Practising financial inclusion in the Global South

Smriti: Hello, everyone.

My name is Smriti Parshira.

I'm a lawyer and a technology policy researcher based in India.

And today it is my pleasure to be hosting the Interledger Salon.

I'm currently a research ambassador with the Interledger Foundation, where

my project focuses on understanding the lived realities of digital and

financial access in my home district of Lahore Spiti in the Indian Himalayas.

In keeping with that spirit of untangling what financial inclusion means for

different communities across the Global South, today I'm excited to be joined by

two guests who have thought deeply about this subject in the course of their work.

Our first guest, James Ogada, is based in Kenya, and he's the Engagement

Director at the Busara Center.

Busara's work focuses on leveraging Behavioral Sciences to gain deeper

insights into people's financial lives and creating suitable solutions for them.

In this process, James collaborates with institutions in the private

sector, philanthropic organizations and government agencies to design

inclusive financial products and markets.

Welcome to the session, James.

Um, our next speaker, Dr.

Susan Thomas, is an economist from India, whose research spans across the areas

of finance, markets, and the economy.

She is the co founder of XKDR Forum, a group that has been doing some cutting

edge quality quantitative and policy oriented research in a variety of areas,

which includes studying how households interface with the financial system.

Susan has worn a number of academic and policy hats, which includes her

instrumental role in shaping India's insolvency and bankruptcy regime.

A warm welcome to you too, Susan.

riverside_susan_raw-audio_f_m_podcast studio_0036: Thank you.

Good to be here.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you.

Thank you both for taking the time to be a part of this conversation.

And let me begin by asking each of you to tell us a little more about the work

you do at XKDR and Bussara respectively, whether it's in the context of financial

inclusion or the work you do beyond that.

And if I may add, it would be interesting to know a little bit more about the

meaning and the origin of those very interesting organizational names

that, uh, both XKDR and Busara have.

So maybe starting with you, Susan.

riverside_susan_raw-audio_f_m_podcast studio_0036: Thank you, Smriti.

This is a question that we get often.

XKDR is a compilation of letters, and I think it's easy to start with

explaining what the K, D, and R stand for.

It's knowledge, data, and research.

Which we think are instrumental in beginning to understand a problem, a

social problem, an economic problem, and to diagnose it and to come

up with a policy solution for it.

The X is the most important part of that name because a long while ago, we

realized that any single discipline, i.

e.

economists, by themselves can't come to this, uh, through

this entire chain of work.

So X stands for cross disciplinary.

So that is.

We use knowledge, data and research from multiple domains to come up with a

diagnosis of social and economic problems.

The big questions of our age and how should we think about coming

up with ways to solve for that.

I hope that makes it clear.

And before I let that go, XKDR is XKDR Forum.

That's our full name.

And forum stands for XKDR Forum.

the recognition that we are a small organization and we believe in doing

our work by building collaborations with other organizations who are like

minded and focus on similar things.

Thank you.

I hope that made sense.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Perfect.

It makes perfect sense.

And I think a lot of the conversation today is about

bringing out this interdisciplinary nature of the conversation.

Um, over to you, James, on that, tell us a little bit more about

Bussara and the name and what you do.

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you for that question,

Smriti, and for having me as well.

So, Busara is a Swahili word that essentially means wisdom, and the

full name of our organization is the Busara Center for Behavioral Economics.

And Busara started as a small office, um, with a post doctoral researcher

studying the psychology of poverty and using behavioral science to see, um,

what kind of policy advice that can be given to different practitioners.

And, um, Um, after some time it eventually evolved to practice and so today Bussara

applies and advances behavioral science in pursuit of poverty alleviation.

And we apply this trade in spaces including education, civic engagement,

um, health, but my team and I, um, work with the private sector, policy makers,

and philanthropy to figure out how to make financial markets more inclusive.

Um, and value adding to people in low income contests.

So very happy to be here and excited to have this conversation.

Thank you.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you so much, James.

So I guess how we run with this is I'm going to ask you a few

questions, but feel free to free to keep the conversation dynamic.

So even if I pose a question to one of you, let's, you know, jump in wherever we

want to and add to each other's inputs.

Um, so, you know, to begin with this question of just getting

our roots into what is financial inclusion and what does that mean

to each of us given the different perspectives we all bring to the table.

And we've seen over the last few decades, there's so much focus, uh, specifically

in the policy circles about furthering financial inclusion, but really

the term can mean different things.

So let me ask you, James, to begin with, what is your interpretation

of what financial inclusion means and why does it matter?

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: So, um, to me, essentially, what

it means is a recognition of the inequalities that exist within

these societies in the global south.

And I think before I even start is to acknowledge that there's a lot of

differences when you look at different markets, even within South Africa, for

example, around, um, usage matrix, the accessibility of some of these services.

So I think about, um, the social, socioeconomic conditions creates,

um, a landscape that demands different kinds of innovations

and context specific solutions.

So whatever solutions that we have seen emerge in some markets,

um, avoiding an assumption that they're going to work in others.

And I think this is at the crux of the financial inclusion industry is

an acknowledgement of their diversity of challenges and opportunities

that exist in different markets.

But also when we talk about financial inclusion, we also think about

regulation and policy at large.

So, um, there's, we see both buyers and opportunities related to regulation

in the context that some markets have greater risk than others.

But then we also see the need for different kinds of policy initiatives in

the different markets that we work in.

in the global south.

And in some cases, um, there's a role for policy to play in allowing

for innovation and responsible versions of finance to flourish.

And in other markets, we see the need for for policy action to protect

customers from emerging risks that are emerging from from digital and

more traditional means of finance.

Yeah, thank you.

I think I'll leave it there for now.

And

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you.

Yeah.

Susan, do you want to come in on that?

Your view on what is financial inclusion and really who do you think

are the key stakeholders, you know, in this financial inclusion puzzle?

riverside_susan_raw-audio_f_m_podcast studio_0036: Uh, thank you.

Uh, I think that is a very important question because I think, as James

just pointed out, the phrase financial inclusion has been used as if it's

a bucket that is supposed to mean the same thing but means something

very different across the board.

Um, I think of financial inclusion as addressing, um, a sophisticated layer

on top of a very fundamental social phenomenon, which is that households

and human beings tend to save.

And when they save, the question is, what are the choices that they have?

So to me, when I think about financial inclusion, and this might run a little

counter to the standard, you know, Thinking and financial inclusion, which

is how do we increase access to credit?

