[vc_row equal_height="yes" content_placement="middle" type="image" enable_parallax="false" parallax_speed="0.4" padding_top="110" padding_bottom="0" bg_image="40136"][vc_column][kleo_gap size="100px"][vc_row_inner][vc_column_inner width="1/6"][/vc_column_inner][vc_column_inner width="2/3"][vc_custom_heading text="Using behavioral insights to improve digital financial capability (DFC) of customers: Key learnings from our experiments across different ecosystems" font_container="tag:h2|font_size:48px|text_align:center|color:%23ffffff|line_height:54px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][/vc_column_inner][vc_column_inner width="1/6"][/vc_column_inner][/vc_row_inner][kleo_gap size="140px"][kleo_gap size="50px"][/vc_column][/vc_row][vc_row equal_height="yes" content_placement="middle" padding_bottom="0"][vc_column width="1/2"][/vc_column][vc_column width="1/2"][vc_row_inner equal_height="yes" content_placement="middle"][vc_column_inner width="5/12"][/vc_column_inner][vc_column_inner width="1/3" css=".vc_custom_1488531456733{padding-right: 0px !important;}"][vc_column_text letter_spacing=""][addtoany][/vc_column_text][/vc_column_inner][vc_column_inner width="1/4" css=".vc_custom_1488531444909{padding-left: 0px !important;}"][kleo_button title="Print this page" href="https://cashlesscatalyst.org/wp-content/uploads/2019/01/MoT-Learning-Note.pdf" target="_blank" style="custom" position="left" size="lg" special="no" border="no" icon="print" font_size="16px" letter_spacing="" el_class="grey-icon" custom_text="#d11e3c"][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][vc_custom_heading text="About CATALYST" font_container="tag:h2|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_row_inner css=".vc_custom_1537456868816{margin-bottom: 35px !important;}"][vc_column_inner][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]CATALYST is a user-centric ‘digital financial inclusion innovation platform’ for the underserved last mile. The initiative is funded by the United States Agency for International Development (USAID) under the mSTAR Program, through funding provided to FHI 360. Housed within the Institute for Financial Management and Research, Leveraging Evidence for Access and Development (IFMR LEAD), the initiative aims to expand digital payments and financial inclusion in India.CATALYST identifies, develops and validates solution frameworks and business models in collaboration with facilitating government agencies and participating industry solution providers to responsibly transition small business ecosystems (i.e., merchants, consumers, suppliers) from an inefficient cash economy to digital payment platforms, and further onto broader digital finance solutions. CATALYST has also launched a new business incubator, ‘Fintech for the Last Mile,’ to promote entrepreneurs focused on developing innovative digital finance solutions for traditionally underserved segments.[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_custom_heading text="Acknowledgements" font_container="tag:h2|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_row_inner css=".vc_custom_1537456868816{margin-bottom: 35px !important;}"][vc_column_inner][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]
<div>The authors thank and acknowledge the support of Arbind Vishwakarma,</div>
<div>Deepti KC, Tunisha Kapoor and John Arun for the insights from their respective projects. Thanks also to Harsh Pandey (FHI 360), Jayshree Venkatesan, Ankur Gautam and Preethi Rao for editorial reviews and feedback, and to Badal Malick and Sharon Buteau for their consistent support and encouragement.</div>
[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" enable_parallax="false" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40098"][vc_column][vc_row_inner][vc_column_inner][vc_custom_heading text="Executive Summary" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff" inline_style="font-style: normal;"][vc_column][vc_row_inner][vc_column_inner el_class="normal-style "][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]

