Successful financial inclusion requires financially capable consumers who use products actively for their own benefit. A rapidly expanding number of first-time customers, many from traditionally unserved population segments, will begin using formal financial services over the next decade. According to the Global Findex, 700 million customers were added to the rolls of people with some form of formal financial account between 2011 and 2014, and CFI projects that if this trend continues, another 800 million could be added by 2020.1 The expansion of financial services offers an enormous opportunity for benefits to both customers and providers, if the new customers can use the products in a healthy, effective manner. On the other hand lack of customer financial capability can lead to dormant accounts, over-indebtedness and other serious problems. The scope and scale of this challenge can hardly be exaggerated.
Meeting the financial capability challenge will involve many solutions and stakeholders. This report reviews the current landscape of financial capability interventions – a diverse landscape, with interventions by financial service providers, online services, social organizations, governments and others. These interventions vary widely in aim, method, scale and effectiveness. There are exciting new developments to report, and an urgent need to broaden the awareness of these innovations so they can reach more people.
Above all, this report highlights a trend still in its early stages that ties financial capability interventions more closely to actual customer behavior, especially at critical decision-making moments, and particularly when signing up for and using financial products. This trend also takes into account insights about how people learn and the kinds of support they need to achieve their goals. Expanding this behaviorally-informed approach, which is already occurring to varying degrees, will require creativity beyond the traditional modes of financial education that dominate the scene, and it will require greater involvement by providers, who are uniquely placed to meet clients at those critical decision moments.