Shea Flynn, Camille Parker, and Allison Ryder
07 Feb 2020

Financial inclusion has garnered broad support across the public and private sectors, with a range of actors developing innovative technologies and programs to help consumers in emerging markets gain access to financial products and services. However, with insufficient financial education, literacy and capability, vulnerable populations are likely to encounter over-indebtedness, fraud, or simply choose the wrong products for their financial needs.  Financial education has the power to build trust and customer resilience in rapidly evolving digital economies. The World Bank Group over the last year has echoed lessons we see still today, that “trust, not technology, is the real obstacle” to scaling digital financial inclusion.

Financial capability matters most for the vulnerable

Financial capability, defined as the ability to use one’s knowledge and skills to effectively select and manage financial resources, is one approach to mitigating consumer risks and building trust that is critical for sustainable financial inclusion. OECD studies further show that financial literacy is strongly correlated with financial inclusion; people with low levels of financial literacy tend to have low levels of financial inclusion and vice versa. Moreover, low levels of financial literacy carry significant costs which are magnified for the poor or vulnerable. People with weaker financial literacy skills tend to absorb higher transaction costs or incur higher debts than necessary, among others. Financial literacy matters because it enables consumers to be more informed about when or how to borrow, save, invest and become more resilient in the long run.

 A global financial literacy survey concluded that “despite increases in access to finance globally, only 1 in 3 adults are financially literate.”  This gap is greater in emerging markets, where digital financial services or fintech companies have prioritized building applications to expand access to financial services.  Innovations to advance financial education could provide value-added benefits particularly for customers in poor or rural areas. Without prior financial and digital literacy, customers receiving or seeking financial products are at risk, as they are less informed and their ability may be limited in how best to use financial services.

Lessons from traditional financial education

 To date, there has been mixed successes overall with the various methods used to provide financial education, ranging from mass-market media campaigns to small group, classroom-based trainings. In emerging markets with limited access to technology and multiple demographic groups, mass-market and group financial education programming has shown to be relatively successful. Mass-market, national level financial education campaigns introduce basic financial concepts to a broader audience through advertising campaigns, entertainment, and publicly available resources. While these programs lack the personalization of other categories of financial education, they are effective in ensuring that financial education messaging reaches a broad audience.

For example, the Reserve Bank of India’s Project Financial Literacy disseminates online resources and tutorials on key financial education topics in 13 languages. The initiative also organizes a “Financial Education Week” each year that promotes key themes to target audiences. In addition to these more “traditional” forms of advertising, other programs have aimed to spread financial literacy messages through innovative means, such as radio shows and television. In South Africa, the World Bank teamed with a popular soap opera to incorporate messages about the dangers of debt and predatory loans into its storyline. Research following this type of intervention found that viewers were more likely to be knowledgeable about borrowing sources and less likely to engage in gambling.

 To provide more curated content, group-based models for financial education have also been effectively implemented in emerging markets. Group trainings provide the benefit of tailoring the strategies and curriculum to a certain demographic or consumer profile. This approach is often employed to encourage youth to adopt savvy financial practices earlier in life. One example of group-based financial education is Egypt’s youth savings groups created under the Enterprise Your Life Project. This project, designed in partnership with Making Cents and Plan International, offers a curriculum of twenty, targeted half-hour training sessions to teach youth participants enterprising life skills and financial literacy. Another project in Uganda focuses on improving financial literacy among family units. These examples are among a number of notable financial education initiatives, in addition to others by the Mastercard Foundation, UNCDF, MSC, Mercy Corps Agrifin Accelerate, Making Cents and CGAP. These efforts rely on the premise that creating opportunities for young people to talk about money management with their family encourages them to adopt smart financial behaviors into adulthood.

More recent World Bank research has suggested that traditional approaches remain ineffective at substantially improving financial literacy and behavioral habits. Moreover, these approaches to financial education are expensive and hard to scale. Digital technology, on the other hand, can provide an innovative alternative given their greater outreach to more customers at a lower cost.  Due to the mixed results of using traditional financial education mechanisms, digital-low-touch, solutions have surfaced as an enabler for financial literacy in emerging markets.  Fintechs and digital finance partnerships have an opportunity to tailor financial education approaches to meet specific needs of customers in developed and emerging markets.


Teachable moments for digital inclusion

Financial education programs are leveraging digital technologies to bridge the gap between financial literacy and capability to reach broader audiences. Through a range of new partnership strategies, nonprofits, financial institutions, and multilateral organizations are pioneering creative approaches to bring financial knowledge and personalized financial education to marginalized populations in emerging markets.

As an alternative to traditional financial education models, evidence continues to show that individual financial education techniques at “teachable moments” can be a highly effective means for increasing financial literacy, especially with new technology innovation. In emerging markets with limited internet connectivity and smartphone penetration, SMS text messaging can be the best way to engage with potential customers. Fintech companies are rapidly developing these SMS platforms because they are easy to scale and provide access to personalized financial education.

