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Innovative Products and Services Drive Financial 'Capability' Through Behavioral Change

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New Research Explores How Organizations Are Tying Financial Capability Interventions More Closely to Customer Behavior, Improving Upon Traditional Education Methods


April 13, 2016 (Washington, D.C.) – The Center for Financial Inclusion at Accion today released extensive new research funded by JPMorgan Chase & Co. on the current state of financial-capability building – that is, how providers are helping to prepare and support customers to make sound financial decisions.

Highlighting a trend in its early stages, ‘A Change in Behavior: Innovations in Financial Capability’ explores innovations from around the world that focus on triggering positive customer behaviors, especially at critical decision-making moments, such as when clients sign up for and use financial products, or when they are prompted to put money aside to meet savings goals.

The research identified seven behaviorally informed practices that show great promise in affecting changes in behavior. These include placing messages at ‘teachable moments’ that reach consumers when they are about to make a financial decision. Others include heuristics, or ‘rules of thumb.’ A third recommendation is to ‘make it social’ – such as using peer-to-peer support, sometimes through social media, that can help motivate consumers to save or stay on track to reach financial goals.

The research also found that major redeployment of resources is needed to ensure that the millions of dollars spent on building consumer capability yield substantial benefits. It recommends six major changes in resource deployment and approach. The top recommendation is to enable financial-service providers to take a greater role in building financial capability. As only one example, banks can organize their client touch points to send savings reminders and tips. Other recommendations include engaging social-service agencies, such as hospitals that provide financial counseling to families experiencing a health shock; and strengthening governments’ focus on shared responsibility among stakeholders.

“Building financial capability is an enormous and urgent task. We’re grateful to JPMorgan Chase for making this research possible. Financial capability requires effort from many stakeholders, including financial service providers, governments and organizations that connect with people at the base of the pyramid. As all these players get involved and spend their scarce resources, it’s crucial that they use methods that actually make a difference.”

Elisabeth Rhyne (co-author of the report), Managing Director, Center for Financial Inclusion

‘Financial capability’ goes beyond ‘financial literacy’ and ‘financial education,’ to focus on ensuring that learning results in action. Research shows that learning from traditional financial education programs often fails to show up in behavior. But when techniques informed by behavioral economics are integrated into interventions, people are more likely to translate their knowledge into action.

“Financially healthy individuals increase the financial stability and resiliency of their communities. To achieve this in every community, we need to better understand the strategies that will help individuals increase savings, improve resiliency and meet their long-term goals. That’s why we are working with leading nonprofit partners, like Accion, to share best practices on the most innovative and effective strategies for empowering consumers around the world.”

Karen Keogh, Head of Global Philanthropy, JPMorgan Chase

The research examined models around the world, with close looks at Mexico and India. While traditional methods still predominate, there are a host of exciting innovations. These interventions range from personal counseling, to mobile apps that help customers understand their finances at a glance, to soap operas, games and videos that embed financial-capability messages and lessons.

In Mexico, for example, Banamex’s Saldazo product is a Visa card-based transactional account with an optional mobile service, co-branded with OXXO, Mexico’s largest convenience store chain. Saldazo uses text messaging and a call center to inform customers, answer queries, collect information and encourage product use. Customers receive an SMS after each transaction, with messages encouraging account usage and providing tips, such as how to send money or buy air time.

In India, Janalakshmi Financial Services builds on research that demonstrates that simple, action-focused rules of thumb (like ‘left drawer has cash for personal expenses, right drawer has cash for business expenses’) are often more effective than longer, more abstract lessons. It delivers one rule of thumb at a time through pre-recorded mobile phone calls. When customers have questions, they can request a call-back from an expert.

The full report and appendices, including dozens of examples of innovations in financial capability, are available online here.

About The Center for Financial Inclusion at Accion
The Center for Financial Inclusion at Accion (CFI) is an action-oriented think tank working toward full global financial inclusion. Constructing a financial inclusion sector that reaches everyone with quality services will require the combined efforts of many actors. CFI contributes to full inclusion by collaborating with sector participants to tackle challenges beyond the scope of any one actor, using tools that include research, convening, capacity building, and communications. To learn more about CFI, visit CenterForFinancialInclusion.org.

About JPMorgan Chase
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.4 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at JPMorganChase.com.

Media Contacts:
Bruce MacDonald
Center for Financial Inclusion
Tel. +1 617.616.1546

Nicole Kennedy JPMorgan Chase
Tel. +1 215.864.5732