Solving for financial inclusion's last mile. Interview with IDEO.org's John Won.

Updated: Oct 12

Financial inclusion and the elimination of extreme poverty has made great strides over this last decade. While the global extreme poverty rate fell to a record low of 9% in 2019 and 400M+ people gained access to banking, progress has been uneven, particularly in rural areas. The COVID-10 pandemic also threatens years of hard-won gains.

John Won, co-lead of Last Mile Money at IDEO CoLab, joins to discuss how we reach full financial and digital inclusion through human-centered design focused on traditionally excluded peoples.


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Mack: Welcome, John. Recent headlines worry that years of progress in eliminating extreme poverty will become undone because of the pandemic. Do you believe financial inclusion faces the same risk?

John: Studies are showing the economic shock of the pandemic to low income people. While small businesses in different markets are faring differently, overall they’re struggling and many won’t survive. For countries with large proportions of informal and small businesses, it’s a huge impact. We’re also seeing big shifts in gig workers. In Indonesia, Grab has seen their workforce shift from ridesharing to food delivery, but revenues are still down. In India, there’s a much-publicized migration from urban to rural areas as a result of a lack of work.

What this means for financial inclusion is that if people had low resilience before, as measured by low savings or access to credit or insurance, the current crisis has only exacerbated this. One bright spot is the number of governments providing assistance through G2P [government-to-person] payments. 130 countries are leveraging G2P payments to counter the shocks of the pandemic.

I’m optimistic about the innovation in G2P right now. In India, there’s is a new API framework that sits on top of UPI [universal payment interface] to facilitate access to digital credit for small businesses. We’re doing a design sprint right now to improve the experiences for the end user to improve access to digital credit. Small businesses always need access to working capital, especially now. For example, this provides an opportunity for a retail merchant to go into an app and secure financing to restock their store shelves and bring in money from their customers. By accessing a marketplace of lenders, they can get the best terms and build credit history while doing so.

Mack: One of your current projects is “Last Mile Money” a global collaboration to expand access to the digital economy. For readers that may not be familiar, how would you describe Last Mile Money and the change you seek to make?

John: Last Mile Money is a 5-year initiative with the Gates Foundation whose mission is to connect low-income and rural communities with the digital economy. A big focus has been on emerging economies like India and Indonesia. Our methodology embraces multi-party collaboration, bringing together public and private stakeholders, donors, investors, and others together. We believe by convening and conducting experiments we can innovate around financial inclusion.


To connect rural, low-income people with the digital economy we need to solve for the barriers people face, especially for building trust and distribution or access points. Distribution especially has very persistent challenges. We define our mission broadly in terms of connection with digital economy.

To connect rural, low-income people with the digital economy we need to solve for the barriers people face, especially for building trust and access points.

Mack: What is your perspective on how financial service providers can build trust into their products with these traditionally excluded peoples?

John: As a first step, you need to acknowledge that financial services historically has not been designed for the needs of low-income people. Banking has been optimized for the middle class and wealthy. For low income people, many have had past experiences that have been negative. IDEO.org has worked in markets like Zimbabwe where people lost all of their savings due to hyperinflation therefore no longer trust the financial sector.

When we design new financial products and services it’s crucial to design for those key trust-building moments that really align with people’s needs, interests, and aspirations.

Second, you need to recognize what has been working for low income people in terms of how they manage their lives. Today, many do that informally, or with a mix of informal and formal means. For example, they may use a bank account to manage certain things for their small business and use it when they have saved or earned enough. Others may have a relationship with a local village lender they know and trust and are willing to make the tradeoff for less favorable terms because it is nearby, and they don’t need to deal with unfamiliar aspects. Village savings groups also work really well for low-literacy women in rural areas. That model works because it’s based on trust and power sharing.

As a next step, when we design new financial products and services it’s crucial to design for those key trust-building moments that really align with people’s needs, interests, and aspirations. For example, it’s important to design that onboarding experience for people as they start that journey to digital and digital self-use.

Mack: How large is the challenge of “last mile” issues for inclusion in your view?

John: BCG's studies on last mile access show it’s a dominant issue in rural areas. While there are still challenges, we see reasonable access and quality products in urban areas. But, the models really break down in rural areas. Challenges remain around banks, telecoms, and other providers that don’t see the business case for serving rural customers. The current models for creating access points like bank branches, ATMs, or in person agent networks are too expensive in how they’re built to serve many rural areas.

Challenges remain around banks, telecoms, and other providers that don’t see the business case for serving rural customers.

Last mile customers are still excluded, and those customers bear the costs of operating in a cash-only economy such as the cost of transportation and security risks. A farmer in a rural area may need to travel 1-2 hours a day to an agent access point or farther to a bank branch. They could encounter a problem while traveling. Even if you were to arrive at that access point, the agent may be closed for the day or don’t have the float or liquidity to give you what you need. Low income people don’t feel welcome in bank branches where they may not have shoes or are illiterate.


Mack: You’re also involved in Designing for Digital Confidence which is bringing together a community of product designers and builders focused on digital inclusion. What problem are you solving for through this community?

John: Everyday 1 million people are coming online for the first time. When they’re experiencing these services for the first time, many low-income people see language which they may not know how to read, or icons they understand. The UX/UI is not optimized for people using a touch interface for the first time. For example, what does a shopping cart icon mean to someone who hasn’t ever been inside a supermarket? When we think about how people in emerging economies are turning to online services, especially this year in social distancing, it’s a problem.

Financial services are complex and high stakes. If you’re playing a game for entertainment, that’s one thing. If you’re sending and receiving money to feed your family and you don’t know if the thing you tap on will save you… it’s a huge source of anxiety and risk. We’re helping to create a new generation of apps that are truly inclusive in their design.

We partnered with Google’s Next Billion to develop open-source tools to empower product teams in financial institutions or fintechs to design for these low income users. These product teams need to have empathy for these users who may not always have an internet connection and may only have one data bundle per week. We released these tools to the public in May and we’ve seen a lot of great interest, curiosity and energy to apply this. There’s strong business case here to design for the next billion users with a lot of companies seeing growth in emerging markets as those populations explore new ways of connecting through social media and to build their livelihoods.

It’s especially important in emerging markets where people don’t just have one job, but multiple. Many people are entrepreneurs with many side hustles. Many of these are now increasingly online. For example, farmers were “hacking” Facebook to sell before Facebook marketplace launched. When we think about all the different sellers selling on Amazon or Jumia, we’re seeing this as a trend that’s been having for quite some time.

Everyday 1 million people are coming online for the first time. When they’re experiencing these services for the first time, many low-income people see language which they may not know how to read, or icons they understand.

Mack: Those are great insights. For the product makers today practicing human-centered design (HCD), what advice do you have on launching and managing products in today’s environment?

John: It’s one of the biggest challenges right now and something we have struggled with at CoLab as well. In the HCD process, the first step is to understand the person you seek to serve. For many designers, whether you’re in a developed or emerging market, it’s hard to reach and talk to low income people, especially if they’re rural. In our design process, it’s crucial we validate our ideas with actual low income people.


What we’ve learned is that there are new tools to ground yourself in user needs and feedback. We’ve used Zoom and WhatsApp calls to connect with users and even organized design sprints across 5 time zones. Remote collaboration is challenging but it’s also really inspiring and facilitate even better design. Given the pandemic and economic crisis, human centered design process is needed more than ever so we can bounce back faster from this shock.

I would also add that 10-15 years ago HCD was not was prevalent or recognized for designing for social impact or inclusion. Today in 2020, there is a much more vibrant community of practitioners. Now is such a great time to have conversations across organizations and see what others have designed.

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