Drama in the payments infrastructure and saturation in financial education: Discussing new avenues of research around financial inclusion in Colombia

In IMTFI's PERSPECTIVES blog series, IMTFI’s International Board members and affiliated researchers take on the definition of financial inclusion. This series aims to foster an open dialogue on issues around money, technology, and financial inclusion for the world’s poor. Individual contributions reflect contributors' own reflections on recent events based on their research and areas of expertise. The topic of financial inclusion will conclude with a capstone white paper by IMTFI titled "Mobile Money: The First Decade."

By Maria Elisa Balen, Universidad Nacional de Colombia and Edgar Benítez, Universidad ICESI 

We are reporting on the forum entitled “'Opening the Economy': Debates about Financial Inclusion - between Profitability and Over-indebtedness” that took place on May 4th at ICESI University in Cali (Colombia), and the workshop on the following day. These two events, bringing together perspectives from public policy, industry, and academia, sought to motivate new generations of researchers to study the promises, problems, and challenges surrounding financial inclusion developments (for the full program, click here). Yet they also became a lively space for discussion between the audience and panel participants. We want to highlight three sets of insights pertaining to the conference’s opening talks and subsequent panels, pertaining to the pluralization of the notion of financial inclusion, what is at stake in current changes in the payments infrastructure, and the important yet saturated field of financial education.

The pluralized notion of financial inclusions

Being financially included can have different interpretations, and the conference’s two opening talks would set the stage for the debate. Carlos Moya gave an overview of the programmatic strategies being followed by different countries across the region that are part of the Financial Inclusion Initiative for Latin America and the Caribbean (FILAC), which he coordinates. Throughout his presentation he stressed the positive impact of having formal access to credit, saving accounts, and insurance for poor communities; in this view, financial inclusion means inclusion into financial formality. Such a perspective was problematized by the second presenter, IMTFI fellow Magdalena Villareal from CIESAS in México. She pointed out not only how among communities ‘financial inclusions’ already take place through participation in different circuits and types of debt, but also that what is referred to as the formal financial system also entails different sorts of inclusion depending on the varied negotiation power of particular individuals and populations.    

The pluralized notion of financial inclusions, left in the air as an invitation, helps ask not only whether populations are being financially included, but what type of financial inclusion is taking place. The following panels would, in a way, pursue the specification of the financial inclusion taking place when discussing both developments in the country’s financial infrastructure—marked by the move towards digital payments—and the challenges of financial education in contexts where expensive yet highly available loansharks (known as paga-diarios or gota a gota) can constitute not only pervasive practices but possible interpretive frameworks to use as starting point for trainings and campaigns.

Drama in the payments infrastructure 

“You need to learn when to commit suicide.” That was the beginning of the answer given by Hernando Rubio, the charismatic CEO of Movilred, to a student in the audience asking what his so-far successful enterprise could do if/when Facebook starts offering electronic payments. “And then, like the phoenix, be reborn as something new,” he continued. Rubio has been one of the main supporters of Colombia’s recent financial inclusion law and the decree that introduces a new entity –Societies Specialized in Electronic Payments and Deposits—into the regulatory framework of Colombia’s financial system. For Rubio there is no doubt that digital payments are the future not only of cheaper transactions, but also of democratizing credit on the basis of cheaper and more effective ways of knowing customers thanks to the harnessing of electronic data.

 The other presenters on his panel on payment infrastructures had similar, though more tempered, views. Andrés Velásquez, from the financial cooperative Confiar, insisted on the importance of using different, complementary means to reach and interact with clients, including digital payments as well as chatting over coffee. But it was Ricardo Gómez, regional manager of Colombia’s Banco Agrario, who offered a contrastingly different perspective. Owner of the largest and most dispersed physical infrastructure throughout Colombia’s

territory, Banco Agrario’s high operational costs include the hiring of helicopters to move cash in and out of distant municipalities where the lack of telecommunications or even electrical infrastructure makes digital options unavailable. If digital is the future, then there is still a long way to go in order to avoid such populations being left behind.

Whether the time for more traditional financial entities to ‘commit suicide,’ as Rubio would say, is coming soon or not, a historical example came up concerning Banco Agrario itself that brought into relief the importance of alternative payment infrastructures. In the 1990’s, the large chain of drugstores called Drogas la Rebaja, owned by family members of the heads of Cali’s drug cartel, was included in what came to be known as the “(U.S. President) Clinton List.” Being on that list entailed sanctions, including exclusion from the payment networks of U.S.-based Visa and Mastercard. Drogas la Rebaja would turn into a cooperative run by its employees, yet continue to be part of the Clinton List. It was only through Banco Agrario that the largest drugstore chain in the country, with more than 4,000 employees, was able to have bank accounts to continue operating during the decade-long lag between the priorities of the U.S. war on drugs and those of the Colombian government. What this example brought home is that the configuration of payment infrastructures not only entails varied costs, but also can affect sovereignty.

In sum, if the move towards digital payments seems inevitable and large changes are already taking place in this regard, then the availability of alternative payment infrastructures seems key not only if one seeks to avoid deepening the exclusion of certain populations, but also considering the margin for maneuvering given by different payment infrastructures that are far from neutral or apolitical.