I think of how do we increase access to all forms of financial instruments and

products so that people who are able to save can do their savings better.

So it's not just about having a bank account.

It's not just about being able to access credit, which in a certain

sense is, Slightly different from what we think of as savings, right?

Savings is what you set aside from what you earn today.

And you hope to be able to support your requirements and your needs in the future.

And the question is, if you are able to save, how is it that you're able to

save so that your future self Can get more than what she would if she were

just keeping the savings say under her mattress Which is what probably our

grandparents generation used to do.

So today we have so many more instruments like, uh fixed deposits we have insurance

we have pensions we have Mutual funds each of these are different different

ways in which people can Access better returns to their savings in the future

and the question that I think that is an important one to ask, particularly

for us in the global south, is that given that we're starting with a base

that is really low, how is it that we can help people to be able to accumulate

to a better life faster, just because they've got access to better ways

of gaining returns out of savings.

And, uh, as I said, a lot of the times people think about this as,

Do you have access to payments?

Do you have access to credit?

But I think that that's a very limited way of thinking about financial inclusion,

which shows up when we think about the way people used to think about financial

inclusion before the 2008 credit crisis, or indeed the latest COVID crisis.

crisis when so many people lost their jobs and suddenly had to give up on

their houses and their ideas of how much they could consume on a day to

day basis or a month to month basis.

And that is when so much more focus came on saying, look, it's for everybody.

But when we think in the global south and we consider that we're thinking

about people who are, uh, disadvantaged in so many ways, it becomes an

especially important problem that we need to think about and solve better.

I hope that helps the definition that you are looking for, Smriti.

Sure.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Yeah, I think it's interesting.

I mean, we framed this conversation around, you know, untangling financial

inclusion in the Global South.

And in both your comments, it really came out that there is something

different about the Global South perspective and this context.

And I was wondering if we can go a little bit more, you know, some of you brought

about some of those points that there is a historical disadvantage context, which

is here, but is there something different?

broader than that, like beyond social economic conditions

beyond historical factors.

Is there something about regulatory capacity?

Is there something about innovation, potential or capabilities?

Is there something different from the supply side as well

in the global south context?

riverside_susan_raw-audio_f_m_podcast studio_0036: Do you want me to go first?

riverside_smriti_raw-audio_f_m_podcast studio_0038: Go ahead.

Yes, please.

riverside_susan_raw-audio_f_m_podcast studio_0036: Yeah.

So I think that, uh, the big learning about what is different from the global

South is, you know, uh, people tend to, uh, look at developed markets,

developing economies and say, look, the business models are working there.

Why don't we just transplant those business models into

every place in the world?

And because we are, uh, those countries are rich, then it will

benefit, uh, the developed markets or the emerging markets as well.

I think that there is a big problem there because.

What drives financial services and products in most of the richer or

the more developed economies is that financial service providers are used to

thinking about their business, giving them or supporting a certain amount

of return and revenue because those customers are higher income customers.

That is not true.

That's not the assumption that we can make about customers or

the citizens of the global south.

They are much poorer.

So when you take the same business The business models that are playing out in

the global north and you try to transplant them into the global south, the very same

business models just won't work because the incomes of the people that they're

trying to serve will not support it.

So in a certain way, you know, it's, it's odd, but the need for innovation

is so much higher in the global south, because what is, you know, Take it

for granted in terms of what are the kind of business models of the global

not just cannot make it in the global South because you cannot do that Which

is why I think the banks and in India and I know this pays the best So I will

use examples from them for the longest time even for giving access to credit

or giving access to savings account.

It was not the banks that did the first push, not universally, right?

There were places where this worked because the state supported

the effort of the banks to reach out to the last mile customers.

But it was a very, it was a very small, uh, uh, coverage

that we were able to achieve.

Then there was the innovation of the microfinance business model that came

in and made that last mile connect between the existing formal financial

systems and the last mile connect.

And I suspect that's what we are beginning to see, and this is not a beginning to

see, this is the last 10 to 15 or even 20 years of the fintech revolution.

But technology has come in to reduce the barriers off the cost of delivering

old traditional financial services and products to the last mile customer.

We're seeing that increasingly now in the space of payments, in the space of

credit, what we are not seeing so much is how much of that can be delivered.

The same channels can be used to deliver pure savings, long term savings and

conditional instruments like Coverage for insurance or pensions, right?

That's not something that we are seeing too much.

And I think that that's where we still need to have the innovation that how

do the existing firms or new firms come up to be able to look at the

this different customer base and start developing new business models to deliver.

What we think of as the old financial functions or products

to these last mile customers.

And from that point of view, Smriti, I do think that you make a very

interesting link here that just as we are thinking of taking the same business

models for finance, We're also taking the same regulatory frameworks that

we are seeing in the global north and transplanting them that those here,

but that's not going to work as well because it's a very different problem

that that regulation is seeking to solve.

Sure.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you.

Thanks so much, Susan and James, can I rope you in there?

Because you made a, you know, comment in your opening remarks about how

very often people think of, you know, the African context as one context,

but there is so much diversity within that context and, you know, And that,

of course, extrapolated to the Global South shows that there's so much more

diversity within what, you know, is the global majority, so many countries,

so many perspectives coming in that.

So what would you think is, you know, unique about the Global South?

Is there a Global South perspective?

Is there an African perspective?

Or does it necessarily, you know, boil down to being much more national

or community level in terms of the financial inclusion agenda?

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: I think to answer your question,

I'll pick you back off some of the points that Um, have been mentioned

by Susan, especially around the role of innovation and in particular.

What we've been seeing is, um, someone mentioned that people are shifting away

from this idea that you can apply a global north business model to the global south.

And we started to see much more localized innovation happening within the Maybe some

regions, for example, in East Africa, and you're seeing innovation happening like

in West Africa for new different kinds of financial products, and I think what's

behind that is that constraints often drive creativity and the markets and the

people within them and the innovators are thinking about solutions that work

for the local communities and work for their different geographies, and what

we've been seeing, especially in the last decade or so, is that the Global South has

become a hub for very frugal innovations.

And we're seeing some solutions that are emerging out of necessity, um,

in terms of how can we better solve these, um, local communities and

how can these organizations work with each other to create a better

enabling environment for responsible versions of finance to flourish.

And maybe I can give an example.

So think about, um, East Africa, the African context that I know fairly well,

and in particular Kenya, an innovation like M Pesa, which enables payment.