Making Cents International created an SMS-based financial education platform to help prepaid mobile customers make better financial decisions for 30 countries in Latin America, Asia, Europe, and Africa. Its interactive, 12-month curriculum includes nearly 500 incoming and outgoing interactive SMSs, making it one of the more expansive digital financial education campaigns. Juntos and Arifu are two other examples of fintechs that are combining communication technologies like SMS, audio recordings, and video with digital analytics and automation to interact with customers’ needs at the right time.

In addition to evolving financial education tools for digital lending and savings, an IFC report emphasized that financial literacy in insurtech is equally important, especially in emerging markets, where individual households and small businesses may not be attuned to the risks they face and may end up losing all their savings due to events such as illness or loss of their business to flood or fire. Inclusivity Solutions, a Signatory to the Guidelines for Responsible Investing in Digital Financial Services applies a Human Centered Design as part of its insurtech solution to offer and educate its potential clients.

Responsible investing for digital financial health

Further innovation and investments are essential to strengthen financial education for sustainable digital inclusion.  A group of private sector investors have been co-leading a global effort to implement Guidelines for Responsible Investing in Digital Financial Services. These guidelines focus on good governance, risk management, consumer protection and with the broader aim of enabling financial well-being for the unbanked and underserved. As financial services continue to be delivered in rural or remote areas in emerging markets, inclusive finance actors, together with fintech innovators will play a critical role in providing just in time financial education for those who need it most.

About the Authors:  Allison Ryder, Camille Parker and Shea Flynn are Graduate Research Fellows at Georgetown University, Walsh School of Foreign Service.  This post is part of a series to broaden partner collaboration and harness evolving experiences from co-founding, current and prospective Signatories of the Investor Guidelines.

Digital Financial Services: Challenges and Opportunities for Emerging Market Banks

25 Sep 2017

The digital transformation that has upended industries from retail and media to transport and business-to-business commerce is now sweeping the financial services industry, through the wide dissemination of digital financial services. This was inevitable, as ubiquitous computing power, pervasive connectivity, mass data storage, and advanced analytical tools can easily and efficiently be applied to financial services. After all, money was already extensively (though not exclusively) created, used, stored, processed, and delivered electronically.

Immediacy and personalization have become the norm for consumer goods and services. Consumers have rapidly become accustomed to making purchases with a touch of their finger wherever they may be, receiving tailored recommendations, choosing customized products, and enjoying delivery of almost any item directly to their front door. Businesses failing to adapt quickly to these technological developments can fail dramatically, and many have already done so, including Tower Records, Borders Books, Blockbuster Video, and countless travel agents and brick-and-mortar retailers. Consumers’ new
expectations apply to digital financial services as well.

Technology has transformed business-to-business and within business interactions, too, enabling reconfiguration of design, production, marketing, delivery, and service functions through distributed supply chains, freelance design, outsourced manufacturing, and contract warehousing and delivery. These reconfigurations are mediated by online marketplaces and distributors, and assisted by back-end support operations and data analysis that together drive better risk assessment, faster fulfillment and more efficient customer service.

The same types of disruptive market innovations and reconstituted value chains are now emerging in the form of digital financial services. This poses distinct challenges for incumbent providers such as banks, finance companies, microfinance institutions, and insurance companies, as financial technology—or FinTech—innovators enter their markets. Incumbents, too, can benefit from these developments, which will enable them to broaden financial access, introduce new products and services, and serve customers more efficiently by deploying new technologies internally or in partnership with external innovators.

Building a Secure and Inclusive Global Financial Ecosystem

08 Sep 2017

The 2017 Brookings Financial and Digital Inclusion Project (FDIP) report evaluates access to and usage of affordable financial services by underserved people across 26 geographically, politically, and economically diverse countries. The report assesses these countries’ financial inclusion ecosystems based on four dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of selected traditional and digital financial services.  The report further examines key developments in the global financial inclusion landscape, highlights selected financial inclusion initiatives within the 26 FDIP countries over the previous year, and provides targeted recommendations aimed at advancing financial inclusion.

Swadhaar, ACCION & AirTel Money: Mobile Money Training for Female Customers in India

20 Jun 2016

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.

Customer Experience Playbook

16 Jun 2016

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.

  1. Introduction
  2. Customer Experience (CX) 101
  3.  Managing CX Projects
  4. Customer Research
  5.  Develop CX Ideas
  6. Prototyping
  7. Measuring & Sharing Results
  8. Scaling Up
  9. Adopting a CX Culture

The Status of Financial Inclusion, Regulation, and Education in India

29 Apr 2016

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

The ABCs of Financial Education: Experimental Evidence on Attitudes, Behavior, and Cognitive Biases

12 Nov 2015

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 The corresponding author may be contacted at

Voice of the Client: An analysis of client satisfaction and consumer protection across four microfinance institutions in India

01 Nov 2015

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.


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