1 00:00:00,049 --> 00:00:00,909 Smriti: Hello, everyone. 2 00:00:00,939 --> 00:00:02,439 My name is Smriti Parshira. 3 00:00:02,549 --> 00:00:06,159 I'm a lawyer and a technology policy researcher based in India. 4 00:00:06,519 --> 00:00:09,729 And today it is my pleasure to be hosting the Interledger Salon. 5 00:00:10,119 --> 00:00:13,539 I'm currently a research ambassador with the Interledger Foundation, where 6 00:00:13,539 --> 00:00:17,459 my project focuses on understanding the lived realities of digital and 7 00:00:17,459 --> 00:00:21,639 financial access in my home district of Lahore Spiti in the Indian Himalayas. 8 00:00:22,280 --> 00:00:26,939 In keeping with that spirit of untangling what financial inclusion means for 9 00:00:26,939 --> 00:00:31,609 different communities across the Global South, today I'm excited to be joined by 10 00:00:31,609 --> 00:00:35,250 two guests who have thought deeply about this subject in the course of their work. 11 00:00:35,799 --> 00:00:40,069 Our first guest, James Ogada, is based in Kenya, and he's the Engagement 12 00:00:40,069 --> 00:00:41,839 Director at the Busara Center. 13 00:00:42,229 --> 00:00:46,579 Busara's work focuses on leveraging Behavioral Sciences to gain deeper 14 00:00:46,579 --> 00:00:51,050 insights into people's financial lives and creating suitable solutions for them. 15 00:00:51,429 --> 00:00:55,009 In this process, James collaborates with institutions in the private 16 00:00:55,009 --> 00:00:59,000 sector, philanthropic organizations and government agencies to design 17 00:00:59,030 --> 00:01:01,079 inclusive financial products and markets. 18 00:01:01,589 --> 00:01:03,114 Welcome to the session, James. 19 00:01:04,764 --> 00:01:06,345 Um, our next speaker, Dr. 20 00:01:06,345 --> 00:01:11,215 Susan Thomas, is an economist from India, whose research spans across the areas 21 00:01:11,215 --> 00:01:13,475 of finance, markets, and the economy. 22 00:01:14,024 --> 00:01:18,134 She is the co founder of XKDR Forum, a group that has been doing some cutting 23 00:01:18,134 --> 00:01:22,554 edge quality quantitative and policy oriented research in a variety of areas, 24 00:01:22,924 --> 00:01:26,624 which includes studying how households interface with the financial system. 25 00:01:27,479 --> 00:01:31,190 Susan has worn a number of academic and policy hats, which includes her 26 00:01:31,190 --> 00:01:35,059 instrumental role in shaping India's insolvency and bankruptcy regime. 27 00:01:35,519 --> 00:01:37,419 A warm welcome to you too, Susan. 28 00:01:38,304 --> 00:01:38,884 riverside_susan_raw-audio_f_m_podcast studio_0036: Thank you. 29 00:01:39,104 --> 00:01:39,764 Good to be here. 30 00:01:40,620 --> 00:01:41,179 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you. 31 00:01:41,199 --> 00:01:44,489 Thank you both for taking the time to be a part of this conversation. 32 00:01:44,489 --> 00:01:48,729 And let me begin by asking each of you to tell us a little more about the work 33 00:01:48,729 --> 00:01:53,690 you do at XKDR and Bussara respectively, whether it's in the context of financial 34 00:01:53,690 --> 00:01:55,699 inclusion or the work you do beyond that. 35 00:01:56,294 --> 00:02:00,015 And if I may add, it would be interesting to know a little bit more about the 36 00:02:00,015 --> 00:02:03,905 meaning and the origin of those very interesting organizational names 37 00:02:03,924 --> 00:02:07,085 that, uh, both XKDR and Busara have. 38 00:02:07,085 --> 00:02:08,564 So maybe starting with you, Susan. 39 00:02:09,794 --> 00:02:10,875 riverside_susan_raw-audio_f_m_podcast studio_0036: Thank you, Smriti. 40 00:02:10,895 --> 00:02:12,535 This is a question that we get often. 