And this emerged out of necessity because obviously, um, the predecessor

was cash, um, and it was working fine, but then out of necessity to figure out

how to do urban rural remittances, for example, that emerged and it's something

that people picked up fairly quickly.

But on top of that innovation, we're seeing again, out of necessity, the

emergence of Um, platforms for trade, for example, and these take care of

logistics and they help, um, small enterprises acquire business inputs

at better rates, and they help the same micro entrepreneurs get access

to different customers in online spaces and including the metal spaces.

On top of that, again, we think about the role of emerging models of

finance for enabling access to energy.

And so we're looking at the application of pay as you go models of pay go.

Um, Um, which is essentially a model of finance to enable people

to get off grid energy solutions.

And, um, we're thinking about that.

How can that be?

How can this model of finance be enable people to participate in the green economy

and participate in a just transition?

And because some of these off grid solar energy, be it a solar water

pump, these are really expensive products, but we're seeing an

emerging role of finance and enabling.

And so these innovations, they often have a wider global application, but

they stem from specific regional needs.

They stem from particular regional challenges.

And in particular,

fact that they come from local innovators and, um, they help address local needs.

They are better suited to adapt to local cultural context.

And I think that's why we're starting to see a change in momentum for,

um, Locally driven innovation.

So yeah, I think that's, that's how I would, I would summarize

what I think about that.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you.

Thanks so much, James.

Um, coming back to you, Susan, I know you've been doing some really

interesting work on, you know, bringing, uh, you know, thinking around how do

you measure financial inclusion, uh, among other things to identify what are

the gaps in the way existing services and products are being provided.

Can you just walk us through those ideas and, you know, what you've been calling

the input, output, outcome framework for measuring financial inclusion?

riverside_susan_raw-audio_f_m_podcast studio_0036: Uh, So I think that this is something

that happens when you start thinking about policy interventions, right?

And I think, uh, the fact that there are so many interpretations of financial

inclusion exists all across the globe because we haven't yet bothered doing

this for any policy intervention.

It is great to have clarity at the start of what is the objective.

What is it that we choose to do is very clear, but what is it that

we, that we will get out of it?

What is the objective?

Is what is the problem?

Uh, this is where we come to saying that all policy interventions must be

viewed through the lens of the input.

That is, what is it that we will do?

What is the output, which is, what is it that we expect to see that

to happen immediately by way of actions or changes on the ground?

But, Ultimately, this is not what we seek to achieve by, in terms of the

objective of the policy intervention.

We need to see some fundamental change that happens in the lives of people,

which is what we call the outcome.

I often like to use the example of education because I think it's

core to all of us and it's, we feel sympathy and we feel instant

recognition in the space of education.

So I'm going to use that as an analogy.

To explain what I mean by input, uh, output and outcome as a framework for

analyzing, uh, policy intervention.

So, in, in education, we all know that the government spends a lot of, uh,

funds in, uh, promoting primary, primary education or secondary education.

And the programs usually target, uh, Building schools and hiring teachers.

This is what we would call the input, the amount of money or the number of

schools and teachers that are hired.

That's the input part, but that's not the end of the story.

What we would like to see is that once these are built, children

will come to those schools.

And that's what we call the output.

But truly, what is the outcome that we desire?

That it's not just that children come to school and apparently pass some exams,

but for the children that come to school and pass the exams, are they literate?

Are they numerate?

Are they able to pick up a newspaper and read it or go through the internet and

read something new and understand it?

That is what we call the outcome.

Now, if I apply this lens to To the field of financial inclusion, the stated

objective was to get people access to the instruments off finance or the services

off finance, but that's not the outcome.

And that is where everybody gets a little stuck so we can think about applying.

Inputs, outputs and outcomes to financial inclusion by saying what we would like

to get to see is spend money so that people get access to using finance

so they get access to credit cards or they get access to bank accounts or

they get access to pension systems.

And this is something that over the last.

20 25 years in India, we have seen the government putting a lot of effort

into building the frameworks of input.

But what is the output?

And this is where my friend and colleague, Suyash Rai from Carnegie, often points

out that India is very good on doing the inputs part of financial inclusion.

But when we think about the outputs, that is, how much do people use it?

When you have a bank account, is it something that you're

constantly putting more money into?

Is it something that you use to build your savings and to

use or to withdraw your funds?

to use for all kinds of activities that you want.

India scores very poorly on the World Bank Global Financial Index on the outputs

compared to lots of other countries that don't score too well on the input.

And for us who sit in the policy space, we know that that's only halfway there.

And the question that we need to ask ourselves is, Just because we put so

much effort into building financial inclusion and getting access to all our

citizens, to bank accounts, insurance products, are they better off as

compared with those people that do not have this similar access to finance?

And when we pin that down, the measurement that we seek to do is

to talk to people and say, Look, because you have a bank account, are

you able to build savings better?

But that's not the outcome either.

It is because you're have a bank account, you're able to build savings.

And so that when you hit a rainy day, or when there's a crisis, like you lose

your job, or there is a health crisis in the family, Do you have sufficient

resilience to be able to withstand that without going into a complete meltdown

mode where you have to stop eating or take away for children from attending

schools because you can't pay fees?

And that's what we think about as the outcome of financial inclusion.

Which is that once you have people who are able to use finance intelligently

and optimally, uh, they should be more resilient in facing shocks

and adverse conditions as compared with those people who do not.

And this is what we put together as a team.

That's an input, output, outcome framework for financial inclusion.

Now I don't pretend that this is something that we can immediately roll out.

I think part of the reason why when we look around the

world, it is so much, uh, easy.

It is so much easier.

to find financial inclusion input scores, like how many bank accounts,

how many people have bank accounts, how many people have insurance.

This is easy to do, but to find out how many of these people feel a lot

more confident about what it is that their future looks like, are they more

resilient when their shock comes out.

This requires for a large scale perception survey where you go out

and talk to people, run these surveys.

And it should not be something that we expect to see only once, but over the

years, as their savings build up and they're able to use these financial

products in more and more optimal ways, are they able to face their future,

whether it's an aspiration or in terms of resilience to adverse conditions?

Are they able to do this better off compared with those people who do not?

And this is what we call.

The Input Output Outcome Framework for Financial Inclusion Measurement.

And, uh, please note, in this, we are not pretending that, you

know, it's a very simple thing.

It's very difficult.

The complexity that we are at here is that, and this is perhaps even more

true for the Global South, as compared with what we see as individuals in

the Global North, that, uh, it's not just a family, a person by themselves.