Evidence suggests that the use of digital financial services can offer benefits such as increased financial transparency, accountability and inclusion. ¹For customers to adopt these solutions, however, it is very important that they see value in these solutions and have the ability and willingness to change their existing habit. This paper elaborates our learnings from experiments deployed by us to improve the uptake of digital payments and promote digital financial inclusion of the population. Some key insights from our field work and interactions with stakeholders include:
<ol>
 	<li>Both the end-consumers and the merchants aren’t proactively looking for digital financial solutions, so the hook to adopt these will have to be very strong. It must be a solution that meets a specific personal need for it to be relevant.</li>
 	<li>Digital financial services are seen as a ‘double-edged sword’ - While majority agree that digital payments and services are convenient and helpful, there is a perceived risk to one’s money due to mistrust in using technology for finances and lack of confidence in their data being kept private. It is very important for the solutions, communication channels and influencers to be trust-worthy to drive adoption.</li>
 	<li>Another aspect that is critical to build customers’ trust is seamless alignment of solutions with emerging technologies. Currently, there are many teething problems with some of the nascent technologies that use UPI or AEPS. If solution providers cannot fix these issues, these liabilities should be clearly defined and communicated to the customers – so that there is no lack of trust later.</li>
 	<li>Adoption of digital financial services is directly proportional to a customer’s familiarity with technology and his/her state of financial inclusion. Taking a low-income individuals on the route to digital financial inclusion, who may or may not have bank accounts to begin with, is a long-drawn process requiring sustained interventions. It is therefore important to first identify the early adopters - example someone who is actively banking and has a smartphone -as they will be more open to change. Once onboarded, they can be the change-agents in networks where they are trusted.</li>
 	<li>Merchants are ready and willing to offer any digital payment solution that the consumers ask for, but the push must be driven by consumers’ demand for it so that it improves their business. Therefore, the initial capability focus for the solution providers should be end-consumers as it is their interest and intent that will decide the merchants’ interest.</li>
 	<li>Taking financial decisions is, in general, perceived to be a complex task – especially by women where they pass on the task to men of the household. There could be various societal norms at play here, but it is very important to take out the complexity from matters related to money. Simple digital solutions can help boost confidence of women and others who might be finding financial decisions complex, in general, and address this need for simplicity in finance.</li>
 	<li>Once people convert to digital payments, they sustain this behavior easily. It requires substantial time and effort to communicate benefits and handhold a consumer to onboard a new digital payments platform. However, once they are onboarded and have personally experienced the convenience of digital payment solutions, people continue to use them.</li>
 	<li>Integrated digital financial inclusion programs should focus on the entire cycle from awareness to sustained change with a specific solution at every step.</li>
 	<li>Finally, to communicate various value propositions and build digital financial capabilities of customers, CATALYST used different channels to reach out to them. We found that a mix of social media and interpersonal channels is important to reach different profiles of people (youth, working men, self-employed women, housewives) who would be at different stages of the adoption curve. For merchants, since they have little active interest in digital payments currently, the format needs to be trusted, easy, engaging and, most importantly, backed by support.</li>
</ol>
<a href="http://documents.worldbank.org/curated/en/332881525873182837/The-Global-Findex-Database-2017-Measuring-Financial-Inclusion-and-the-Fintech-Revolution">http://documents.worldbank.org/curated/en/332881525873182837/The-Global-Findex-Database-2017-Measuring-Financial-Inclusion-and-the-Fintech-Revolution</a>
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<div>Figure 1: The adoption continuum and learnings</div>
[/vc_column_text][vc_single_image image="40152" alignment="center"][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="image" bg_color="#373b3c" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40100"][vc_column][vc_row_inner][vc_column_inner][vc_custom_heading text="ECOSYSTEM RELATIONSHIPS AND MARKERS OF TRUST" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][vc_row_inner equal_height="yes"][vc_column_inner el_class="normal-style"][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]In this context of women in lower-income households who earn a considerable income and make day-to-day financial decisions, gender dynamics also come into play as these groups tend to follow traditionally patriarchal customs. Certain norms and implicit rules preserve the fabric of their socioeconomic lifestyle which has to be taken into account if the prevalent ecosystem has to be recreated digitally. Two important heuristics relevant to the digital payment context, based on qualitative insights, are described below.

[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_custom_heading text="Heuristic 1: Ownership matters" font_container="tag:h2|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]Since digital payments rely on digital infrastructure – bank accounts, smartphones and internet connection, primarily. Digital financial inclusion at an individual level means individual ownership of these.

