MicroSave Consulting (MSC) is a boutique consulting firm that has, for 25 years, pushed the world towards meaningful financial, social, and economic inclusion. These podcast series are hosted by MSC for dedicated founders, start-ups, investors, and other stakeholders in the startup ecosystem. Through this bouquet of curated conversations around developments in the financial inclusion space, we offer insights and lessons based on our research and expertise.
MicroSave Consulting (MSC) is a boutique consulting firm that has, for 25 years, pushed the world towards meaningful financial, social, and economic inclusion. These podcast series are hosted by MSC for dedicated founders, start-ups, investors, and other stakeholders in the startup ecosystem. Through this bouquet of curated conversations around developments in the financial inclusion space, we offer insights and lessons based on our research and expertise.
MicroSave Consulting (MSC) is a boutique consulting firm that has, for 25 years, pushed the world towards meaningful financial, social, and economic inclusion. These podcast series are hosted by MSC for dedicated founders, start-ups, investors, and other stakeholders in the startup ecosystem. Through this bouquet of curated conversations around developments in the financial inclusion space, we offer insights and lessons based on our research and expertise.
A cartoon making the rounds on social media showed eight professionals, including a cook, a driver, and a teacher hired by children for a day so that their mother could relax on Mother’s Day.
This very much sums up the importance of a care economy, especially as an enabler for increasing women’s participation in the workforce.
Despite being aware of its magnitude as an economy and society, we tend to undervalue unpaid care work.
Research cites a lack of focus on the care economy as one of the main reasons for the attrition of women in the workforce or entrepreneurship. Social norms expect women to be primary caregivers irrespective of whether they perform paid work or not.
The pandemic further increased the time women spend on unpaid work. Scholars such as Ashwini Deshpande showed how the gender gap in unpaid work significantly worsened in the first year of the pandemic.
NSO’s Time Use Survey reports that both employed and unemployed women in India spend 83 per cent and 78 per cent more time, respectively than men on unpaid domestic and care activities.
Time spent in unpaid care affects how much time women can spend on paid economic activities and leisure.
Shifting this disproportionate burden of care away from women requires changes at multiple levels. The central issue of who must be cared for and who provides that care is assumed to be the sole responsibility of private individuals (read women) and families. The structural and institutional context here can be decisive for the future of work and the quality of life of all demographics.
Similarly, ubiquitous local provision of affordable and quality care is even more critical for low-income working women whose compulsion to work may leave a care deficit for their own families.
Wherein they are unable to provide adequate care at home and deploy a range of informal practices to fill in this care deficit e.g. elder siblings taking care of younger ones, skipping school, and doing household chores, leaving kids with neighbours, or elderly kin.
As India becomes the most populous country in the world, there will be huge social and economic implications of the care deficit, disproportionate burden of care work on women, and lack of institutional mechanisms to provide high-quality and affordable paid care. Spectacular improvements in health and life expectancy, reductions in fertility, and smaller families make this need more critical.
A national policy
Bringing care work into the formal economy is important. An overarching National Care Policy, that enables adequate provision of affordable, quality, and where required subsidised care for all age groups, could be a starting point.
However, implementing such a policy will need robust public and private collaboration. While the government’s role is much debated and discussed, the role of the private sector is often overlooked.
The private sector can play a crucial role in enabling the provision of high-quality and affordable care services.
Private sector investment is required for the rapid skilling of young women and men on par with international standards to become certified childcare and geriatric care, professionals. Along with a rapidly increasing blue-collar workforce, build a highly skilled red-collar workforce adept in providing age-appropriate care and support. There is an exploding global demand for professional caregivers.
Studies suggest that OECD countries alone would need 13.5 million new caregivers by 2040. This presents an opportunity to create dignified job opportunities for the young fulfilling not just domestic but global demand.
Anna Roy is Senior Adviser, NITI Aayog and Mission Director, Women Entrepreneurship Platform; and Sonal Jaitly is the Gender Equality and Social inclusion Lead (GESI) at MSC
Digital financial services (DFS) have been hailed as a game-changer that transforms developing nations, especially the lives of low- and moderate-income individuals. However, disappointingly, these services have performed below expectation, as several technical and behavioral factors hinder their adoption.
In a previous blog on Griffith Asia Insights, we delved into people’s experiences with DFS in Bangladesh and Indonesia and revealed their significant challenges. Despite technological advancements, people still prefer cash transactions to digital methods. This preference stems from a lack of trust, confidence, and perceived value in DFS, especially in cash-heavy economies.
The blog also highlighted several important issues, such as the impact of the digital divide on individuals at the bottom of the economic pyramid (BoEP) and support mechanisms to promote the adoption and effective use of financial technology among economically disadvantaged people.
