Clarity Connect

Financial inclusion in emerging markets has seen significant strides in the last two decades. This has been supported by both the private and public sector driving expansion of basic financial services to reach underserved areas and clients. Designing financial products which are inclusive, relevant, affordable and scalable in emerging markets has been possible with greater understanding of the unique challenges and opportunities of underserved populations.

Some of the key design elements of financial inclusion products include:

• Convenience and Access:
  • Financial Literacy and Education: Offering financial literacy training and educational resources helps individuals build the knowledge and skills necessary to effectively manage their finances, make informed decisions, and access a broader range of financial products and services.
  • Simplified Processes: Streamlined and user-friendly application processes make it easier for individuals with limited literacy or digital skills to apply for financial products.
  • Mobile and Digital Financial Services: Providing digital financial services can facilitate convenient access, particularly for individuals living in remote or rural areas. This also requires a focus on low literacy users with step-by-step guidance and also ensure products are available in regional languages.
• Affordability:
  • Low or No Minimum Balance Requirements: Eliminating or reducing minimum balance requirements ensures that individuals with limited financial resources can access and maintain accounts without facing penalties or fees.
  • Affordable Transaction Costs: Minimizing fees and charges associated with account maintenance, transactions, and transfers ensures that financial services remain affordable for low-income individuals.
• Relevant products and channels:
  • Designing tailored credit, savings, investment and insurance products: Features such as small loan sizes, flexible repayment terms, and insurance coverage for specific risks relevant to client livelihoods make more relevant for the target customer.
  • Collaborations and Partnerships: Establishing partnerships with community-based organizations, government agencies, and local businesses to extend the reach and enhance effectiveness.
  • Alternate Credit Scoring: Exploring alternative credit assessment methods, such as household asset ownership, or livelihood / location-based credit scoring, can expand access to credit for individuals with limited or no formal credit history.
• Focus on trust and transparency
  • Customer Support and Assistance: Providing personalized customer support through helplines, community outreach programs, and dedicated customer service representatives can help build trust and also address any issues on a timely basis.
  • Transparent Pricing: Communicating and providing disclosure of fees and charges as part of product marketing and onboarding services.
  • Enhanced Security Protocols: Enabling transaction alerts, payment confirmations, account activity updates, transaction limits, and security features like OTPs help enhance customer experience and security.

By incorporating these product design features into financial inclusion initiatives, financial service providers help create more inclusive and accessible products leading to broader economic empowerment and inclusive growth. Despite considerable progress in enhancing the financial inclusion product and service portfolio, challenges remain in implementation and scaling of various initiatives including new products. Regulatory context is also varied among different countries and while learnings can be drawn from more mature financial inclusion markets (like India), they need to be seen in context to local regulations and requirements.

There is a greater need for more product specific insights within the broader domain of financial inclusion, including, micro business loans, micro housing finance, micro insurance, among others. This would help both financial service providers and their clients in meeting their goals. More to be added on this ahead.