen 

Sarala was not alone in thinking so. In the First Phase of the study, we followed the lives of 25 women in Dharavi for two months to study women’s saving behavior. It is to be noted that many women were not open to admitting their hiding strategies unless we visited them multiple times and gained their trust. Hence, we used an ethnographic research approach to learn about their lives in their local context. Women taught us about their savings needs. We were convinced that they needed i) financial counseling to address the psychological barriers they face about savings, and ii) savings products that are flexible, offer liquidity and promote daily savings. 

Design of the financial education modules and a savings tool
The lessons we learned in the First Phase of the study inspired us to design financial education modules using an interactive comic book format depicting the life of the women entrepreneurs. The characters were carefully crafted using life stories from women’s lives - challenges that women micro-entrepreneurs like Sarala face and how they overcome these financial challenges. The comic books introduce concepts of disciplined savings, and how to achieve short-term and long-term savings goals. 

An image from the comic book

While we believed that our financial education modules would encourage women to maximize their savings, at the same time, we also learned from our previous study that financial education is not enough if financial consumers do not have access to flexible saving products. 1  

Lately, economists and researchers have experimented with savings tools beyond basic banking access. The first study of this type introduced a lockbox to respondents in a randomized controlled trial in Kenya. 2 The findings show that supplying a secure lockbox to store money increased savings by 66 percent. They also found a positive impact for women with “below median decision-making power in the baseline.” The product led to a higher “self-perception” among the participants of their savings behavior and positively affected consumption decisions on durable goods. 

With an eye to the innovative project conducted in Kenya, we decided to provide alternative savings tools to our respondents, along with financial education, to understand if the savings products could improve their savings capability.

Experiment to understand the impact of the financial products 
In the Second Phase of the study, we conducted an experiment in Bihar with 203 women who were associated with Self Help Groups (SHGs). We provided 40 women with financial education training; 40 women with a lockbox and a key; 43 women with a lockbox and a key as well as financial education; and 80 women received no intervention. 

A female respondent and her family and neighbors listen to the story on savings 

We followed women for more than two months and recorded their savings at the end of first and second months. Women who received the financial education training increased their savings by 8% compared to women with a 1% increase in savings who did not receive financial education. Provision of the lockbox further significantly increased savings by 42-51% during the intervention. 

Data indicates that women who received financial education training shared their knowledge with others too. 77% of women who received training reported sharing their knowledge with others; 73% reported discussing the household’s expenses, budget and savings with their husband; and 59% reported they encouraged their children to save.  

A woman receiving a lockbox and a key

Increase in SHG bi-weekly saving
Women were meeting with their SHGs on a weekly basis, and in every meeting the majority (87 percent) was depositing Rs. 10, a minimum required amount to be a member of a group. The average bi-weekly savings amount during the baseline survey was Rs. 20. 
After we provided women with the intervention, SHG bi-weekly saving increased to Rs. 22 after a month; and to Rs. 32 after two months. There was a substantial increase in savings in women in the treatment group - who received a lock box and financial education training, compared to women in the control group - who received no financial literacy and lockbox from us. For example, bi-weekly savings of women in the control group increased from Rs. 26 to Rs. 31 - a 16% increased in saving, whereas women in the treatment group increased savings from Rs. 20 to Rs. 33, a 39% increase in bi-weekly SHG savings.  

Lessons learned
Our results align with other similar academic studies, like the Kenyan study noted above. We learned that understanding the financial behavior of women is a very crucial and progressive step towards finding solutions to empower women in the marketplace. Women like Sarala need savings products that are flexible, offer liquidity and promote daily savings. Women cannot go to banks every day, especially if they are living in rural areas that are far away from these services. The weekly engagement with SHGs is a step forward but still amounts to sporadic savings. In most cases, they are saving the minimum ‘required’ amount to remain a member. 

When promoting savings, the psychological barriers women face when trying to save must be addressed. Our findings indicate that context specific financial education, and reinforcing saving behavior through easy-to-use tools such as the lockbox, encourages women to save regularly. For example, in our study, women were actively hiding money away in their homes to ensure other household members don’t squander away savings. Providing a secure lockbox helped women put away money safely. Providing relevant financial education helped women save this money in banks and SHGs rather than at home or through chit-funds. 

Findings from this study can encourage NGOs and public policy makers to find very simple tools to implement that can help women increase their savings by a significant amount. This kind of an intervention is not only low cost, but also low maintenance and is the kind of short-term solution that is adaptable to the lifestyles and habits of poor women in India.

References:
1. KC, Deepti and MuditaTiwari. 2015
“Can Financial Literacy Help Migrants Save More?” Funded by Institute for Money, Technology, and Financial Inclusion (IMTFI), University of California. Published by IFMR Lead.

2. Dupas, Pascaline, and Jonathan Robinson. 2013a. 
“Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya.” American Economic Journal: Applied Economics 5 (1): 163-192.

Read Deepti KC and Mudita Tiwari's Project Report Innovative and Interactive Ways to Improve the Financial Capabilities and Savings of Women