The specific circumstances of individuals and their communities play a significant role in the DFS adoption process. For instance, take Hina, a small business owner in Munshiganj, Bangladesh. Although Hina has access to a mobile payment app and understands the benefits of DFS, she chooses to conduct her transactions at her local bank. These transactions consume valuable time and energy that she could use for family or business purposes. Although she actively engages in other activities on her smartphone, such as social media and gaming, she hesitates to use DFS independently. This reluctance underscores broader issues of limited financial literacy, perceived complexity, and distrust.
In 2023, a survey by Griffith Asia Institute and MSC examined 2,000 respondents from low-income households in Bangladesh and Indonesia. It revealed the growing popularity of digital payment platforms, such as bKash, Rocket, Nagad, GoPay, OVO, and ShopeePay. These platforms offer savings, loans, bill payments, and money transfers. These services cater to those who lack access to traditional banking. The survey showed that while 55% of households use digital banking in Indonesia, it is not as prevalent in Bangladesh, where only 17% use it.
The survey reveals noticeable differences in trust, confidence, and willingness to use digital payment methods, with a higher perception of risks in Bangladesh. More than 33% of the survey participants in Bangladesh expressed concerns about fraud and financial losses with digital banking services, compared to just 12% in Indonesia. A significant majority—86% of respondents in Bangladesh preferred cash payments when shopping, and 73% preferred to send money to their families in cash. They cited convenience as the primary factor behind their choice. Conversely, these percentages were lower in Indonesia, at 49% and 46% respectively.
Research by Dipu and Sultana suggests that inefficiencies in digital payment systems contribute to this issue. They propose that user-friendly designs, simple interfaces, and comprehensive onboarding processes could increase DFS adoption. Our survey data clearly shows that more than 90% of respondents in Bangladesh use social media apps and YouTube frequently. However, only 14.5% of men and 15.3% of women use mobile banking apps, and merely 11% of men and 6% of women use mobile payment apps frequently. These low numbers signal the need to design DFS in a way that is as user-friendly as social media apps to increase adoption.
The situation is slightly different in Indonesia. Social media and YouTube usage is significantly higher, with 79% of men and 80% of women actively engaged. Additionally, the country has strongly embraced mobile banking and e-commerce apps. About 55% of Indonesians use digital banking services, which indicates a higher level of trust and confidence in digital financial transactions. This increased adoption is due to superior customer facilitation, support mechanisms, and higher income. The structured support effectively addresses concerns and fosters trust in DFS, which is not as prevalent in Bangladesh.
Our regression analysis of survey data from Bangladesh shows that the presence of local agents significantly boosts the likelihood of individuals to download and use DFS apps, and the results are statistically significant (p<0.01). Agents offer crucial handholding and personalized guidance, which is especially important for users with limited technological proficiency. This discovery emphasizes the significance of agents’ deployment in rural areas to promote DFS adoption.
Given these insights, Bangladesh is ideal for our randomized control trial (RCT) and intervention. The lower baseline of digital payment adoption, coupled with lower confidence and trust in DFS, offers fertile ground to study the impact of targeted interventions.
We must identify best practices for DFS adoption and address the factors that hinder its acceptance among non-users and low-frequency users. In response, the Griffith Asia Institute has been conducting an RCT in Bangladesh’s Munshiganj district with 230 participants from two upazilas. This trial came into being in partnership with the Asian Development Bank Institute (ADBI) and MSC and with funding support from the Citi Foundation.
The experimental design has established treatment and control groups with similar observable characteristics, which enabled reliable evaluation of the program’s impact through a comparison of outcomes between these groups. An endline survey and periodic technology acceptance model (TAM) surveys will collect data on the factors that affect individuals’ decisions to adopt and use DFS. Additionally, we will use a diary-based data collection tool to capture data on changes in participants’ financial behaviors, decision-making processes, and challenges over one year of the survey.
The interventions for the treatment group seek to increase their adoption and usage of DFS relative to the control group. The interventions have two main components:
Personalized discussion and handholding: This consists of hands-on learning experiences from trustworthy sources to establish credibility;
Establishment of trust in digital financial services and their capability: This consists of the provision of practical guidance from credible experts to enhance users’ confidence and knowledge levels, which will thereby increase the adoption and learning rates of DFS.
The current research intends to rigorously test interventions for digital financial services (DFS) designed to accelerate adoption. It seeks to determine the optimal level of individual engagement to receive technical support, identify the most effective facilitation, and establish the best methods to increase DFS adoption.
We intend to provide in-depth information to develop effective policies as part of this research. The insights from the research study will be designed to be used by policymakers and other stakeholders to encourage and strengthen DFS adoption. Our ultimate goal is to improve financial inclusion and empower individuals so that more people have access to and can benefit from financial services.
Barquin, S., de Gantès, G., Vinayak, H. V., & Shrikhande, D. (2019). Digital banking in Indonesia: Building loyalty and generating growth.McKinsey & Company, February6.
Davis, F. D., Bagozzi, R. P., & Warshaw, P. R. (1989). Technology acceptance model.J Manag Sci, 35(8), 982-1003.
