Putting Clients at the Center: A reflection from Microfinance Opportunities, Part 1

“Putting Clients at the Center” is currently popular in the financial inclusion discourse. But what does this phrase mean? At the recent USAID After Hours Seminar entitled, “Putting Clients at the Center: Designing and Delivering Effective Financial Services,” Microfinance Opportunities (MFO) staff took up the challenge and put skin on the bones of this concept. As an organization MFO is committed to understanding the financial realities of low income households and developing consumer-focused solutions. Working with financial diaries and the building of financial capabilities has led to important insights about financial behaviors. 

Essentially financial education seeks to change people’s financial behavior, building on their money management practices. Starting from this base begins with understanding how a person uses money and how they interact financially with people and institutions. Changing these behaviors to achieve a goal such as usage of branchless banking products means assessing what new knowledge, skills, and attitudes are needed and finding the best channels to convey these key messages to get there.

Analyzing financial transactions data both quantitatively and qualitatively offers an excellent picture of people’s money management practices. The financial dairies methodology reveals several things:

• We can estimate aggregate levels of individual/household cash inflows and outflows across different geographies.
• As a sequence of financial transactions, financial diaries data can reveal how lump sum expenses are financed, which is invaluable data when it comes to product design.
• Geographically coded data tell us where transactions originate and the route money travels from person to person.  Once mapped, this information can help identify market opportunities.
• We know who and what are on each end of the transactions. In the case of e-money transactions in Kenya, we learned that over 80 percent take place within social networks made up of family, friends, and associates.

A parallel but subset of these transactions analyses can be done by mining institutional Management Information Systems. The major difference is that one party in each transaction is a particular financial institution. Not only does a comparison of the two databases provide valuable market intelligence for a financial institution, but the findings can also provide a window on financial behaviors such as over-indebtedness and delinquency. 

MFO looks at the issues surrounding financial inclusion based on people’s real time money management. Drawing on our extensive experience with financial diaries and the implementing financial education projects we have been able to build a framework for ‘putting clients first’. The triangle ‘puts clients at the center’ and implicitly asks the question, “how can one intermediate to support people’s financial behavior?” The model argues that sustainability, scale, and impact are more likely if an institution’s operational processes, products, and delivery channels, and the financial capabilities of clients, together fit the needs or financial behaviors of low-income clients.