Dispersion and saturation in financial education

The panel on financial education had three different perspectives on the topic, though they shared a basic assumption: people need more financial education in Colombia. Nidia Garcia, head of the department of Financial and Economic Education at Banco de la República (Colombia´s central bank) did a presentation on the main points of the national strategy of economic and financial education (EEF). Based on healthy financial habits, responsible use of money, and financial capabilities, that strategy represents the first attempt at promoting a unified national framework for financial education. Because the EEF was launched just a month ago, it is too early to have an idea of its reception among institutions, banks, IMFs, and the like. This top-down process will be interesting since financial education is not a new topic among institutions in Colombia like Fundación WWB-Colombia and Fundación Paz y Bien, whose representatives constituted the rest of the panel.

Daniela Konietzko, the director of Fundación WWB-Colombia, a leading microfinance institution with a bank of its own, pointed to some difficulties that they have faced during the last years in their programs. Among them are two that represent an important challenge for any institution interested in promoting financial education. First, time-intensive educational programs have been the most effective ones in terms of developing financial capabilities, yet the fact that poor women have multiple social and economic responsibilities in their homes and micro-businesses makes it harder to develop these kinds of programs for them. Second, since financial education has become so popular among institutions, people have begun to feel that a saturation point has been reached.

That saturation was also emphasized by Alicia Meneses, who has helped to create and develop the educational model of Fundación Paz y Bien, a grassroots organization. In her view, “People don´t like going to workshops or taking classes; they are tired.” In order to avoid this situation, she and her workmates have developed community-based interventions as the key components of their financial education programs. Rather than emphasizing individual capacities and skills—as the former approaches did—Alicia believes that acquiring good financial habits is a collective process of learning-by-doing. In a similar fashion to the Grameen Bank model based on social capital and networks, Fundación Paz y Bien showed us that learning the habit of saving requires collective strategies (i.e. saving clubs) with common purposes.

In sum, what is identified as the continued need for financial education faces a crowded scenario, not only in terms of the multiple activities in which potential beneficiaries such as poor women are engaged, but also in terms of the varied and dispersed financial education initiatives they have been already exposed to, which adds up to a feeling of saturation.

In such a context, is changing financial practices a matter of systematizing the diverse financial education initiatives and evaluating their outcomes in order to move towards a more coordinated approach based on lessons learned, as the central bank seeks to do? Is it a matter of designing strategies that are carefully tailored to the life conditions and motivations of particular populations? Or is it, as the Movilred CEO emphasizes, mainly a matter of making credit cheaper and more available using digital technologies, so that customers on their own will see the benefit and choose the better option? Such were the questions left hanging in the air.

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This event was part of two longer term endeavors. On the one hand, this was the first in a series of forums that ICESI University is launching under the title “Opening the Economy,” which seek to foster academic reflection about the economy from viewpoints that are not limited to those of mainstream economists. On the other hand, it is part of the process of configuring the Latin American node of the international network of researchers that are part of IMTFI. In the upcoming months, we plan to launch an online platform in which researchers working on social studies of money and finance in Latin America can learn about each other’s work, interact, and pursue common research agendas.

Maria Elisa Balen is an international board member of IMTFI and an affiliated researcher at the Universidad Nacional de Colombia. Contact Maria Elisa at mebalenu@unal.edu.co; Edgar Benítez at ebenitez@icesi.edu.co

Can I try again? Working with research participants as they map their networks

By IMTFI researchers Sonia Laguna, Rosa Guerrero and Maria Elisa Balen

Our larger research work focuses on the deployment of mobile banking in changing practices of social protection for forcibly displaced families in Colombia. Part of our research entailed drawing family maps of our informants’ family practices of social protection. Methodologically, this involved two steps: First, we mapped members of the network and in the second step we mapped the different goods and services circulating within that network. The goods and services included not only money but also care, food, housing, etc. Here, we draw from our fieldwork experience to highlight some of the interactions between research participants and researchers engaged in the process.

We were interested in discovering the map drawing with our research participants in order to discuss different aspects of the maps rather than assuming them beforehand. Networks can be drawn using computer software which allow for homogeneity of representations, ease of navigation for spatial arrangement and rearrangement of nodes, and the possibility to build and manipulate layers of information. However, using computers was an obstacle for our participants, so we chose to work with hand drawn maps. Such a choice entailed a series of challenges and findings that we share here.

During this and other research endeavors, we noticed various methods to which research participants were already accustomed: for instance, being asked questions and their answers being recorded in paper or audio formats, and being asked permission to take pictures or videos of them whilst they go about their everyday lives. With these and other methods however, the stages of design and analysis tend to be carried out elsewhere: back home in researchers’ rooms or offices, discussing with colleagues or poring over their notebooks or computers. As researchers, we take our time in formulating problems, carefully crafting and often piloting approaches before we throw ourselves into fieldwork. We also take considerable time in reflecting upon and analyzing the information being explained. This can also be the case in mapping social networks that are used primarily as a tool for the researcher to interpret and convey her research findings. Our research departs somewhat from this model. Our approach encouraged an active involvement of participants in the elucidation and visualization of their own worldviews, as well as fostering an ongoing, joint reflection about findings. The rationale for an approach that places the interaction of researchers and research participants into central focus can be traced back to various theoretical and ethical considerations. These include participatory action research approaches giving prominence to the collective construction of knowledge and highlighting the transformative aims of scholarship (Salazar, 1992; Fraser et.al, 2004) as well as an understanding of explanation as something that does not displace people’s experience (Smith, 1996). But this post is less about our research methodology’s underpinnings and more about their implications while mapping networks.