Dipu, S. M. A., & Sultana, T. (2021). Smart GOALA: An Alternative Marketing Channel for Connecting the Peri-urban Marginal Dairy Farmers with the Urban Consumers in Bangladesh. InDigital Transformation and Human Behavior: Innovation for People and Organisations (pp. 353-367). Springer International Publishing.
Kaka, N., Madgavkar, A., Kshirsagar, A., Gupta, R., Manyika, J., Bahl, K., & Gupta, S. (2019). Digital India: technology to transform a connected nation. McKinsey Global Institute.Ministry of Housing and Urban Affairs.
Lee, J. N., Morduch, J., Ravindran, S., Shonchoy, A., & Zaman, H. (2021). Poverty and migration in the digital age: Experimental evidence on mobile banking in Bangladesh.American Economic Journal: Applied Economics, 13(1), 38-71.
Rubina, a grocery shop owner in rural Munshiganj in Bangladesh, owns a basic feature phone. Her use of the phone is limited to talking to her friends and relatives, sending and receiving text messages, and occasionally using bKash (a mobile financial service) to receive payments or pay suppliers. She cannot use bKash by herself and relies on her husband to use the service for her. She cannot afford a smartphone. However, she sometimes borrows her husband’s smartphone (the only family member to have one) to watch YouTube videos. She does not know how to use social media and messaging apps.
Hafid, a farmer who also runs a photocopy and mobile accessories shop, hails from a semi-urban area of Bandung, Indonesia. He has a smartphone, and he mostly uses it for accessing social media and doing online shopping. The ‘super app’ he uses works for both online shopping and digital payments.
The examples of Rubina and Hafid illustrate how many low and middle-income (LMI) people are divided in terms of using digital platforms and services like WhatsApp/Telegram-based messaging, social media, YouTube videos, digital payments, online shopping, etc. Hafid’s experience is representative of being in a far more advanced stage of the ‘digital journey’ compared to Rubina. Their journeys differ in terms of their access to, and use of, smartphones to engage in the digital economy due to a range of barriers such as affordability, capability, and confidence.
This digital divide is real and growing. Its impact is particularly evident in the realm of financial services where the role of digital technology has been increasingly promoted as a game changer for achieving greater financial inclusion. However, despite the high levels of investment and promotion towards the adoption and effective usage of digital financial services, bridging the digital divide remains a persistent challenge.
Many factors lead to the digital divide―the status of infrastructure, cost and accessibility of smartphones, lack of education, lack of financial and digital literacy, poor User Interface/User Experience (UI/UX, regulatory challenges, and commercial driver―as very clearly articulated in this article. But there is a behavioral angle to it as well. In multiple markets in the global south, we have seen that the LMI people still prefer personal interaction rather than digital mode―there is still a lack of trust in technology and a lack of confidence to use technology (especially in the case of digital payments), and a lack of value proposition that digital financial services (DFS) offer, especially in cash-heavy economies. The same is true for using digital platforms to grow businesses. This results in poor digital skills and a broadened digital divide.
It is important to remember that achieving financial inclusion isn’t just about innovative technology, investments, or infrastructure. It’s also about changing behaviors, building trust, and working with communities. As digital transformation continues to change the financial inclusion landscape, it brings with it several important questions―how is the digital divide impacting those at the bottom of the economic pyramid (BoEP) and how can effective support mechanisms drive technology adoption and effective usage? What can be considered as the best practices to drive DFS? Is there a single factor or combination of factors the cause hindering the adoption of DFS among poor non-users? And what roles do the diverse circumstances of individuals and their communities play in it?
This is the focus of a major new research program being conducted by the Griffith Asia Institute in partnership with the Asian Development Bank Institute (ADBI) and MSC (MicroSave Consulting). Made possible through funding support from the Citi Foundation, this program examines how the digital divide impacts the poor in developing countries and identifies practical support mechanisms that can drive technology adoption and effective usage. Through the use of surveys, diaries, and a randomised controlled trial (RCT), the findings will have significant implications for developing policies to promote financial inclusion.
To understand the practical support mechanisms better, data is being collected from low-income individuals in Indonesia and Bangladesh about their usage and attitudes towards DFS. In particular, the RCT will examine the effect of various instruction and support mechanisms on the adoption of digital payments by owners of micro- and small enterprises. Based on these findings, solutions will be designed and tested with the aim of supporting individuals to develop their digital skills and build confidence in their ability to use DFS.
This study will help policymakers and practitioners better understand the digital divide and what practical approaches can be used to ensure that, as new technology continues to develop and evolve, it can provide solutions that benefit all members of society, including the poor and vulnerable.
This blog is the first of a three-part series that will showcase the developments of this research project and highlight our findings along the way.
The article was first published on the Griffith University website on 6th November 2023.
This site uses cookies, by continuing your navigation, you agree with our Cookie Policy.Ok