As one would expect, going higher up on the economic ladder, the ownership of products and services becomes individual centered. Lower income means shared ownership to cut costs. Power comes into play and, typically, even if the household as a group owns two gadgets, it is clear that the member who holds more agency and autonomy will own the smartphone. It was found that this was not about gender alone but also dependent on occupations. Women selling old clothes, for example, held equal (if not more) agency and autonomy than men in the family than their counterparts who make bangles. This was because of the former had more independence in carrying out their businesses while the latter and were completely dependent on their agents.

[/vc_column_text][vc_custom_heading text="Implications" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]
<ul>
 	<li>The gender context: If all digital products and services were, by default, centered on the use of smartphones and smartphone ownership was with men, the first step would be to strongly incentivize co-ownership for transactions alone. The man in the household, who might have ownership of the phone, needs to be convinced that he is a partner in progress of the household when the woman is able to use the phone for making digital payments through her accounts.</li>
 	<li>The occupation context: In occupations where women hold equal agency and autonomy, a targeted intensive handholding approach could be devised. Since women showed an overwhelming willingness to learn, identifying women who could be champions of digital payments and handhold others could be the way forward to gain trust and manage cultural sensitivity.</li>
</ul>
[/vc_column_text][vc_custom_heading text="Heuristic 2: Employer-employee relationships" font_container="tag:h2|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]There are also subtle but powerful dynamics between these women and their employers, particularly in cases where agency of the employee is important for the employer, for example, domestic workers. In a domestic worker-employer relationship, the pain-points for the employer, in most instances, are inconsistent patterns of leave and delay in work times. The pain-point for domestic workers lies in communicating about work delays and/or leave on time. The domestic workers earn an average of about INR 3,000 from about three to five employers. A digital solution can allow these women to consolidate payments from their employers, keep track of their schedules and leave, at the same time, keeping the employers informed about potential delays or leave.

[/vc_column_text][vc_custom_heading text="Implications" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]
<ul>
 	<li>Rather than a narrow focus on digital payments, think of the employer-employee relationship as an opportunity for a bundle of services. Incentivize the employers, to encourage them to make digital payments to domestic workers. Incentivize workers by giving them talk time reimbursements, or variable pay based on leave taken or any such mutually fair benefit.</li>
 	<li>Link all payments and government transfers to the account being used for salary transfers. Many government benefit transfers go unnoticed and unused in the bank accounts because the beneficiaries do not use their accounts and are unaware of their balance.</li>
</ul>
[/vc_column_text][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40101"][vc_column][vc_row_inner][vc_column_inner][vc_custom_heading text="MARKERS OF TRUST" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][vc_row_inner equal_height="yes"][vc_column_inner el_class="normal-style"][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]Looping back to the initial idea of an ecosystem as a system of living relationships, it is observed that even though these relationships are marked with inequality, the norms and variations are consistent and known to all the parties. Trust is therefore vital to the survival and growth of the ecosystem. In attempting to create a digital ecosystem, it is essential to recreate the markers of trust digitally as they are on the ground.

The first marker of trust is that all the parties in an existing relationship dynamic are equally invested. Otherwise they would not embrace an unknown system. In the case of working women, the dynamic not only includes men and the household, but also their employers, agents and the other economic actors that they interact with in the value chain. The two tricks of the trade above highlight how this dynamic works.

The second marker of trust would be an assurance against fear of the unknown. This could be achieved by intensive handholding and proactive grievance redressal. CATALYST’s efforts in Bhatta Basti with opening bank accounts and ATM pin generation were a good example of how this becomes an effective strategy in including the financially underserved.

The third marker of trust comes from incentivizing the early adopters in the community to become champions and role models where they help their peers through the digital journey. Information and communication from known and trusted sources would be a far more easy-sell for digital solutions than from the marketing and promotion activities of the solution itself.

The fourth marker of trust would be a process of community legitimization or validation. Since the community itself is a key stakeholder, the community should benefit. Public good or value must be created, in collective public terms, so as to not only endorse the digital ecosystem, but encourage it.

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<p style="text-align: center;">CATALYST is an initiative seeded by an alliance between the Government of India &amp; USAID, to expand digital payments and financial inclusion in India, especially for small merchants and low-income consumers.</p>
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