For the first step of mapping the members of the network we conceived of a set of conventions: circles for females and triangles for males, double lines for marital unions and lines stemming from such unions conveying offspring. The circle/triangle differentiation was easily incorporated by research participants and perhaps showed how ingrained such distinctions are. It was the other aspects of the exercise that presented difficulties. 

For the first participant, we provided a sheet of paper (size A2) and colors for drawing her map. In this, some hurdles came up with handling spatial distribution: it so happened that either some members of the network ended up being cramped in a corner or just did not fit within the page even as a large part of the page remained blank. In response to this we changed our strategy which proved useful. We provided participants with a large piece of paper for practice so that they could get a feel of how the distribution could look like (see picture below).

Other issues had less to do with practice and more to do with fitting the realities of their networks into the picture: if a widow remarries but keeps her connections with the family of her late husband, does she include both mothers-in-law? How does one distinguish between formal unions and those outside of marriage that have nonetheless produced offspring? What if a neighbor or friend, who is not part of the family, is actually quite important and ought to be included?

We realized that the practice of encouraging participants to have another go and include the adaptations they saw fit was quite productive. One woman, for example, devised a convention to distinguish formal unions from informal ones or those that were no longer operating. She used a crisscrossed double line (similar to this: ₩₩₩ ) to include another woman her husband had lived with during a period in which they were separated and from which he had other sons, and she used it to include the father of one of her grandchildren who never assumed his responsibility. Others came up with diverse solutions: participant ‘A’ organized different types of relationships in different sections of the map (siblings in the bottom left, nieces and nephews in the bottom right, children in the upper left) to allow for her friends to have a space in the upper right, whilst participant ‘B’ drew her connections towards different family units that were themselves organized around the woman in each family (her mother, her late husband’s mother, and her current husband’s mother). 

Our lesson was that, on the one hand, it was important for the participants to have many attempts, as it gave them the chance to ‘polish’ their work between drafts, just as researchers do. Additionally, this allowed for the sequence of attempts to be used as a resource: why does an estranged husband appear in the second, but not first attempt? Why do some members appear in more central positions in one draft compared to another? Such questions ended up being engines for further discussion. Rather than impose a correct way of doing things, giving participants leeway to adapt allowed for a more creative and richer grasp of their own worldviews. Such adaptations allowed for differences among the maps, instead of the homogeneity of results one would get using a computer program for this procedure.

We are, however, left with the question of whether these deviations stemming from reflections – as well as interactions between the researchers and participants- are to be located within the metric of the problem or as a resource in itself. This is a real question, for which we don’t have a set answer. If participant A in the example above aggregates types of relationships, whilst participant B focuses on family units organized in terms of couples and their offspring, this can affect both the sorts of flows being drawn and the interpretation of them. In the case of B one can see how a sibling with many children tends to receive more money than what he can give to others, and this is not something that would be as evident in A’s map. But insisting on the organization around family units could be an imposition on A, who may be telling another story: one in which personal relations with a nephew, for example, are not mediated by the sibling/parent but rely on the relation or affinities between the two specific individuals.

Going back to the parallel with network-mapping computer software in which centrality is provided by the flows in the network, in our research the centrality of a node in the distribution was based on the person’s perception. Thus, while the drawing of flows could eventually challenge the initial centrality given to a node (´look how many things pass/ don’t pass through this person’), this was not something that could be resolved by means of a straightforward formula. And this was so because we wanted to map different sorts of flows, which do not necessarily have numerical equivalents. Let us move on to discuss, then, the second step of our mapping exercises: the drawing of flows.

We began by ascribing different colors to the different sorts of goods and services flowing through the network: yellow for food, red for housing, green for money, dark blue for care and light blue for advice. To this we added an extra color (orange) to be used if the participant wanted to draw another flow that was not included in the ones we presented. Not all used it, but this extra provision turned out to be interesting. One participant chose to draw ‘union’ which for her denoted joint participation in festivities or everyday recreation and hanging out, while another drew ‘yahé’ — the traditional indigenous medicine through which he communicated and took care of his daughters. This signaled to us other sorts of interactions that pertained to wellbeing and a good life while highlighting that the components of such rituals and interactions were quite diverse.

Arriving at the most relevant categories in research tends to be an exercise of fine tuning between two poles that can be equally unproductive: too much abstraction and too much complexity. Too much abstraction can empty the map of the sort of referents that are meaningful for a person, or enforce the invisibility of particular dimensions—which has happened often enough, particularly when discussing the activities carried out in the domestic sphere. That too much complexity can also be problematic was a lesson, which became all-too-evident for us in this second part of the exercise. The design issues we faced in the drawing of goods and services circulating through the network were, again, both a matter of operational convenience and flexibility. For while including different sorts of flows could give us a more comprehensive view of the interactions in the network, too many flows could make the resulting map unreadable. Even without the extra color, our maps ended up being quite saturated and difficult to read (see picture above).