It is about their entire household.

It's about the family.

No one in India stands alone.

It's, they stand within the construct of their family.

So these are best measured at the level of households and families

as compared to just individuals.

Although you could do it for individuals, but there are increasingly studies that

are going and starting to ask questions about, uh, whether, uh, about, uh, how

it is that Uh, people are financially included, uh, not just being measured

in terms of the number of accounts that they hold, but in terms of their

confidence in facing the future.

I hope this makes sense, Manjeet.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Makes perfect sense.

Thank you for taking that large body of work and condensing it for us in such

a simple and, you know, obvious make it makes it sound so obvious that you need

to understand the outcomes and on the, you know, the point you were making in the end

about the individual and the household.

One of the things I've come to realize in the field work that I've been doing

a part of my intellectual project is there's also the third link to

is which is at the community levels.

Specifically, when you go into societies that are close knit, there

is some kind of financial inclusion that can happen at the community level

where households help each other out, even when, you know, they may not be

individually at the household level, what we call quote unquote fully included.

So that's been an interesting observation for me.

riverside_susan_raw-audio_f_m_podcast studio_0036: Yeah, so, uh, if I may just take

one more minute of time, uh, in the olden days before there were

banks insurance companies, uh, both.

I mean, certainly for all the people in India, and I know that there are

studies that have documented this for households and communities in Africa,

there used to be these things where there was community savings and lending and

in India, they are called chip funds.

In the, in, in various countries in Africa, they were called Roscas.

And this was a community effort that there was a promise that was made by a

bunch of people in the community that every month they would pull together

some funds and the family that was most needy would, uh, get it right.

But, and, but this was a promise.

All those families had to come once a month and put in their share into a

pot and only one family could get it.

And this would only work.

If there was sufficient trust in the community, which is

something which is critical for such long term promises to hold.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Yeah, yeah.

Thank you.

I'm going to turn to you, James, you know, on this theme of outcomes,

talking about fundamental change, some of these things that Susan brought up.

I think it goes very intrinsically to the questions of, you

know, behavioral factors.

So can you tell us a bit more about this fascinating field that you're a

part of, of behavioral sciences, and What lessons does that seem to hold

for furthering financial inclusion?

Would love to hear about, you know, your work, both in terms of the

kind of interventions that have been adopted and what are the outcomes

that you've seen, uh, in your work.

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you.

And I think before I answer that question, I just want to, uh, support what Susan

has been mentioning because I couldn't agree more and I think essentially what

she's been saying is part of the reason why we're seeing a change of taxonomy

from financial inclusion to inclusive finance is that we're now trying to

see if you can ask better questions and think about where we go from here.

We're at this sort of working point where we're thinking a lot more

deeply about livelihood outcomes.

So what is a financial life?

Like, what are the different components of a financial life?

And how can these policies and programs and products actually help improve,

um, livelihood outcomes and, um, improve the financial life aspects

of, of what we're trying to do.

And when it comes to financial inclusion, don't get me wrong, the

progress has been great and it's been significant, but the question

is, how do we leverage these gains?

People are aggregating in both analog and digital settings, but how do we

leverage the momentum that others, and the industry itself has been creating to

build something else on top of that and to really think about, um, what are the

likely outcomes that we aspire to create for, um, people in the global South?

So, to go directly into your question, um, Smriti, is the behavioral factors

when it comes to financial inclusion.

And obviously, as we saw, this is our bread and butter, and this is the

problem that we usually try and tackle.

The first is surprisingly simple, and it's essentially the biggest problem that we

often encounter with different partners that we work with is the lack of relevance

and clarity of value propositions.

And so where we come in is our behavior lens help us understand

if financial products truly fit financial, truly fit people's needs.

Um, and more importantly, it helps us understand why, which is the mechanism.

So, once we understand how and why people prefer certain ways to transact, to borrow

and to save, and I like the example that Susan gave around, um, the savings groups

and the, um, here they're called ROSCas, but you also have SACOs and other, um,

analog grouping mechanisms, is to really understand why do people prefer these, and

our ability to listen and to understand those preferences, um, and to anticipate

what is likely to change and what is not likely to change, is really important.

Essentially how we're able to influence, um, behaviors and I should also say

to positively influence behaviors because obviously, um, the application

of behavioral economics needs to be done responsibly in a way that's

aligned to people's own, um, beliefs and people's own, um, aspirations.

riverside_smriti_raw-audio_f_m_podcast studio_0038: hmm.

Mm

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Second, I would say it's incentives.

Um, so especially when it comes to financial inclusion, not

always, but sometimes there's an expectation of formalization

or digitization, which is great.

Digital is an effective tool.

Um, it's efficient, but it's not necessarily an outcome.

So what we often encounter is asking our partners to really consider what

is the incentive for what is the incentive for people to switch from the

trusted analog methods to digital ones.

So why switch from your savings group and from borrowing from your friends

and family to switching to an app or some other similar form of mechanism?

So, one of the ways in which we approach this problem is through testing.

To understand for this value proposition, to what extent does it resonate with them?

To what extent do they trust it?

To what extent is it similar or dissimilar to the existing mechanisms and the

ways that they prefer to approach finance, be it a transaction, be it a

way of saving or be it a way to borrow.

And the reality is people will always stick to what works

for them and as they should.

So any effort for digitization or even policy should align to

people's needs and preferences.

If we're truly trying to drive meaningful change.

riverside_smriti_raw-audio_f_m_podcast studio_0038: hmm.

Yeah.

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: is the complexity of

financial decision making.

So here we have the behavioral biases, the behavioral biases, sorry, that

I'm sure many of us have heard about.

And this in particular comes into play when you think about aspects

like saving behavior or investing in long term financial products.

And this is where the nuances of psychology, psychology

become more important.

Because, for example, in the informal sectors, um, that are very common and

represent a majority of The economies in the global south is how do you

introduce a concept like a pension to make it something that's more urgent

and also realistic because you also have to think about scarcity of resources

for people to put money away for the long term futures for retirement.

And so understanding these biases allows for the design of financial

products that align with real world decision making, making it, making

it easier for people to engage.

And so you come with this.

Again, global north concepts with its own definitions with his own taxonomy.

And how can you change that and apply it to the local context and not, we're

not just saying sub Saharan Africa, but we're talking about whether it's

Kenya or Malawi, how can we create a program or an initiative that aligns

to, um, better with existing ways of transacting such that they can better

engage with a concept like putting money away for the longterm futures.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Yeah.

