India is at the cusp of a financial inclusion revolution on an unprecedented scale and impact. The power of the JAM trinity to enable cash-less, contact- less, remote transaction authentication is ready to be leveragedfor achieving the goal of universal financial inclusion. Yet, we see a big gap between availability and actual uptake and usage of financial services. Consider for example the fact that one in two farmers do not have access to formal finance and only two percent of the adults have health insurance.
A study conducted by Grameen Foundation with over 25,000 respondents revealed some very interesting insights about engaging with formal financial institutions. Women belonging to the low-income segments showed a greater propensity to deposit their savings in formal banks compared to men, who preferred to keep money at home.When women are in charge of making financial decisions, they use the money for improving their family’s financial condition – by investing in small businesses, ensuring nutrition and education of their children or saving for contingencies, for instance.
Grameen Foundation is at the fore-front of deploying technology to create a deeper impact in access to financial services for low income populations, especially women and to bring them the tools and opportunities that they can use to help themselves.We see three important barriers that explain low adoption and usage of financial services. These are: The Capacity Barrier, the Trust Barrier and The Access Barrier.
Capacity barrier refers to the lack of awareness, knowledge and skill in using different financial products. We have developed and deployed a mobile learning platform called “Grameen Learning Application (G-LEAP) which is used by the Front Line Workers of microfinance institutions to learn about different financial and digital products, and in turn, train their clients. We have now integratedArtificial Intelligence based emotional analyzer to better understand the level of engagement of the learners. EASE (Emotional Analytics for Social Enterprises), an Artificial Intelligence tool based on deep machine learning takes inputs through video and audio files to analyze the sample on the parameters of temper, mood and energy to come out with insights on the emotional and cognitive status of the person. The tool tells us precisely what topics or key words attract attention, and also the ones that make people disengage.
We are not only seeing a change in the knowledge and awareness of the clients about digital finance, what is even more important, we are seeing a shift in attitude and behaviors. This shift results in a higher proportion of people who are trained to actually start using the digital channels. Out of over 57,000 clients trained by us using these tools, over half of them have already started using the new digital channels.
The second barrier that people face is trust of any new system, and more so, if it is something seemingly as complex as digital finance. We are combining an Augmented Reality tool, Grameen Guru that lets a client interact with a virtual assistant orally, in their local language who then provides information on the relevant topics.Use of these front-end applications that keep the clients at the center, together with the hand-holding provided by the front line workers to start using digital channels is what leads to building trust of new systems.
In order to address the third barrier, the access barrier, we have digitized cash collection across over 150 branches of our partner MFI Sonata microfinance. This has transformed a typical Sonata branch from being a place to access micro credit, to where the clients can carry out the entire range of banking transactions. This has made full financial services accessible at Sonata branches. Within a few months of introduction, we are seeing a huge jump in digital transactions at Sonata branches.
We can conclude that improved awareness, capacity, confidence and trust of the clients and front line workers through use of GLEAP, AI, AR and IVR (interactive voice response) systems together with convenient access has a direct impact on ultimate adoption and continued usage of financial services.As a sector, it is therefore imperative to engineer a paradigm shift in the way we approach financial inclusion, from providing financial literacy to building financial and digital finance capability.
We are traversing the path, of bringing the latest in technology from the realms of laboratory and the privileged to the masses, from technology applications at the back-end systems to the front-end, where it changes the way people gain information and conduct their business. The ‘internet of things’ is already here. The next big opportunity that we see is to take these concepts to transform sectors such as Agriculture, Healthcare and Education, so that the benefits are realized by a billion people.
CEO, Grameen Foundation
Prabhat Labh is an international development expert with over two decades of experience in leading programs and initiatives across Asia, Africa and North America. Prabhat brings deep domain knowledge in financial inclusion, enterprise development and livelihoods sectors. Prabhat is a Post Graduate from the Indian Institute of Forest Management, Bhopal and holds a Bachelor’s Degree with Honours in Statistics. Prabhat has undergone several specialized courses at institutions such as Harvard Business School, University of Pennsylvania, University of Southern New Hampshire, and International Training Centre of the ILO, Administrative Staff College of India and XLRI.