Fortunately, we had the opportunity to try again. Instead of drawing all the flows on a single sheet of paper, we used acetate sheets in order to be able to juxtapose layers. Adding and extracting layers gave us considerable room to play with. And it allowed for this to happen on site, with the combination of different layers becoming a resource for discussions with participants. In the end, there were iterative changes not only in the various attempts by research participants but also in the implementation of our methods (see an example of the outcomes in the pictures below). Trying again is an option that we as researchers were thankful for, and so were participants: for who hasn’t in general had moments and situations where they have thought ‘this is what I should have done’ or finished a conversation and after a while thought ‘Ah! This is what I should have replied!’

Sonia's fourth attempt, and her map with the money layer on top

The interpretation of these maps began along with their crafting, and has not finished. We still have some work to do, including analyzing what these maps tell us about present views in the context of other fieldwork material we gathered about past and future perspectives of families’ social protection practices. We want to emphasize that drawing their maps was something these participants enjoyed (and so did we). Some of the pros discussed here—of the different attempts and on-site conversations during the map-drawing becoming a resource—could also be obtained in other contexts using computer software. But one thing to be said about whatever means chosen is that networks can help visualize not only quantities of flows but entire worldviews. And for the latter, thinking about the best way of harnessing participants’ abilities is key for their engagement.    

Fraser, N., H. Dahl, P. Stolz and R. Willig (2004) ‘Recognition, redistribution and representation in capitalist global society: An interview with Nacy Fraser’, Acta Sociológica, Vol.47, No.4, pp.374-382.

Salazar, M.C. (1992) (editor) La investigación-acción participativa. Inicios y Desarrollos.  Editorial Popular: Madrid, pp.14-20.

Smith, D. (1996) ‘Telling the truth after postmodernism’, Symbolic Interaction, 19, pp.171-202.

Trust Funds: Session Four of the 2016 Conference

"In _____We Trust: The Contingencies of Social and Financial Protection" with discussant Kate McKee of Consultative Group to Assist the Poor (CGAP) began the session by polling participants about their trust relationships with banks, insurance companies, credit card companies, and spouses. She also built on earlier discussions about the differences between "knowing how" and "knowing whether" by pointing to issues about lack of choice, the disconnect among clients with efficiency discourses from industry, the "layering" of digital effects, and the understanding that the continuing "role of the state is quite important" as an entity that can "drive" efforts.

“The role of mobile money in social protection networks in two rural areas of Colombia" by Maria Elisa Balen and Andrea Beltrán from the Universidad Externado de Colombia started with an explanation of how sixty years of conflict had produced over six million internally displaced people. Using the analytical triad of market, state and family, the research team focused on "social protection practices" in two field sites: Montes de María in the north and Putumayo in the south. The northern region has been suffering from a decline of tobacco production, and in the south the ups and down of illegal coca crops have been disruptive. Thus the family has to "reconfigure over a large distance." Two additional features are significant: "the state has become more present," and "mobile money becomes an interesting object of study."

The methodology of the study, which used snowballing ("someone who knows someone") and different entry points, avoided "normative perspectives of what family is" and was structured around "two decentralizations." Researchers looked at practices from a past-present-future perspective (including accounting for "how they think the future will be" and "how they want the future to be") and viewed money with "an approach allowing for diversity in conflict zones" and in the context of "other goods and services." The research team used tools like storytelling, drawing (including family maps), and workshop participation.

Participants faced a number of challenges in an environment in which regulation is designed to protect a platform being open to everyone but has yet to be enforced. Often bank intermediaries change very often, and the distribution of cash transfers also changes. When populations in those environments "don't know who they are dealing with and what they have to do to be more stable," the resulting volatility can be very relevant. Regional differences matter as well. For example, in the north the availability of cash transfers for two or three years has shaped uptake patterns. Researchers also looked at how participants treated different amounts of money differently. Among their major findings, researchers found 1) the amount of money in circulation changed in both directions, 2) money is often part of a wider web of exchange, and 3) mobile phones are present in family practices but don't appear to be influencing "technological spillover."

"Dimensions of Electronic fraud and Governance of Trust in Nigeria’s Cashless Ecosystem" by Oludayo Tade of University of Ibadan and Oluwatosin Adeniyi of University of Ibadan looked at "what trust means" and "how trust-building can be done" by examining financial fraud in the digital sector and how it might be facilitated by the trust fostered by intimate ties. They also observed a generational dimension in opportunities for deviant behavior in this "peculiar ecosystem," because of the existence of a "huge population of young people" that is "also dynamic" in which Nigerian youth may "deploy their energies" for "the right and wrong reasons." In considering the dimensions of e-fraud and how trust issues may stymie adoption of new technologies, they reminded the audience that the "internal dimension" in which a conspiracy by staff of the bank may compromise the data of the bank or improperly use technical know-how to make cash transfers. With 21.69 billion lost to 3,756 fraud cases in 2013 alone, policies pushing cashlessness can stimulate greater anxiety. Wen "trust underlies customer-bank relations," breaches cause avoidance behaviors and disrupt financial ecosystems. Fraud strategies may also involve love/fiancee, wife/husband, and son/father dyads, although transaction alerts can foil schemes, particularly for ATM card withdrawal fraud.

