Customer marketing and education are always important to driving the adoption of mobile money, but they are absolutely crucial for female customers, who generally take more time than men to trust and start using mobile money services. In India, where uptake of mobile money has been slow—only 3% of women have heard of it and 0.1% have used it — customer education must be a key part of any successful mobile money initiative. This snapshot looks at how Swadhaar identified the needs of its urban and resource-poor female customers and then used these insights to create tailored training materials for a mobile money loan repayment pilot with Airtel Money in Mumbai, India.
CGAP partnered with Janalakshmi, the largest urban microfinance institution in India serving 3 million poor Indian women, and global development advisory, Dalberg, to understand the Janalakshmi customers’ journey and design and test customer experience improvements for them. One of the outputs from this work is this Customer Experience (CX) Playbook, which aims to help FSP staff serving poor customers, to implement customer experience improvements, and ultimately influence their organizations to build a culture of customer-centric innovation.
The CX Playbook is divided into the following eight sections detailing different stages of embedding customercentricity within the organization. Each section contains operating principles and useful tools for each stage. The Playbook also describes typical challenges faced in implementing such projects along with suggested solutions. Use the CX Playbook for either end-to-end CX projects or specific aspects such as user research or CX ideation.
- Customer Experience (CX) 101
- Managing CX Projects
- Customer Research
- Develop CX Ideas
- Measuring & Sharing Results
- Scaling Up
- Adopting a CX Culture
India’s financial inclusion agenda has witnessed a paradigm shift over the last decade, away from an emphasis on credit to a more comprehensive approach toward financial services (e.g., opening bank accounts and offering basic financial products, such as insurance). This paper describes the structure of banking and microfinance institutions in India relevant to the developing model of financial inclusion, as well as relevant regulatory structure and modes of delivery. It explains the current state of financial inclusion, as well as regulatory changes necessary to make the new architecture for inclusion viable, including a critique of some of the recommendations of the Mor Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households. The paper then reviews modes of delivery and the regulatory structure being contemplated or recently introduced. It assesses the suitability objective envisaged as critical for inclusion, associated challenge of revamping consumer protection laws, and imperative of improving financial literacy. The paper also discusses the case of micro, small, and medium-sized enterprises in the given context
This post originally appeared on the CFI website.
India has received much fanfare for its financial inclusion efforts in recent years. A few weeks ago we declared it our Financial Inclusion Country of the Year for 2015 in recognition of the major steps it took, which resulted in achieving the greatest improvement in its Global Microscope score between 2014 and 2015. It recently granted new bank licenses that dramatically diversify and grow the country’s services landscape, widely applied new cost-saving technologies like biometric identification, and rolled-out historically ambitious public programs like PMJDY that dramatically reduce the portion of the population that is unbanked.
“Never waste a good crisis” said Royston Braganza, CEO of Grameen Capital India, at the Inclusive Finance Summit in Delhi last month, referring to the Andhra Pradesh crisis of 2010. The recently-released Responsible Finance India 2015 analyses the current state of practice on responsible finance and social performance management in India. In light of that report, Braganza questioned, “Have we learned from our mistakes?”
Responsible finance centers on client protection and market conduct, and has been extended in recent years to include many other good corporate citizenship issues such as employee management, governance, and social performance monitoring.
By way of context, here are a few numbers on the present-day BoP Indian finance landscape:
- Across MFIs in India’s MFIN network, which represent roughly 90 percent of MFIs in the country, loan books grew by 64 percent in the last fiscal year, compared with 43 percent in the year prior and 4 percent in the year before that.
- In total, MFI outreach in the country accounts for about 100 million clients.
- Reportedly, through PMJDY 180 million new bank accounts have been opened over the past year, and adjacent schemes covering insurance, pensions, and credit have been implemented, as well.
- For the first time in a decade, the RBI granted new bank licenses last year – to Bandhan Bank and IDFC. Bandhan now has 500 branches and over 2,000 service centers across 24 states. Sixty-five percent of IDFC’s first 23 branches are located in rural areas of Madhya Pradesh.
