According to the World Bank, over half of the total adult population, an estimated 2.5 billion working-age adults, does not have access to formal financial services. To explore possible ways to increase low-income individuals’ ability to save with banks, CGAP brought in IDEO.org to work with one of Mexico’s largest banks, Bancomer. The bank’s condition: The products couldn’t lose the bank money. A CGAP video (see below) captures the process the team used to develop savings products for Bancomer. Although the target market for this research was those making US $8 to $12 a day, higher than the traditional definition of the BoP, there are a number of things to learn from the research:
1) The process IDEO.org and CGAP used to develop and design their final products.
2) The challenges of working with companies unfamiliar with working with the poor.
3) The insights into how this segment of the population feels about financial institutions and why.
IDEO.org and CGAP developed two products for Bancomer by conducting in-depth interviews in Mexico City with their target market. They used the information collected from initial interviews to create initial concepts to share with interviewees in order to spark discussions of what matters to them. After collecting the data, they spent two weeks in California synthesizing the data to present their ideas to Bancomer to finalize which ideas to turn into prototypes. They then returned to Mexico City to test the two prototypes.
Working with a large bank such as Bancomer provides the ability to scale. However, one main challenge is shifting how the bank collectively thinks – and getting the bank to meet people where they are. As we’ve seen in other cases, it’s difficult for such large institutions to be innovative and create such solutions in-house. This is played out in the video when a Bancomer representative notes that it is strange to spend three months in the product design phase; they usually spend 2 weeks in the design phase. Bank representatives also were surprised that the teams plan to interview 20 people in-depth, instead of the standard practice taking much broader view with surveys of thousands at a time. Another shift is to reframe the bank’s thinking about long-term revenue.
During the team’s interviews they learn that many people do not trust the banks and choose not to open savings accounts due to commissions or fees that reduce their savings. “People don’t think about saving in the way the bank thinks about saving,” says Adam Reineck, a principal designer at IDEO.org. Everyone thinks in terms of what they need in x months, x years, and that is how they organize their money. People will save for different projects using different boxes; they like the separation of money into different containers because it helps create some prioritization of what they can spend and what they cannot. Some people give their money to a family member to hold on to for them so they aren’t tempted to spend it. Almost everyone they met saved in tandas, informal savings group of 10-30 people with no interest or fees, at one point in time. The tanda organizers are very financially savvy; people trust them with their money and trust their financial advice.
Bancomer agreed to pilot both of the products the team developed, Mis Proyetos and Tandazo. Mis Proyectos, a categorized savings account would allow people to pick a project to save for and could deposit money at either an ATM or a corner store. The other product the team came up leveraged the tanda organizers. They created a service to make what tanda organizers do safer and easier and in turn the tanda organizers become a way for the bank to access a segment of the population that they wouldn’t normally. The product, Tandazo, provides the tanda organizer with a debit card, name badge and a phone application.