At this stage of the primarily qualitative study, content analysis has been done and crime narratives have been analyzed. For example, they presented The Eatery Case as an instance of "un-credited lodgment." Many scams promise to return money in two weeks time and are facilitated through text messages. They also note the "other side" of fraud in terms of governance, and how from the side of business and government, access to subscription services can be compromised

In the question and answer session the team emphasized the importance of specific context in "what you mean when you think about the unbanked." Insights from the field indicated that people were deeply invested in formal banking, and that the rhythms of life in "normal local markets" were still structured around the informal collection of daily contributions from traders. They noted that in making trade-offs, an incentive for becoming banked might be to avoid being susceptible to "increased physical attacks" and "robbery at home," in which victims would lose not only their property but also their lives. Transferring risks to a formal banking center could limit this danger. Additionally, they pointed to the affordances of existing programs for students to open accounts, which "enables you to receive money from home." They also observed that as people travel "we need to design packages that addresses customer characterizations."

"Intermediaries, Cash Economies, and Technological Change in Myanmar and India" by Janaki Srinivasan of the International Institute of Information Technology Bangalore (IIITB) and Elisa Oreglia of SOAS at the University of London examined why intermediaries might be valuable rather than vilified.

"We have most of our fieldwork ahead of us," Oreglia admitted and expressed her enthusiasm for IMTFI critique, because she and Srinivasan were "looking for feedback." She began with a story of a tea trader from the northern part of Myanmar. "In many ways she is the kind of intermediary who is portrayed as the 'bad guy' in markets." Enthusiasts for disintermediation might see her as taking "advantage of farmers who may be ignorant of prices or unable to travel" and morally compromised by her assumptions that "farmers are really dumb." In a system in which traders may "give money and clothes" that create obligations from farmers who "have to sell to us because they are indebted to us" she appears as a suspect character. But Oreglia argued that the story is "much more complicated," particularly when "cash persists as do intermediaries" despite the potential "escape" offered by mobile money. Yet "even when the same operation would be cheaper and faster" if done directly by the farmer himself, many prefer existing social, cultural, and economic norms.

Srinivasan noted how "markets that are dominated by cash" raise interesting questions about the role of intermediaries and "what value are they bringing to the market," "what value do these transactions brings to the idea of value as situated in a place," and "what constitutes value in two different places." She emphasized the importance of how different countries manifest different patterns of adoption: "mobile money is about to take off in Myanmar," but in India "mobile phones has been around for a while, but mobile money is relatively recent." Although she granted it can be challenging to map how intermediaries are able to add value or disrupt value in a summer of fieldwork, she will be looking at a site that she has worked at previously in in Kerala in a study "which is itself a revisit" of an influential study by Robert Jensen who did survey work over the course of five years. (IMTFI blog readers can peruse the article for themselves from this link to "The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector and read an account of Srinivasan's first IMTFI presentation with Jenna Burrell and Richa Kumar here) 

Srinivasan believes that terms like "producer" or "seller" may actually be more complicated categories characterized by differences of investment, size of fishing crafts and operational costs, and even various types of fish. Thus "the story of a sardine" may be different from the story of another fish. In particular, the role of the auctioneer may be important as well as issues of religion and gender that differentiate Janaki's field site in the Christian south and Jensen's in the Muslim north. Although the middleman is "the person that everyone wants to remove," she asserts that collective organizations can have more benefits than autonomous entrepreneurs and that the rise of co-ops in the sixties and seventies had undermined the power of the previous"fairly exploitive relationship." Using an auctioneer who was paid by the co-op was often valued "to get the best prices for the fish," although a system of transparent auctioning facilitated that, because it was "a system that people have come to recognize and trust." In asking "what does this have to do with technology," she noted that "the auctioneer always had a mobile phone." Accounts were settled daily and sometimes settled weekly. Of course, in 2012 there was "no mobile money to speak of," so Srinivasan was looking forward to revisiting to "see how the intermediary deals with" the new platform.

Oreglia noted three previous financial crises in Myanmar and instances of demonetization. She explained that the field site was in an area of ethnic minorities and small market towns with Burmese-Chinese and Burmese-Indian residents, as well as tribal people, so ethnicity could also play a role not only in trust but in loyalty. The region might "trade with the rest of the country," as well as with China and Thailand, using its economic base in agricultural products. In the illustration above she shared the roughness of field notes, in trying to map out how money travels, including on bus networks. and the many financial movements of small traders who tended to borrow money from financial traders. Unlike the Kerala case, co-ops were used mostly by women traders. Goldsmiths who were all around the market and tended to be Chinese, Those of Chinese ethnicity "did business with everyone," although she emphasized the fact that "loyalty is not necessarily trust." Her tea traders relied on farmers not having many choices, but the technology that has proved to be most transformative is not mobile money. Rather she claimed that cheap motorbikes from China were offering now access to other lines of credit, because farmers could travel to other villages much more easily. Nonetheless most "still rely on these traders," and "ethnic ties have big part to play."