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: And lastly, I would

say it's customization.

And again, it goes back to this principle that context matters.

Contexts always matter.

And by using behavioral insights, financial services can be tailored

to meet specific needs and contexts of different groups.

And where we're seeing this becoming more and more prominent is

we know, um, there's huge gender gaps that exist in finance in traditional,

um, finance in particular when it comes to banking and, um, and, and

other forms of financial services.

But the reality is some of these gaps are transcending also into digital spaces.

We're seeing, um, a gender, a gender gap in access to access and usage

of digital financial services.

So thinking about how can we create financial products and services

and how can we prevent programs.

that are able to close this gender gap in access to finance and access

to markets and access to trade.

And so we're really thinking with our partners about what are the unique needs

of women, what the realities that they face, what are the existing ways that they

prefer to engage with finance and how can we build effective markets and products

that better aligned with their men.

So yeah, without going further, I think I'll leave it at that.

But Thank you for that question.

riverside_smriti_raw-audio_f_m_podcast studio_0038: thank you.

That was fascinating.

And thanks for breaking that down.

I was interested.

You know, you talked about pension as one example.

Could we go a little bit deeper into that?

I would love to know, you know, what are the kind of barriers behaviorally

that you see in terms of trying to convince people about the benefits of,

you know, long term or old age savings?

And what what is the kind of intervention that is needed to then change their mind?

Like, is there any kind of example in that space?

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: And so I can give an example that one of

my colleagues is currently working on.

So I'm thinking about the concept of risk management and especially in group

settings is that sometimes when you introduce a product and you call it

insurance, it's um, It's a different context, but essentially what it means,

it's a risk adaptation mechanism.

And often, what exists already in these markets is people have group

mechanisms of ways to deal with risk.

So, I've heard these examples about, you know, every month a different

person contributes money to this pool, and at that point everyone withdraws.

So, there's different forms and variations that that takes.

But essentially, it's people recognizing their susceptibility to

shocks in their own environment, be it climate, be it, um, enterprise,

and especially with COVID, we've seen the importance of building resilience.

And so essentially, it's thinking about, from a program perspective and from

a private sector product perspective, is how can these group mechanisms

be optimized such that you create efficiencies in the way that people

transact with each other and think about the incentives for increasing,

for example, the savings behavior.

So can we, can we nudge people towards increasing the savings amounts

and complying with their own set objectives for how often they make

these contributions into this such that we create a more robust environment?

That's people can benefit from each other.

So rather than coming with an alien concepts like insurance as much

as insurance is very necessary, especially in the context of emerging

risks associated with climate change.

But how can we leverage the existing groups?

And think about how we can bundle different products together and optimize

already existing processes to arrive at the same objective rather than coming

with our own predisposed notions about what works and the mechanisms that work as

much as they are true because we've seen the impact in different spaces but how

can we help people transition towards it.

their own ways of adapting to risk their own ways of understanding and

predicting this risk in a way that works for them and instead of us

trying to in a way force people to behave and participate in markets

in a way that we assume they should.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thanks so much, James.

I think that's an interesting, you know, point of departure from you're

talking from risk management to another kind of product, which I know

both of you have studied in different ways, which is digital credit.

And, um, and I think that's an interesting point of departure.

Product to talk about in the context of financial inclusion of financial

wellbeing, because unlike certain products like insurance or bank accounts

or payments, even, uh, you know, there is a more tricky relationship with

the credit and financial wellbeing because of the potential of overuse and

people getting caught in a debt traps.

Uh, so maybe I'll start with you, Susan, can you tell us a little

bit about your work in this area?

And more broadly, your understanding of what could be responsible digital credit,

uh, you know, given these challenges of, uh, the potential debt traps, et cetera.

riverside_susan_raw-audio_f_m_podcast studio_0036: So when we think about debt traps,

I think that what we usually think about is, uh, over indebtedness,

that there is an individual or a set of individuals within a family,

all of whom are able to get credit.

I think digital credit is, uh, understood today as a phenomenon where, as opposed to

the old traditional process of going to a bank and, uh, doing a lot of due diligence

and, uh, going through a laborious process to validate your ability to repay today.

Digital credit is, um, typically targeted towards much smaller loan amounts,

and then depending upon your instant behavior, you get access to a lot.

I think that Uh, it has been, uh, overhyped in a certain sense because

by its very definition, because the extent of time that the traditional

credit models spend in doing due diligence does not show up in the

digital credit space, most people think that That credit is easy to access.

I, I, I mean, my observation is that that's not true.

It's not the same credit product.

We are much smaller, uh, in, in size so that if a person does not

repay, the lender does not face a crisis, which typically happens when

you have concentrated loan amounts.

So I think that the very nature of digital credit enables a better risk management.

For the person who is making the loan, and if they find that on small

payments, one person does not is not able to repay, they will simply

not issue the fresh credit amount.

So I think that there are some benefits.

And of course, because it's being made instantly access

accessible to the person in need.

Uh, these are typically products which are small in amount as

well as short, short term.

Uh, where I think that it can become irresponsible is, uh, if A, you, you

are lending, uh, these things to many people in the same household and the

same household is going into distress and um, Uh, that there is no information

sharing about the extent to which a household is, uh, overextended as

opposed to just focusing on whether the individual is overextended.

But this is all about the business practices of the lender themselves.

And I think that, um, it is something that is, uh, interesting.

It is evolving, and my suspicion is that there should be more of this because.

The nature of the global south is that households are small.

They don't have that many assets, but they do have requirement of short term

credit requirements at the equivalent of a working capital for companies.

And this is a model that needs to evolve its own risk management.

practices before it can be, uh, considered to be responsible or dangerous.

I think that, uh, the problem might be that the same kind of biases that we see

in the large credit, uh, business model.

Second, this is a very documented phenomenon that women, even though they

end up doing extremely good repayments, uh, because they don't have ownership of

assets that is their own, as opposed to the family owning assets, that Women tend

to be getting seeing a bias in terms of being able to access credit on some of

these platforms as compared to the others.

But overall, when we did our studies and asking whether digital credit platforms

are giving a higher sense of resilience and comfort about their future to various

families or to various people who are using these digital credit platforms, we

found that over and above all the assets that they hold, or the income levels.

So, uh, some of these households are richer as compared with the other,

those who are able to access finance through these digital platforms tend to

be a lot more comfortable about their income, Uh, ability to withstand shocks

in the future as compared with not.

