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Calling All Innovations in Financial Capability!

March 24, 2015

 A New FI2020 Project Needs to Hear about You

by Julia Arnold

A colleague recently shared a story about helping a friend’s housekeeper open a Jan Dhan Yojana account in India - a free bank account offered through India’s massive new financial inclusion scheme.  After being stonewalled by the bank teller and yelled at by the assistant manager, who insisted the bank no longer offered the account, my colleague and the housekeeper were ushered into the bank manager’s office. The bank manager proceeded to ask the housekeeper for multiple forms of ID, none of which are required for the Jan Dhan Yojana account.  Only when the bank manager recognized my colleague as a financial inclusion expert and author of a scathing newspaper article on the Indian banking sector, did he “make an exception”.  When the housekeeper returned the following day to get her debit card, she was asked for payment.  Luckily, she pointed to a copy of a pamphlet in the local language, which showed that she should be allowed to open the account without a deposit. Now, after all that, she is a member of the formal banking system of India.

What this story shows is that a decree that banks must offer a financial product to the unbanked is not enough.  Educating front line staff, shifting workplace culture, and strengthening consumer protection laws are all key changes needed to enable genuine inclusion. 

So is advancing financial capability.  Financial capability refers to a person’s knowledge, skills, attitudes, and behavior, as demonstrated in informed personal financial choices and outcomes.  In this case, the housekeeper had access to a personal financial inclusion expert to help her navigate her relationship with the bank, but few people are so lucky.

Financial capability efforts are not only about information transfer, but also encompass enhancing a person’s ability to use financial services effectively to manage her economic life.  For example, in my colleagues’ story, an educated frontline staff who helped the housekeeper understand the appropriate use of the requested bank account would be an example of financial capability building.Or another financial capability intervention could use the account to encourage the use of the account during times when the housekeeper has money to deposit (e.g., tracking her deposits and using that data to send reminders at those intervals).

Inspired in part by stories like this, and building on FI2020’s Roadmap to Financial Inclusion, the Center for Financial Inclusion is investigating innovators in building financial capability.  In this context, an innovation can refer to a new or new use of a delivery mechanism, product design, program idea or process. The purpose of the innovation must be to assist customers to gain greater financial capability.  Over the course of this year, we are scouring the world to identify the best, most creative – and potentially replicable – efforts to build customer financial capability – starting right now!

Have you seen or been associated with any innovations in financial capability building that CFI can investigate?  Please share them with us!

Below you will find a link to a Google Form that asks you to briefly describe an innovation. The form is easy to use and should take less than five minutes of your time.

By contributing to our research, you are helping ensure we capture the full spectrum of innovations around the world.  It will take all of us to make stories like the above are a thing of the past. Thanks in advance for your help!

This post was originally published on the CFI blog.