Bothe researchers said they strove to "rescue intermediaries from distain" and the "contempt they are held in." To learn more about the disintermediation debate, you can visit this profile of Janaki Srinivasan to read an extended interview with her and see images from her Kerala field site.

Taking Time to Adapt

CONCEPCION, Colombia

A new report from the online news and popular culture channel Fusion, explains the pros and cons of mobile money and why uptake is slow in Concepcion, Colombia.

Manuel Rueda/Fusion

"Although the system provides clear benefits, such as facilitating the transfer of remittance money to relatives in far-off villages where banks don’t exist, it usually takes time for people to adapt to the new technology. It’s particularly tough to promote mobile money in places where it’s not used regularly to pay salaries...." Read on.

What's Behind Door Number One? Experimentation and Innovation: Tools and Solutions for Specialized Populations

The final panel of the day modeled how the educational mission of IMFTI might take many forms: academic lecture, episodic entertainment oriented around humor, or impassioned call to action from the perspective of non-governmental advocacy.  Despite some technical difficulties, the final trio of papers of the day was ably moderated by IMTFI stalwart Scott Mainwaring, an HCI researcher now based in Portland who has had a leading role in a number of UCI think tanks.

"Risk Preferences, Time Preferences, and Willingness-to-Pay with Mobile Money versus Cash in Bangladesh" was presented by Jonathan Morduch of NYU, but he gave credit to his NYU colleague  Jean Lee and to two other co-authors.  As one of the authors who created Portfolios of the Poor, Morduch has maintained a high scholarly profile on issues of financial inclusion.  In his talk at IMTFI he emphasized "new ways of thinking through new ways that people spend money," including new approaches to risk preferences, time preferences, and models for willingness to pay.  Although his study focused on the highly successful electronic currency efforts of bKash, he wanted to account for “monetary ecologies” that might be more complex.  He also aimed to go beyond existing US research on attitudes about cards vs. cash to understand how mobile phone currency might be different from traditional currency for citizens of a developing nation.

He prefaced his talk with some historical background about bKash, which was founded in 2011 by BRAC Bank and has counted IFC (International Finance Corporation) and the Gates Foundation among its investors.  It has garnered some impressive statistics, including about 14 million subscribers and 105,000 agent points that allow the company to offer both money transfer and mobile wallet services.  Sold and advertised as a payment platform – with advertisements featuring students, garment workers, and other economic actors -- Morduch argues that bKash functions in monetary ecologies of behaviors, resources, services, and products.

Morduch's team poses a significant question drawn from the IMTFI's own calls for proposals: "Does the digitization of money dematerialize the symbolism and physicality of money, and does it have consequences for decision-making involving spending and saving?  In other words, for those in Bangladesh, does 1 Tk in cash equal 1 Tk in mobile money?

Morduch notes that The Social Meaning of Money by Viviana A. Zelizer makes the argument that money depends on who earns it and how it is earned, so that different kinds of money are spent differently.  For example, money on mobile a phone sent from daughter working in a garment factory may be differentiated from money in cash derived from farm work by those remaining in rural life.  He pointed to other work in the US about credit cards vs. cash and observed that the use of this research in mobile money studies may obscure an important functional difference, in that such cards decouple the moment of spending from the moment of payment and thus involve notions of liquidity and the nature of credit.  Such currency functions as "play money," as Priya Raghubir and Joydeep Srivastava assert in their influential article "Monopoly Money: The Effect of Payment Coupling and Form on Spending Behavior," which examines how much experimental subjects were willing to pay for nine items on a menu without prices.  By adding a credit card logo to the menu, researchers noted behavior changes, just as a study of how $50 of gift scrip vs. the same amount of cash for use at a grocery outlet might influence how potential customers might choose items in favor of expensive soups over cheaper soups or expensive pens over less expensive ones in a phenomena that could be characterized as "spending more when not spending."

Researchers focused on the Gaibandha District in the Rangpur Division in Bangladesh near the Indian border.  The country has a low rate of food consumption, which is worsened by a famine season or "monga" condition.  Working with the NGO Gana Unnayan Kendra (GUK), which helps women to become garment workers and places them in jobs in the capital Dhaka, researchers also had to account for seasonal variability in incomes.  Morduch's team was interested in possible unexpected effects of remittances, if mobile money was considered dematerialized and not weighed with same consideration as cash money.  Using Raghubir and Srivastava's research with the monopoly money paradigm, researchers wanted to look at how a different context and time might shape risk preferences.  The sample studies was derived from families sending migrants to Dhaka, and the methodology was intended to account for the impacts of gender, class, occupation, and age.  By looking at risk preferences in work pioneered decades ago about sets of gambles that might be considered analogous to bets placed on head flipping, researchers can look at how subjects might choose a safer lower yield bet (such as 33/33) in comparison to a more risky tempting one (such as 0/95).  At this point they have completed stages for recruitment and consent, baseline surveys, time preferences, and willingness to pay.