- Under the RBI’s newly created categories of payment banks and small finance banks, 11 and 10 providers, respectively, have received new licenses, further expanding the network of providers serving the poor.
In short, given India’s rapidly changing and expanding financial services landscape, it’s more important than ever that these new players, and the quickly-growing older ones, are treating these first-time clients, and everyone else, with adequate care.
Defining and Monitoring Social Goals
Aside from a few MFIs, social goals are not clearly defined, and those that have defined goals might not have them integrated into their business plan, and/or might not be monitoring them, relayed Alok Misra, author of theResponsible Finance India report. The Code of Conduct assessment report by MicroSave covered 50 assessments including 32 NBFC-MFIs and revealed that only 37 percent of MFIs have a documented social performance management policy in place. Without this, much pertaining to an institution’s social mission goes untracked, which widens the possibility for mission drift.
Social Performance in Governance
Social performance management needs to be embedded at institutions’ top levels. “How could your board be expected to make critical decisions about things related to operations if they don’t know about client centricity and social missions?” asked Leah Wardle of the Social Performance Task Force.
Given that most MFIs in India don’t have well-defined social goals, it’s not surprising that much work remains in mainstreaming social performance in governance. Regulations and the industry Code of Conduct have significantly improved governance, yet only 17 percent of MFIs have SPM board subcommittees. The focus of governance has been on traditional compliance-related areas.
Addressing client protection has seen tremendous progress since the 2010 crisis, thanks in part to regulatory guidelines, the industry Code of Conduct, and the Smart Campaign. Great strides have been made in disclosure, with a focus on client understanding, for example. Most MFIs in the country strive to conduct compulsory group trainings using plain-speak for all new clients on product features, terms, and conditions.
Hema Bansal, India Director of the Smart Campaign, pointed to two other areas in need of serious attention: consistent and informed payment rescheduling policies and stronger research and application of cash flow analysis to assess repayment capacity.
Responsibility to Staff
Institutions have responsibilities to their staff, as well. Staff turnover and gender imbalance remain areas of concern among MFIs in India. Only roughly 20 percent of MFI staff are women. The industry Code of Conduct centers on labor law compliance, including minimum wage and mandatory leave. Although such requirements are largely being met, high staff turnover warrants closer examination of wages, staff satisfaction, and intensity of field work – especially given recent industry growth.
These 60 percent growth numbers might seem dramatic, and they are, but the additional outreach is indeed welcomed. During the conference session it was shared that just five states in India account for 58 percent of the country’s MFI loan portfolio. One-hundred-twenty districts in the country don’t have an MFI! Manoj Nambiar, president of MFIN, remarking on the dramatically changing services landscape said, “If financial inclusion is a priority of the government and the country, we need more institutions. It’s not a question of me versus them. It’s a question of what we can do together.” However, it’s essential to remember what’s come before and not repeat the horrible crisis that begun this decade. In order for inclusion to be sustainable, responsible finance is critical.
Note: These remarks were made during a panel discussion at the Inclusive Finance India Summit in December, entitled, “Moving from No Harm to Doing Good: Double Bottom-Line Microfinance”.
Lessons on financial education from a field experiment in India
This paper uses a large scale field experiment in India to study attitudinal, behavioral, and cognitive constraints that stymie the link between financial education and financial outcomes. The study complements financial education with (i) participant classroom motivation with pay for performance on a knowledge test, (ii) intensity of treatment with personalized financial counseling, and (iii) behavioral nudges with financial goal setting. The analysis finds no impact of pay for performance but significant effects of both counseling and goal setting on real financial outcomes. These results identify important complements to financial education that can bridge the gap between financial knowledge and financial behavior change.
This paper is a product of the Finance and Private Sector Development Team, Development Research Group. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The corresponding author may be contacted at firstname.lastname@example.org.
This report presents the findings of the Voice of the Client project in India, a ground-breaking initiative in the microfinance industry developed by Hivos and MIX to leverage mobile technologies as a means to analyze the level of satisfaction of clients with the suite of products and services offered by their MFIs. The analysis is based on data related to client protection principles which were collected from nearly 6,000 clients across four MFIs in India, namely Cashpor, Satin, Sonata, and Ujjivan.
