Customer oriented inclusion

Posted on April 23, 2013 by Sumita Kale

Meaningful financial inclusion calls for understanding the needs of the customer, and not going in for a top-down approach.

Tilman Ehrbeck puts this point through well in his blog post, calling for the starting point to be from demand-side insights rather than supply-side considerations:

Half of all working-age adults globally lack access to formal financial servicesAnd contrary to popular belief, these people are often entrepreneurs in the informal economy -- by necessity, not by choiceUnbanked people don’t live financially simple lives; they have a strong need for income-generating opportunities, the ability to build assets, and tools to mitigate risks and smooth consumption in the face of emergencyBy listening to what these people really need, we can dramatically fast-track innovation in financial services to reach more people with a greater range of products at affordable prices to help them improve their lives.

Dr Subir Gokarn, then Deputy Governor RBI, had given a similar approach in a speech in 2001, 'Financial inclusion: A Customer Centric View':

Who the potential consumers are, what motivates and drives their decisions, what constraints and risks they face and so on are all fundamental questions, the answers to which are the starting points of strategy formulation In other words, the better the understanding banks and other financial service providers have about the potential consumers of their inclusion-oriented products and services, the more likely their strategies are to succeed in a way that benefits both consumers and producers.

Under India's bank-led model for financial inclusion, banks need to get this message and work to tailor their products to customer needs, the business case will then flow automatically.

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