So if we make this link between the outcome of access to credit or access

to finance is supposed to be giving the individual or the household better comfort

about, uh, how they can face the future.

It seems that the early evidence says that these are all

helping as compared with not.

So that's what I would like to see.

Um, and, uh, as for the potential for overuse or in indebtedness, I think

it is in the incentives of the lenders who are able to set up these, uh, the,

the due diligence or the information share to do better risk management.

But if we are focused on the individuals who are getting it, my sense is that

this is a step in the po in the positive direction for financial inclusion.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you.

That's an interesting perspective.

Uh, James, I know you've also done work around, you know, comparing

the digital credit landscape across different countries.

Tell us a bit more about that, please.

And also whether you looked at only individuals and households as

your unit of analysis, or were you also looking at small businesses?

So, Over to you, James.

Mm hmm.

Mm hmm.

Mm hmm.

Mm

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you Smriti.

Um, so I'll begin by saying when it comes to our perspective on digital

credit is number one is they do no harm principle and so it sounds very

simple but It exists for a reason.

So we need to be mindful of, um, models and think about policy interventions

for forms of credit that can create harm because, because we know that they can.

And I'll give an example for some other work that we've done here in South and

Africa, in an East African market, is by examining transaction level data from all

mobile money credit providers, we realized that there was a practice of lenders So

essentially what you're doing is extending digital credit loans to novice, novice

borrowers as a way of screening them.

So essentially you're giving someone a loan as a way to see who's

eventually going to be credit worthy.

And the byproduct of that is we have these borrowers who are entering, who

are newly financially included in mobile money and by extension of digital credits.

And they don't understand the consequences for defaulting on these loans.

So what ends up happening is for some of these individuals, As soon as

they're included in digital financial ecosystems, they're excluded, um, not

because they had any intentions to defraud, but they simply didn't understand

the consequences and the terms and conditions of these loans, of these loans.

Also, some of the practices that we've seen are in debt collection that

are particularly concerning is Some lenders, um, in the markets, they often

outsource debt collection practices, um, to other third party providers.

And we're seeing a couple of ways of calling people and, um, threatening them

and, you know, I'll call you mother, I'll call you auntie, and all these things.

And we're seeing some of these.

Um, aspects that are bordering on fraudulent ways to pressure

people into repaying the loans.

And yes, there needs to be a sustainability of these markets.

There needs to be debt collection.

But thinking about how policy can protect people from some of

these, very left field practices.

And finally, I think, which is, um, most important is, is there is interest rates.

So some of these interest rates are extremely high, and I know it's

problematic to convert the rates into APR, but ultimately, we're thinking

about hot state borrowers who have urgent needs, they don't really have

a cool down period, and they take out a loan, not fully understanding how

much it is that they have to repay, and how much that takes away from the

business, or from their household.

Um, and the future implications of taking out that, of taking

out, of taking out that loan.

Now, what that being said around the do no harm principle is also,

um, thinking about what people want.

And ultimately, people want credit, and I can even argue that people need

credit, especially microenterprises.

And like you correctly mentioned, Smriti, we did, um, we did, we have done

multiple studies looking at the role of digital credit for microenterprises.

And so, because of some of the emerging concerns around the growth of digital

credit is there's been some conversations in some circles, obviously not all, to

stifle the growth of digital credit.

But I think ultimately, and this is something that I've also considered

in myself, given the different points of research and the different

kinds of data that we've seen.

But also what I see more of is people want more credit.

People want more credits for to be able to survive household shocks.

People want more credits to be able to help with their liquidity needs

for their businesses and in some cases to help grow their businesses.

And so for me what this means is the industry needs to think about how to

create an enabling environment for quality credit to exist and for it to thrive.

And what do you mean by quality credit?

I think I would put it in for the three or four easy buckets is one is affordability.

So, um, is there a way in which the risk that the lenders are

exposed to can be reduced?

So we're thinking about credit reference bureaus and other mechanisms

by which the risk exposure is lower and hopefully, hypothetically,

that can drive down interest rates.

Second is amount, and this matters a lot, especially for entrepreneurial use cases.

is when you have a loan for your business that can help you get an

asset, whether it's a fridge for your little shop, or whether it's some kind

of labor saving device or some kind of agricultural machinery for, for

you to be a more productive farmer.

When we're able to, um, create an environment where there's higher credit

limits or people have a better ability to grow the credit limits over time

is where you can get towards purpose driven lending rather than the more

generic consumer loans that we're seeing as more prevalent in the markets.

And then similarly for, um, entrepreneurs is the tenure.

So when people take out these loans, when the due date comes before

you've, you've fully realized, um, the impact of that loan.

So for example, if it's some kind of asset before you're able to

actually get the increased revenue from having that asset and if the

loan comes before them, then that becomes problematic for your business.

So how can we support the establishment of business models that are

responsible, but then also think about the supply side mechanism

is in terms of what's sustainable.

How can we reduce the risk exposure of the providers such that.

It's great and strong business case for the supplier of the loans, but then also

supports people at a housing level at a housing level for them to be able to

adapt to shops for them to be able to Get access to, um, education, um, for

them to, and, and also for enterprises to grow their businesses, to expand

their businesses and create employment.

Smriti: Thank you.

Thanks so much for explaining that, James.

Sorry.

Susan: Yeah, so can I just come in?

I think that's a fascinating point, James.

I think we don't think often enough about financial inclusion

as being a two party system, right?

That we often think about the individual.

We think about the household.

We don't often converse.

in the same story as the lenders.

The lenders are playing a role and it is also important to think about

the kind of risks that they face.

And, uh, the one addition that I would make to the narrative that you just

presented is that in a certain sense, we think about the small households

and the small individuals who are, you know, Taking these loans in

order to support an enterprise, more particularly when these are the lower

income households that we tend to see a larger fraction of in the global south.

They have less of a, uh, the support system or the wherewithal To buy

or access risk management tools.

But what is more interesting is that if there is a lender who has given a large

number of loans or even a small number of loans to a set of farmer entrepreneurs,

and the farmer entrepreneurs are saying that it is going take a little longer

for them to repay on those loans, it is actually something that is a risk.

that the lender themselves can take, uh, hedges against or protect

themselves against as compared with the farmer or the individuals themselves.

And I think that that is something, uh, which is an important point to

keep in mind that financial inclusion.

Is not just about, uh, the, uh, people who are doing the access to

finance, but also whether it is,

Smriti: a bit.

