Financial Inclusion & Beyond Coming April 15

Hey everyone, well it’s been a long time! But we’re really excited to share a sneak preview of our upcoming series, Financial Inclusion & Beyond, where we’ll be exploring lessons from around the world about how a combination of public policy and technology can create a more inclusive financial system and promote financial health and wellbeing for everyone. We started recording this before the pandemic, and it’s taken us a while to get this to you as we record from home, but the events of the past year have only reinforced to us that this a crucially important topic!

So, Paul, why did we decide to focus on this issue of financial inclusion, health, and well-being?

Well, Sean, it’s just so important and as you’ll hear our San Francisco Fed president Mary Daly say succinctly in our first episode, ‘we all do better when we all do better.’

We all need to be plugged into the financial system, right? It’s a given. But for some us….in fact for many of us, this is actually still quite difficult. And something that I learned and I am sure you learned it too while recording this series is that the excluded are quite resourceful. They’ll find ways to save and invest, but those ways aren’t always efficient. Financial inclusion enables our economic lives by providing us access to savings, investment, insurance, and income smoothing vehicles that help us support our goals.

Financial inclusion enhances individuals’ participation in their communities and helps them build resilience, which spills over to the health of our economy. Here’s how Mary Daly puts it:

Well, you think about the economy, it needs each and every one of us. And if any group is excluded, we’re leaving talent on the table, we’re leaving important people and communities behind. So inclusion is the foundation of a healthy and strong economy, which is one of the key missions of the Fed. And that’s inclusion across a host of things, that’s inclusion in economic opportunity, it’s inclusion in financial opportunity, it’s inclusion in a sense of belonging to a community. I think of it as we all do better when we all do better and leaving anyone on the sidelines limits us all.

Linda, we’ll hear a lot in the series about the idea of taking a human-centric approach to the design of financial products. But is that really such a new and radical idea?

It is radical in the sense that it is so fundamental but often overlooked. Human centric design is about meeting people where they are at in terms of their needs and lives. By making financial products relevant to people’s realities, you not only further financial inclusion, you also help people achieve financial actualization. One of our guests, José Quiñonez, works to build credit access for migrant populations who aren’t served by the existing credit bureau system, and he really drives the point home:

Traditionally, low income people have been secondary users to products that were designed for other people in mind. They were either the afterthought, or people that were just thrown into using products that were not explicitly designed for them. So, the concept of what I think what banks and fintech companies and other institutions can do, is to really step back and really think about, well, what are the primary concerns and problems that low income people have, and then build products particularly designed for them instead of forcing them to be, again, secondary users to products that they designed for other people in other constituencies.

Cindy, we get to a number of examples of technology trying to meet people where they are as, Mary and José both talk about, and heard time and again that people clearly don’t dream about opening a bank account, but want a useful tool to enable their lives.

You are absolutely right. And that’s such a powerful observation. At the end of the day it all boils down to how consumer-facing financial products can support important life events such as education, home purchase, and retirement, in a responsible way.

Sometimes solutions can be as simple as connecting a very real and personal asset to a modern financial product that increases a family’s liquidity and return on savings. It is also about getting rid of the frictions that get between our good intentions and actual behaviors.

The question is: How do we fill the gap and build the bridge? We speak with Arjuna Costa, a leading impact investor for financial health who shares a lot of great examples from his global work:

I met a woman who runs a small shop in the front of her house. I asked her how she saved and she went into the back of the store into her house and she brought out five different boxes, plastic and tin boxes and there was a little bit of cash in each of those boxes.

Each of those mini accounts that she keeps in her head had a very specific purpose. One was school fees, one was new school uniforms. One was a niece was getting married. So her mental model of money and savings was complex, but it met where her life was. For years, we’ve gone to her and said, “Open a bank account. It’s very secure. The bank is 10 kilometers away, and, oh, by the way, the bank closes at three o’clock, so you’re going to have to come back the next day if you’d really need the money.”

Ok, well, if you like the sound of this, stay tuned for the release of the entire series, coming in April. We can’t wait to share it with you!