Digital financial services can be an effective driver of financial inclusion, especially in developing nations where most adults have better access to a mobile phone than a bank. Financial inclusion, in its entirety, is access to, and use of, quality, affordable financial products and services that lead to financial wellbeing. Over the past decade, the access component of inclusion has significantly improved. Today, 76% of the global adult population has a bank or mobile money account, up from 51% in 2011.
Despite these advances, many countries still find themselves unable to provide adequate financial services to large segments of their populations. This is particularly concerning as individual resilience to economic crises is dangerously low. Only about half of all adults in developing economies could access funds within 30 days to cover an unexpected expense.
A key barrier to reaching full financial inclusion is low digital and financial literacy levels. As financial products and services are increasi
ngly delivered digitally, literacy in both areas is essential. Rolling out effective initiatives that raise literacy levels could substantially improve consumer protection and financial health, especially among disadvantaged groups in developing economies. Designing and implementing successful digital and financial literacy initiatives, however, is complex. Public and private sector entities, often along with civil society, must ultimately collaborate on literacy content, strategies for reaching the end user, and the evaluation of pilots.
Given there is not yet a definitive best approach to delivering digital and financial literacy initiatives, the World Economic Forum and the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge Judge Business School conducted a series of multi-stakeholder regional roundtables to explore lessons learned from ongoing and recent public-private efforts to advance literacy.
Following a series of roundtables in 2021 focused on fostering partnerships tha
t advance inclusive digital financial services, in 2022-2023, the Forum and CCAF held four regional roundtables covering Sub-Saharan Africa (SSA), Asia-Pacific (APAC), Latin American and the Caribbean (LAC), and the Middle East and North Africa (MENA) to examine innovative digital and financial literacy pilots and programmes. Participants in these roundtables included stakeholders from across the financial services ecosystem.
From the various presentations and discussions during the roundtables, three key insights emerged around how to build more successful digital and financial literacy initiatives.
It is essential to embrace new channels and creative approaches for effective reach
While social media platforms have their challenges, such as perpetuating financial and advertising scams, they also provide a means for consumer financial education at scale. During most roundtables, examples of initiatives that leverage social media channels and creative outreach approaches were shared.
Examples from the SSA
and LAC regions included using mini-dramas and audio clips featuring fictional characters to narrate stories about e-wallet openings, inquiries about credit products, and financial decision-making behaviours. The interactive voice response campaign is designed to increase women’s ability to access and use digital financial services. These audio clips were highlighted as effective tools to address basic literacy challenges. Government authorities such as the SEC in the Philippines and the CMF in Chile have made their own YouTube channels, created an investor education video series, and used Instagram and other interactive tools to educate consumers on various financial topics.
Local merchants are a key part of inclusive digital financial infrastructure and need literacy support
Often, ‘literacy’ is thought of as something to tackle at the individual consumer level. Yet, local merchants are an important nexus for scaling digital financial services. By accepting digital payments, merchants can simultaneously e
ncourage the use of digital financial services and enhance their businesses through improved sales monitoring and establishing a digital footprint that can lead to demonstrable creditworthiness.
Roundtable discussions highlighted the benefits derived from merchants digitizing their businesses with well-designed products. They also emphasized the importance of support for merchants as they consider this transition. Such efforts can sit within large, holistic initiatives, such as the BSR HERfinance wage digitization programme. This programme helps employers responsibly digitize wage payments for low-income workers in global supply chains. A crucial element of this initiative has been the involvement and training of local merchants near factories that have digitized wage payments. These merchants have received incentives and support around accepting digital payments, helping make the programme a sustainable success.
Initiatives need to target and be designed for different consumer groups
Although there are ge
neral common challenges, marginalized communities are varied and experience financial access challenges differently, to different degrees, and with different root causes. Roundtable participants discussed how important it is to ‘meet the customer where they are at’, be it a garment worker who has never used an ATM, groups of migrant workers with different native languages, or semi-literate populations.
Responding to the need for unique approaches to reaching various consumers, the Digi#ances project in Jordan – one of the top refugee-hosting countries per capita – offers financial training in multiple languages to cater to different refugee groups. Similarly, the Hey Sister! digital and financial literacy campaign has scaled to different regions, each implemented in a tailored way. In SSA, for example, telecom providers are key partners and offer free access to content for their subscribers; in MENA, a central bank is adapting the initiative’s open-source content to deliver on its financial literacy strategy
. In LAC, a new set of characters was introduced in the audio/video training clips so consumers would better identify with them. Consumer feedback suggests the approach is working and helping to improve financial literacy. For example, in the SSA region, the more episodes women listened to, the less likely they were to share their PIN with someone like a family member or a mobile money (MoMo) agent, as the below figure shows.
Collectively, the roundtable discussions have showcased the importance of building effective and scalable digital and financial literacy initiatives in an increasingly digital world. They also have highlighted that there is no one pathway to success, and cultural and contextual nuances must be taken into consideration in any implementation. Knowledge sharing around pilot triumphs and failures will be key to achieving significant digital and financial literacy progress.
Over the next two years, the Forum and CCAF will continue working together to facilitate multi-stakeholder knowledge e
xchange by holding additional roundtables, in connection with the Future of Global Fintech Research Initiative, an effort looking to produce relevant and timely global insights on fintech and inclusive digital finance. The aim is for these insights to help further drive responsible innovation in the financial services ecosystem, innovation that leads to greater financial wellbeing for both consumers and businesses.
Source: World Economic Forum