"Mobile Money Financial Literacy via Television Comedy" by Andrew Crawford of Monash University looked at mobile money in Cambodia in the context of financial education campaigns rather than just at the uptake of a particular service, in this case Wing.  Crawford opened by reminding the audience that the financial system had been destroyed by the Khmer Rouge, that US dollars had been used for a period of time afterwards.  Although there were micro finance competitors, Wing -- like M-PESA -- "flows through the economy," and digital currency circulates with loan payments, money transfers, payroll, multi-currency conversion, e-commerce, ATM cards, and deposits.  Nonetheless, financial policy makers were well aware of the problems with mobile money observed by researchers, including the fact that it was expensive to conduct financial education, curricula were slow to rollout, and language and lack of interest issues could stymie retaining and applying information.  (At this point he noted that boredom from conventional presentations like own PowerPoint presentation could cause little to be remembered from his talk.)

Crawford argued that TV comedy could provide a viable alternative to conventional public information campaigns, given that 98% of people in the country watch television and that penetration is particularly high, because many people also watch shows on buses, where corporate synergies between broadcasters, such as  CTN and CNC, and bus companies present opportunities for the Cambodia Microfinance Association and ADA Luxembourg.  Crawford showed several episodes with a couple who progress from very small businesses in barbering and food service to larger enterprises that require more capital and financial planning.  As the relationship matures, along with their banking and credit skills, his hair gradually becomes tamed and his affect becomes less outrageous.

Crawford's research team wanted to find out if there was any impact in both short-term and the long-term financial literacy from watching the show.  Furthermore, can any impact measured in focus groups be extrapolated across wider populations?  The group focused on garment factory workers, because of a desire to focus on women, who represented about 400,000 workers, providing labor for major brands, who were paid in cash with no method to save and thus often remit to family.  In the past the transfer of money was effected via motorbikes with locked boxes, which was inefficient.  Subjects were usually young (in Crawford's opinion often too young to be working full time) and watchers of TV.  The methodology involved three groups: 1) Treatment 1, which experienced generic financial education with a five-minute slide presentation video, 2) Treatment 2, which experienced financial education entertainment with a five-minute comedy show, and 3) Control Group, which experienced a generic comedy show and received no financial literacy education.  Crawford explained that he wanted to combine quantitative research from surveys with qualitative research that involved 1-on-1 interviews with researchers and focus groups after each screening.  Follow up sessions conducted after 3 months to test long term effectiveness Phone surveys – CEO of Wing owns TV station, wife is host of Cambodia’s Next Top Model Country-wide changes – New mobile money accounts, demographics of new clients, general mobile savings trends Novelty Background, Effectiveness, Share results – final research paper

"The Formal Disguise: Financial Inclusion Among Flexible Workers and the Self-Employed" by Ana Echeverry and Coppelia Herrán of Inspira Lab focused on Colombia and the tough competition faced by workers often forced to pay-to-work in positions lacking any social safety net for health and education targeting an unskilled or low skilled labor force, in fields that include outsourced textile production and manufacturing, food and restaurant services, retail and sales, car maintenance and services, and fitness and beauty, where workers often must pay a fee for using the commercial space and bring their own equipment and supplies.  Such workers must often even pay  fees for keeping the place of employment clean, and half of their wages may go to the owner of the commercial space.  Unlike the "temptation costs" described in the previous panel, on this panel Echeverry and  Herrán depict highly disciplined workers willing to invest in the site of employment.  Nonetheless these workers may be extremely disenfranchised.

This team before had worked with "bottom of the pyramid" workers outside of the formal system, but those adopting what  Echeverry and Herrán call "the formal disguise" in many ways are just as desperate as those they had studied before who were using technology through gaming networks and "betting on chance."  Among these barely legal formal workers 43.3% were self-employed, 46.4% earned below the minimum wage, and 50% lacked social security coverage.  The team focused on 24 informants and took a direct approach in public spaces and via referrals with video ethnography and semi-structured interviews trying to the understand the scope of problem.  By interrogating "different views and perspectives," they characterized their work as "exploratory research" about contrasting behaviors and identifying underlying factors driving behaviors, such as values, attitudes, and perceptions.

The group focused on identifying those with contrasting behaviors with a 360 degree view of human personalities that included the careful planner, the risk taker, the person ending a career, the formally trained worker, the submissive economic actor, the spontaneous personality, the risk averse, the independent, the apprentice, the tech-enthusiast, and the technology averse.  By identifying common patterns among diverse people, researchers hoped to identify common strategies and attitudes reflected across personality types.  Informants talked about work, money, and risk with researchers and described an environment of "in and out mobility" instead of "upward mobility."  Such workers depended on using word of mouth and referrals for finding jobs, reliance on social networking, trust, honesty, and willingness to work.  Such workers constantly battled the fact that temporary employment makes it difficult to establish relationships.

This population of vulnerable workers seemed to be avoiding account deductions.  They were not using mobile money, because they realized that the bank takes money, and they also wanted to continue staying below the "fiscal radar" to reduce costs.  Researchers observed a pattern of withdrawing all money on payday and a complicated mental logic in regards to risk.  Their subjects were willing to make certain kinds of investments, even if they did not map onto the conventional architecture of financial inclusion.  These workers might expend pocket money to get better healthcare or divert savings into building home additions for future rental as a retirement strategy.  They might funnel saving towards equipment with hopes of enhanced employment opportunity, but more living those savings went toward financing the inevitable with planning for their own mortality.  In other words, many had little hesitation about shouldering the costs of funeral insurance – in light of their knowledge that this is an event that they know will happen.  Unlike the relatively transparent investment schemes in funeral insurance,  Echeverry bemoaned the fact that 90% of the people subsidized 10% of those who used government services, which fostered a further lack of trust in the system.  Instead workers assumed all risks and operational costs as a consequence of flexible and emerging contracts.  Often workers had to splurge on costly training courses as well.  Echeverry opened by likening many of the country's educational investments to DeVry-style extraction.