The analysis represents a novel attempt to create benchmarks based on client-level data in the Indian market with the aim of providing MFIs and funders with actionable data sourced directly from clients that can be leveraged to address areas of weakness and improve operations accordingly. By regularly tracking how clients perceive the customer service they receive, microfinance stakeholders can design programs that can better meet client needs and preferences and, more broadly, improve their impact on the population they aim to serve.
This paper discusses the role of microinsurance, in a broader social protection framework, as a possible instrument to mitigate risk and reduce vulnerability of poor and low-income households. The research studies microinsurance as an integral part of social protection systems in six countries: Bangladesh, India, Vietnam, Brazil, Cambodia, and Rwanda. It synthesizes the key messages of the country studies for better integration of microinsurance into social protection while considering the social protection principles of universality, solidarity, and equity. It further focuses on insurable risks suitable for microinsurance, such as sickness, old age, death, accidents and disabilities, and extreme weather events. The paper covers the following sections in detail:
- Concept of social protection and microinsurance with a focus on its relevance to the informal economy;
- Description and analysis of different social protection systems and microinsurance practices in six countries;
- Lessons learned from integrating microinsurance into social protection systems;
- Recommendations for extending coverage to the informal economy and other vulnerable groups, improving benefits, and increasing access to public social protection and microinsurance with a focus on approaches that can be replicated in other countries if adapted to fit a specific environment.
This paper seeks to identify the causal effects of expanded access to microcredit on borrowers and communities using six randomized evaluations. The evaluations are based on a variety of sampling, data collection, experimental design, and econometric strategies. The methods are deployed across urban and rural areas of six countries in four continents representing vast disparities in terms of borrower characteristics, loan characteristics, and lender characteristics. The paper finds a consistent pattern of modestly positive, but non-transformative effects of microcredit. Other highlights include:
- Studies do not find clear evidence, or even suggestive evidence, of reductions in poverty or substantial improvements in living standards;
- There is strong evidence suggesting that businesses expand, though the extent of expansion may be limited, and there are hints that profits increase with access to microcredit;
- Analysis shows that it is likely for access to microcredit to have an effect on occupational choice, business scale, consumption choice, female decision power, and improved risk management;
- There is little evidence of harmful effects of microcredit, even with individual lending at high real interest rates;
- Analysis of heterogeneous treatment effects of the studies suggest the possibility of transformative effects on some segments of microlenders’ target populations.
A macro and micro view of MFI’s compliance to the Code of Conduct
Associations of Microfinance Institutions such as Sa-Dhan and the Microfinance Institutions Network developed a Code of Conduct (CoC) for Microfinance Institutions. They were supported in this effort by the Small Industries Development Bank of India and other institutions, after the Fair Practice Code that had been mandated by the Reserve Bank of India came into existence in 2013. The objective was to create acceptable standards and prescribe expected levels of responsible finance and lending by MFIs.
SIDBI took the responsibility for ensuring that MFIs implemented the Code of Conduct and Fair Practice Code seriously. Ever since SIDBI provided support for the Code of Conduct Assessment (COCA) studies, more than 50 MFIs, big and small, have been assessed and provided with inputs on their current state of play in terms of their compliance with the Code of Conduct and the Fair Practice Code. They have also been given guidance on the way forward. SIDBI commissioned MicroSave to consolidate reports of COCA studies of 50 MFIs done by five rating and evaluation companies. The objectives were to generate learning through insights that were gleaned from the sector, to streamline the future format of COCA reports and to reveal the overall lessons that could be learned from these individual assessments.
This report presents the consolidated findings of the Code of Conduct Assessment reports for 50 MFIs in India. The MFIs represent diverse legal structures and a range of business sizes and scales of operation. The MFIs are also representative of varying geographical presence, as they all varied in their outreach in different states across the country.
The reports have been analysed using a framework built on five key pillars that are critical to the implementation of the Code of Conduct. The five pillars are Integrating Social Value into Operations; Credit Processes and Policies; Human Capital; Transparency and Fairness; and Regulatory Compliance.