Design for financial empowerment

According to the World Bank, there are still 2.1 billion people that don’t have access to banking facilities. Contrary to popular belief, this doesn’t just affect those in developing economies. There are still 9 million unbanked American households that sit on the periphery of the economic system.

In 2007, following a student software development project from Kenya, Safaricom launched a mobile-based payment and money transfer service, known as M-PESA. M for mobile and “PESA” for Swahili currency.

M-PESA is a fast, secure and convenient way to transfer money via text. Users with a national ID card or passport can deposit, withdraw or transfer money without needing to visit a bank.

The system has been lauded for its social value; offering opportunities for small businesses and playing a significant role in reducing poverty.

Coffee growers can promptly pay their field workers; urban dwellers regularly send money home to their rural families, and even hospitals have sent money to patients in remote areas to pay their bus fare to hospital.

Since its inception, the M-PESA system has grown to more than 25 million users in Kenya alone. And has since been welcomed in Tanzania, India, Afghanistan, Albania and Romania.

In 2004, Bank of America asked design firm IDEO to come up with an idea to attract more customers. Instead of starting inside the walls of Bank of America headquarters, IDEO ventured into the field to observe real people's relationships with money.

During their ethnographic research on their targeted customers: boomer-age women with children. IDEO made an intriguing observation. These women were rounding up all of their household transactions to make addition easier, which added a buffer in their bank accounts.

Based on this behaviour, IDEO developed a service called Keep The Change. When a purchase is made using a Bank of America Visa debit card, the cost is rounded up to the nearest dollar and the difference from the customer’s checking account is added into her savings account.

This bit of financial wizardry also solved another problem: low savings rates among the members of the target demographic.

The campaign proved so popular that it drew more than 2.5 million customers in its first year, including 700,000 new checking accounts and one million new savings accounts for the bank.

Bitcoin has been one of the world’s most disruptive technologies. It’s turned industries upside down, killed others and given life to numerous invaluable services. While the crypto-currency has brought its fair share of challenges, it's also brought great opportunity.

Bitcoin, as the first of its kind, is a revolutionary payment network with global accessibility. The decentralised form of digital payment puts the power back in the users’ hands, providing increased freedom from banks and governments.

The democratic tool allows anyone, anywhere, to control their own money using innovative peer-to-peer technology. End-users can pay for all kinds of goods and services with bitcoin and, in turn, be paid for anything they provide.

Bitcoin evens the playing field between currency conversion rates, commission fees and transfer limitations that come into play with traditional monetary systems. A unique digital signature protects every exchange so that there's little risk of fraud, chargebacks or identity theft.

One significant solution enabled by Bitcoin is CommonCollection: a social site for global peer-to-peer giving.

CommonCollection connects people directly, allowing donations to be instantly transferred from one person to another. People with an urge to help can browse through cases on CommonCollection and read individual stories, which have been uploaded by people in need.

Once the givers are ready to donate, they scan a code with their mobile device, decide the amount they want to give and click send. Within a few minutes, the recipient is notified and can use the donation for its intended purpose.

Unlike many African nations, Uganda doesn’t suffer from a shortage of food. However, many still lack an income to purchase it. In response to this, the World Food Programme (WFP) decided to introduce a cash programme as a supplement to the standard food-aid packaging.

While providing cash seems like a simple fix, the still had another hurdle to overcome: introducing financial literacy skills into a barter economy. This is where the help of Design Without Borders (DWB) was enlisted.

Developed by designers in collaboration with the Ugandan beneficiaries, the Aki Financial Literacy Kit helps users manage their money. It ensures overall better planning and long-term development.

The kit consists of three elements, the first is a calendar and calculation tool, Aki Plan, which informs users about basic working periods and how much they earn.

The second is a board game, Aki Play –a version of Monopoly– to teach the basics of financial literacy such as understanding the value of money, budgeting and planning.

Participants of the board game have to consider how best to invest their money, and features a number of scenarios based on life-like situations in Karamoja, Uganda.

The final is a wallet, Aki Save, which acts as a motivational tool to help users save to reach their goals. With six compartments to each represent a different expense, such as food, medical costs and other essentials.

"Lack of financial literacy is the main barrier to ending poverty and acquiring sustainable livelihoods,” says DWB Managing Director, Anjali Bhatnagar. “Traditional classroom teaching on financial literacy has shown itself to be ineffective in reaching poor households.”

Creditworthy applicants are often denied loans as they lack detailed credit histories. Throughout Latin America, those who do have a credit history often have a negative score. This is primarily due to the over accounting for negative behaviour and under-reporting of positive behaviour.

Destácame is an alternative credit-scoring platform giving everyone equal footing when it comes to loan applications. It uses alternative data to assess individual payment behaviour and creditworthiness.

Through the platform, users can receive a rating based on credit-like sources, such as utility receipts, which indicate all times that bills were paid on time.

Destácame's main goal is to empower the mid and low-income segments of the population. People can gain access to financial products, achieve fairer rates and ultimately improve their lives.

Users can now demonstrate their creditworthiness to financial service providers, who are looking for better, faster and cheaper ways to extend credit and other financial products to a largely credit-invisible population.

So far, Destácame has more than 850,000 users in Chile and Mexico. And since the entire application process at Destácame.cl is online, the cost of ‘acquiring’ a new client for banks is reduced by 70%.