I don't know if it's just me.

Susan, sorry to interrupt

you, but there seems to be a, uh, you know, you're blanking out in the middle.

Uh, so we've lost a few points that you made.

Maybe just, if you can, go back.

You know, your last two

Susan: so, so I just wanted to emphasize that it is important when we're thinking

about a sustainable and you brought the phrase responsible digital credit, but

I think I liked James point that, uh, people want credit, they need credit.

So you be always need to have a supply side.

where people are willing to provide the credit and the only point that

I will add to what James said is that, uh, the lenders are better

able to protect themselves against the kind of shocks that, uh, that

even the small farmers and the households, uh, are going to withstand.

Um, and that is something that we should put into our equation when we

think about developing sustainable digital credit or credit markets.

I

riverside_smriti_raw-audio_f_m_podcast studio_0038: Yes.

Thank you.

Thanks, Susan.

And thanks, James.

Um, you know, just to broaden this conversation, we've been

talking about financial inclusion.

We've spoken about specific products, but to look at this under the broader

umbrella of, you know, the financial regulatory landscape, and we know

within that inclusion is one agenda, but there are others like Consumer

protection like, uh, you know, data protection and privacy of consumers.

So just to understand, like one of the ways this is linked is, uh, you know,

just drawing from the comments that both of you made is this idea of creating

credit registry saying that, you know, We don't have, uh, data about, uh, credit

history of some of the small businesses.

So there is a conversation, at least in India, about, you know, being

able to take data at the individual level of these proprietors and

trying to use that as a basis for, uh, you know, giving them credit.

And that of course brings up some questions around consumer

protection, around data privacy.

And another example which comes to mind is from the payment space where, you know, we

are seeing this push towards frictionless instant payments and the emphasis being

on frictionless where sometimes this is coming at the cost of, you know, an

increase in the amount of fraud of people not understanding the swiftness with

which the transaction is taking place.

So I want to come to both of you, maybe starting with you, Susan, on.

Do you feel that, you know, the, uh, the agenda and the work on financial

inclusion that has been going on has kept pace, um, with the other broader

regulatory developments that we need for this to become like a whole,

uh, you know, a financial wellness package, so to speak, for the consumer.

riverside_susan_raw-audio_f_m_podcast studio_0036: mean, simple answer.

I think no, because the rate of growth of financial inclusion has been really rapid.

I think that, uh, there was a lot of nice work that was done in about 2013,

where we were thought about building a consolidated policy framework for finance.

I think, Smriti, you may remember this well, but this was the Justice

Shri Krishna Committee, the FSLRC, the Financial Sector Legislative Reforms

Commission, and one of the big, uh, Trust in that was to worry a lot more

about financial consumer protection.

I think that it is a challenge to, uh, to the existing large

financial service providers on how to provide good consumer protection.

And if you start consumer protection as saying, We don't know how

things are going to go bad.

Then the first stop is to be able to collect consumer grievances and to set up

a consumer grievance redress mechanism.

And my suspicion is that even for the existing financial service providers,

that is something that we, uh, at least in India, across the different financial

service providers are still working on developing a robust system for.

So, uh, beyond what you said as If we just focus on digital credit or credit

as a product, it is yes, I agree, important for us to have in place good

information systems about who are the defaulters, what is the information about

the loan size that they're defaulting on.

I would take a step back and address the larger question of the approach

that we as a country has taken to financial consumer redress, because

that's the point at which you understand or you have a feedback mechanism.

from the users off or finance into the regulatory space, because I think one

of the things that we have seen very often is that there are a set of harms

that we observed in other countries.

And we presume that those harms will happen in our country or in the In

the global south, the same kind of harms as we see in the global not.

But to James's point, right?

Nothing about these need be the same because they are a very different set

of people and types of people, their desires, their wants, their needs.

They can be similar, but the levels at which they exist are completely different.

So my sense is that we have captured or we have put in place consumer

protection, which is similar to what we see in the global north.

But perhaps there needs to be innovation on that front as well.

So I agree with you that we do need to worry about consumer protection when

it comes to data and data sharing.

But I think that there is, this is one piece of the puzzle when we think about

financial consumer protection, because ultimately it's about asking whether

your customers have faith in the system when they put aside their savings.

into financial products.

Financial products are tricky, right?

It's not like buying a refrigerator.

You are putting money into a product which will only give you

returns over a very long horizon.

It can be short term, it can be medium term, it can be long term,

but you need to have the faith.

And so it is critical for us to put in place consumer redress.

Where grievances go back to the regulator and they see the

regulators are taking action.

So I would worry about that not being fully understood

and put in place in India.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Right.

Thank you.

Thanks, Susan.

James, I'm going to come to you with, you know, two points.

One on anything you want to add in terms of the consumer protection

framework in the African context, uh, which, you know, you might want

to add to what Susan was saying.

And the other is, uh, you know, Susan mentioned something about, you know,

the that the harms from one context will not necessarily translate to the other.

We spoke about how, you know, regulatory factors, regulatory features may not

translate, but are there positive lessons which actually could be translated,

uh, from one country context to other?

Is there anything in, uh, you know, Busara's global work that you

have seen where you feel that, uh, there are some interesting cross

country linkages that can be made?

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you Ji for that question.

So, um, to respond to that, I'll first start with that example.

So I remember reading an article a few years ago from the former governor of

Kenya Central Bank, and essentially he was saying that there are a number

of issues that come to his table, uh, when it comes to consumer protection

in the digital credit environment.

Take up so much of his time and yet in the context of the larger scheme

of things when it comes to the overall credit markets, the digital credit

environment represents about 10 percent of the overall borrowing economy.

And so I think it's what this speaks to is the stage or the environment and a lot

of digital credit markets in especially in South Africa are at an embryonic stage.

They're still early.

There's still a lot of innovation.

There's new entrants.

Um, and there's also new borrowers and, um, what this leads to is.

Um, undesirable outcomes, both at the borrower level, but also

at the, at the supplier level.

But again, we go back to the principle of impact first priority

and consumer protection first priority of doing, of do no harm.

The role of the regulator is to ensure that the borrowers who are in the

millions are protected from variations of digital credits intentionally

or not, that creates less than the desirable outcomes for customers.

But also an important principle here is to think about the regulator capacities.

And so different regulators in different markets have different, um, regulatory

capacities, be it technology, be it oversight based on the different

constitutions to actually implement and protect customers from these laws.

And so regulators themselves are having to innovate.

