Although it has been nearly 40 years since Muhammad Yunus first pioneered his microlending approach in the villages of Bangladesh, most audiences still only associate the word microfinance with operations in a rural context: images of rolling farmland, a woman tending to her flock of chickens, or laughing as she sits with the other members of her self-help group in a spacious, communal meeting point. But in India, urban populations are expected to grow from 26% to over 36-50% in the next 25 years. The RBI is making an effort to improve support for this swell of urban poor from a policy perspective, but in the meantime, how can financial inclusion programs adapt to this changing client base?
Understanding the Urban Client
Operating in an urban environment means meeting the needs of a multicultural audience. These clients are typically economically active, but often lack access to housing security, proper sanitation, and traditional family support networks, which leaves them vulnerable to income shocks and setbacks. Although they have increased access to the physical branches of formal financial institutions relative to their rural peers, financial products are rarely tailored to their specific needs. These clients also face a higher cost of living and prefer more familiar, informal products.
To meet the needs of savvy, urban clients, institutions like Swadhaar FinAccess (SFA) adapts the content, design and delivery mechanisms of their financial inclusion programs to better serve their populations.
SFA begins with a holistic approach. They must begin with the basics of budgeting and saving (like is done through the Financial Education Programme) and work outward to more specialized products like recurring deposits and insurance. They must also actively address misinformation, often deeply rooted in the community. By providing an integrated approach, SFA builds long-lasting relationships with their clients and works to provide product linkages that helps them achieve their financial goals.
Serving an urban client base also means tailoring delivery mechanisms to account for spatial and scheduling constraints inflicted by an urban environment. Narrow lanes, small buildings and few communal meeting areas limits group size and increases logistical barriers. This is mitigated by the use of client homes for the most well-established trainings.
While using clients’ homes has advantages in this setting, it also increases the importance of community outreach. The role of the Community Mobilizer is crucial at SFA, as she is responsible not only for enrollment, but securing a training location.
Another solution to physical constraints is the creation of a local, physical presence, such as SFA’s 10 FILCs (importance examined in more depth here).
From a scheduling perspective, the prevalence of fixed and variable income earners means SFA must adjust the timing and length of their programs. A fixed wage earner (a housemaid for example) prefers trainings after business hours, whereas a variable wage earner (a papadum manufacturer for example) prefers shorter trainings. For the papadum maker, one extra hour spent in trainings means one hour of wage lost.
The diversity of earners has caused Swadhaar to create different programs tailored to these groups. The Financial Education Programme for men, for example, occurs in the evenings after normal business hours. The development initiatives however, specialized sessions focusing on monsoon health or currency identification targeting entire families, take place over the weekend.
The attention paid to different wage earners has also seen SFA programs become leaner and more concise over the years to better respect the busy, hectic lifestyles of their clients. The Financial Education Programme, for example, has gone from eight sessions in its early phase, to only three sessions today.
Working in an urban environment means increased diversity in clients’ language, religion and culture. From a content design perspective, this has led SFA to use non-specific visual representations in the storyboards and role-plays. It also means offering lessons and materials in a variety of local languages, and creating materials that can withstand the travel and weather conditions faced by educators in the community. For example, it would be ideal to have short videos incorporated in the workshops, but transporting a projector from site to site is impractical.
An emphasis on scalability benefits and advanced technology is helping this issue, and SFA will likely use future grants to pilot the efficacy of tablet-based programming. Continue reading