Echeverry noted that children become a priority when people are so exhausted and desperate.  The parents researchers studied were willing to do anything for their offspring.  They also were extremely dependent on communication networks, especially those that involve access to word-of-mouth information.  Researchers marveled at the fact that most people in the population they studied had smart phones, which were a "tool for the job."  In fact,"many of them had phones better than ours."  To stay competitive and reduce costs, many opted out of mandatory requirements.  The Inspira team described them as "quite organized," and asserted that "most of them do financial planning."  For such labor-intensive poverty vulnerability the "concern isn’t healthcare but not being able to work."  Thus most can barely afford mandatory insurance services, which would come to about 15% of their income.  Rather than rely on a risky calculus around public health and modern medicine, they were more likely to focus on "protecting oneself from risks" in other ways, including by relying on "religious elements," such as obeisance to the patron of jobs and workers.  Echeverry said that she observed similar behavior in her own nephew around the game Magic the Gathering, which is likewise about rules for "special powers.  These workers in casual labor markets feel compelled to "insure yourself with saints."

Because of government turnover and policy reinvention, researchers have had to delay the implementation phase of research.  Their current action items for lawmakers emphasize an agenda for worker-centered change, which includes the following elements: 1) Offer incentives to compensate for social protection benefits, 2) Provide social dialogue tools that bring together dispersed workers and employers, 3) Offer tools and services that ensure a better future or  living conditions for children, 4) Leverage referrals and social networks into employment services, 5) Make loans or credit eligibility visible to the user, 6) Recommend related products or services into the experience of payroll accounts, such as insurance or investments, 7) Promote add-on complements to mandatory insurance at a minimum, 8) Structural social security reform to include lowering costs through customization, and 9) Promote alternative investments.

To emphasize pragmatic approaches and direct attention to new opportunities for the business sector, the Inspira research team also catalogued a number of "innovation opportunities" that follow from worker-centered principles.  First, researchers discouraged companies from thinking about desktop computing as a platform for Internet and emphasized analogies to social network sites and mobile applications.  For such workers digital recommendations serve a number of purposes, and mobile technologies can also congregate dispersed, independent, and flexible workers to facilitate exchange of services and spread opportunities.  This approach would help workers make informed decisions, and stay up-to-date on legal, insurance and financial topics.  Second, in thinking about money matters, researchers urged financial service providers to offer savings incentives toward specific goals.  For example, in explaining eligibility for loans, allow prospective borrowers to visualize pre approved loans.  Third, companies could develop micro-insurance to provide alternative products that personalize one-sized-fits-all mandatory insurance or respond to specific needs that might be constantly present in workers' imaginations, such as eldercare or high school as expenditures.  Fourth, innovations could emphasize closing the loopholes created by flexible labor laws designed to help Colombians to become competitive in the global market.  Mobile technologies can help workers meet in a place for business relationships, social dialogue, and financial and risk management services.

Listening to Echeverry, I was reminded of the work of Lilly Irani about the flexible workforce that provides so-called "Mechanical Turk" services too difficult for automated computerized AI to be tasked to do.  Irani has had technology workers rate employers to turn the table on systems that before could only rate workers.

Betting on Chance, a Booklet

by IMTFI researchers Ana Echeverry and Coppelia Herrán

Betting on Chance is the result of a research project that seeks new ideas and answers to achieve financial inclusion by working with and adapting services originally intended for gambling. During research in Medellin, Colombia, we found that people living below the poverty line were using game network operators as a means of conducting their daily financial activities. Network game operators are companies that specialize in managing betting and gambling games through a network of privately owned points of sales as well as affiliate independent sellers. Each seller uses a digital device or point-of-sale terminal for issuing tickets and completing transactions online.

The booklet includes helpful illustrations of the movement of money.

By using video-ethnographic methods, our team of social scientists and designers documented the activities of 21 informants who work in street-sales in the city of Medellin, Colombia. Why, we ask, are these game operators preferable as financial service providers for the poor? What needs do they address? What can mobile money service providers and microfinance institutions learn from these local institutions and practices? Although this study only covered a limited geographic area in Colombia, we believe that the findings and guidelines can be applied in different contexts affected by poverty in this country and beyond. Through an exercise in design thinking, we draw attention to criteria that should be taken into account when developing new products and services aimed to facilitate the use and exchange of money among people with scarce resources.

This booklet seeks to elicit conversations and the exchange of ideas across various fields including development economics and microfinance, social studies of poverty and human centered design. We hope the guidelines outlined in the booklet will help people working in the public, private and academic sectors to design alternative policies and programs to serve the common good.

Our final brochure is available both in English and Spanish.

If you would like to learn more about this project or have any comments, please contact:
Ana Echeverry: Email: anamariaev@gmail.com
Coppelia Herrán: Email: coppe@me.com
www.toca.com