They're having to update how they view the markets and they're having to update

how they think about The legislative oversight to protect customers, and I

think the development space at large has, um, come to, um, has, has caught up with

this, um, with this dynamic and thinking about how can we create sandboxes, for

example, where, um, a provider can come and they can figure out, uh, they can

test it in a controlled environment, and we are able to anticipate some

of these negative consequences before they're actually scaled into the market.

Um, and so I guess I would say that's one of the aspects that's transferable

from market from other markets, although we have not directly been involved

with them, but they do feature in our research is seeing how we can create,

um, sort of these testing environments that sometimes we do or like on our own,

um, well, not only in credits, um, using our lab apparatus, we have different

mechanisms for testing people's ability to understand terms and conditions.

For example, And what we see is that we have a lot of assumptions around people's,

especially now that we're speaking extensively about digital credits,

we often have a lot of assumptions.

about people's ability to understand and compare information and to make

decisions that are consistent with their own priorities for their own well being.

And so, for example, thinking about how people are able to compare,

um, terms and conditions from the interest rates to the tenure from one

provider of a kind of loan to another.

And from some of the research that we've done, um, that's also been

applied to different regulatory contexts is that People often struggle

to make calculations because of information asymmetry, for example.

So in one provider, the information is simple.

The other one is complex and people's ability to compare financial products

leads to Um, or their lack of ability to compare financial products leads

to their inability to switch and their inability to, um, have behavior that

makes them choose a cheaper option or an option that's more optimal for

their entrepreneurial activity, for example, and that also has negative

consequences at a market level.

So Maybe you have legacy providers that are able to keep customers captive because

they don't really understand what's what else is available in the market.

They're not able to compare and they're not able to find another deal

elsewhere besides the first provider.

And so those are some of the nuances that we're seeing that from a

regulatory perspective, the power and the power of information or

the power of quality information.

Can help customers behave in a way they're consistent with what they want, but also

has positive outcomes for the market at large, particularly when it comes to

competition that can drive down prices and have other positive impacts as well.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thanks, James.

Yeah, I think that's a really critical point on the role of competition

and, you know, the effectiveness of the market as an intervention in

furthering into the inclusion agenda.

So we're about to close our conversation and before we end, since both of you have

been so good, I'm going to hand each of you a magic clamp with a genie, which is

going to let you envision what you see as the future of digital financial inclusion.

So starting with you, Susan, maybe can you tell us.

What are the kind of outcomes that you expect to see in the

future of digital finance?

And what do you think are the steps that will take us there?

riverside_susan_raw-audio_f_m_podcast studio_0036: So All our research work on understanding,

uh, financial inclusion, the entire chain through input to output to outcome,

leads us to believe that the more access to finance, people will get better off.

Right?

Irrespective of what is, how rich they are, poor they are.

Financial access does matter.

It's not the only thing that matters, but it certainly has

a non zero significant effect.

Uh, what is the future?

I think that that all stands in the hands of the environment,

uh, of regulation, because I do, I do agree with James, right?

I think that when people see their neighbors who have access to finance

being better off, they tend to learn through that process as well.

I agree with James that.

Uh, regulators on policy makers, uh, do play an important role in doing the

learning, allowing or facilitating for people to learn faster, to understand

better, to get better clarity.

I remember that our securities markets regulator.

has made lots of changes on how information about products should be

more clear in larger pond of the like.

Uh, but it does say that if we want to go down the path of digital financial

inclusion, there needs to be a lot more innovation that is permitted in the space

before we can get those links between people and the financial products done.

How does that pan out?

I think that it's all positive the but the question that comes to my mind

when I think about the global South are who are the people who are going

to take the business risk in terms of building these models, because there

is still a lot of work to be done.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thanks, Susan.

James, your, uh, wishes and what it takes to get there.

riverside_james_ogada_raw-audio_f_m_podcast studio_0037: For me, again, I want to agree 100

percent with what Susan mentioned is that there's still a lot of work to be done.

And how I often think of this is a pyramid.

And so when it comes to inclusion, um, I think there's a lot of

questions that are being asked for good reason about the livelihood

outcomes associated with inclusion.

But also I do believe that those gains shouldn't be watered down

because it's a foundation upon which other things can be built upon.

So at the base of this pyramid, you have inclusion.

So getting the masses into formal or informal, uh, financial systems

that they can, they have options of different ways to transact.

They have options of different ways to save different ways to borrow.

Now, what comes beyond that is usage.

So thinking about how not only are we giving these people access, you know,

you get them an ID, you get them an account or you get them like a mobile

phone, but getting them to actually use these products in a way that is

convenient for them in a way that Helps them get other tertiary benefits that

would come after and so naturally at the pinnacle of this pyramid I would

say that that's where the value addition is And so this is like susan said where

it's a more difficult question, but I do believe it's very surmountable So

how do these different initiatives, how do these different products actually

add value to people's financial life?

How do they increase household resilience?

And how do they help enterprises grow and create more jobs is where a

lot of, um, the financial inclusion, um, industry is looking at is like

that value creation, um, pinnacle.

But then also, like I mentioned before, is the diversity of the different

contexts in sub Saharan Africa.

For example, some markets, need more attention to the inclusion stage.

Some markets like in Kenya need more attention to the value addition

stage where we've seen people aggregated because of aspects like

money, there's data available, but what do we do with that data?

How can we actually optimize the financial lives of people who

are using these products that have been using them for years?

And I think that's the pinnacle that my team and I in particular are really

excited about working with our partners.

riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you.

Thanks so much, James.

And I think that's interesting.

We seem to have come a full circle because the, you know, the peak

of your pyramid really points back to the outcomes limb of what Susan

has been explaining from our work.

And so we all seem to be kind of on the same page of understanding the

importance of outcomes in this whole conversation, the key learning for

me has been that, you know, you just don't need good intentions or good

policies or a good financial product to actually get to the finishing line on

terms of outcomes you need a lot more.

And hopefully for everyone who's been listening, we've managed to bring out

the importance of interdisciplinary work in this space and the role that

the research community, which all of us here are a part of, has been playing in

our own ways to deepen the understanding of financial inclusion and kind of

help the ecosystem assess how we are faring in terms of measurable outcomes.

So with that, I'm going to thank you once again, Susan and James for this

rich and insightful conversation and to the intellectual foundation for

inviting us to this episode of the salon.

Thank you.

Have a good day.

riverside_susan_raw-audio_f_m_podcast studio_0036: Thank you.