41 00:02:12,915 --> 00:02:18,685 XKDR is a compilation of letters, and I think it's easy to start with 42 00:02:18,705 --> 00:02:21,505 explaining what the K, D, and R stand for. 43 00:02:21,685 --> 00:02:23,714 It's knowledge, data, and research. 44 00:02:24,050 --> 00:02:28,620 Which we think are instrumental in beginning to understand a problem, a 45 00:02:28,620 --> 00:02:32,619 social problem, an economic problem, and to diagnose it and to come 46 00:02:32,619 --> 00:02:35,129 up with a policy solution for it. 47 00:02:35,439 --> 00:02:39,959 The X is the most important part of that name because a long while ago, we 48 00:02:40,009 --> 00:02:42,489 realized that any single discipline, i. 49 00:02:42,489 --> 00:02:42,749 e. 50 00:02:42,760 --> 00:02:46,649 economists, by themselves can't come to this, uh, through 51 00:02:46,649 --> 00:02:48,239 this entire chain of work. 52 00:02:48,450 --> 00:02:50,359 So X stands for cross disciplinary. 53 00:02:50,399 --> 00:02:51,160 So that is. 54 00:02:51,434 --> 00:02:57,494 We use knowledge, data and research from multiple domains to come up with a 55 00:02:57,714 --> 00:02:59,855 diagnosis of social and economic problems. 56 00:02:59,864 --> 00:03:04,095 The big questions of our age and how should we think about coming 57 00:03:04,095 --> 00:03:05,714 up with ways to solve for that. 58 00:03:06,194 --> 00:03:07,275 I hope that makes it clear. 59 00:03:07,754 --> 00:03:13,275 And before I let that go, XKDR is XKDR Forum. 60 00:03:13,285 --> 00:03:14,184 That's our full name. 61 00:03:14,545 --> 00:03:16,339 And forum stands for XKDR Forum. 62 00:03:16,699 --> 00:03:22,220 the recognition that we are a small organization and we believe in doing 63 00:03:22,220 --> 00:03:27,489 our work by building collaborations with other organizations who are like 64 00:03:27,530 --> 00:03:30,040 minded and focus on similar things. 65 00:03:30,505 --> 00:03:30,885 Thank you. 66 00:03:31,635 --> 00:03:32,674 I hope that made sense. 67 00:03:33,015 --> 00:03:33,454 riverside_smriti_raw-audio_f_m_podcast studio_0038: Perfect. 68 00:03:33,484 --> 00:03:34,464 It makes perfect sense. 69 00:03:34,464 --> 00:03:37,194 And I think a lot of the conversation today is about 70 00:03:37,194 --> 00:03:40,554 bringing out this interdisciplinary nature of the conversation. 71 00:03:41,025 --> 00:03:44,165 Um, over to you, James, on that, tell us a little bit more about 72 00:03:44,234 --> 00:03:46,114 Bussara and the name and what you do. 73 00:03:48,895 --> 00:03:49,614 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you for that question, 74 00:03:50,295 --> 00:03:51,605 Smriti, and for having me as well. 75 00:03:51,625 --> 00:03:56,655 So, Busara is a Swahili word that essentially means wisdom, and the 76 00:03:56,655 --> 00:04:00,015 full name of our organization is the Busara Center for Behavioral Economics. 77 00:04:00,634 --> 00:04:06,255 And Busara started as a small office, um, with a post doctoral researcher 78 00:04:06,304 --> 00:04:11,155 studying the psychology of poverty and using behavioral science to see, um, 79 00:04:11,165 --> 00:04:14,695 what kind of policy advice that can be given to different practitioners. 80 00:04:14,734 --> 00:04:20,644 And, um, Um, after some time it eventually evolved to practice and so today Bussara 81 00:04:20,685 --> 00:04:24,065 applies and advances behavioral science in pursuit of poverty alleviation. 82 00:04:24,225 --> 00:04:29,424 And we apply this trade in spaces including education, civic engagement, 83 00:04:30,005 --> 00:04:35,445 um, health, but my team and I, um, work with the private sector, policy makers, 84 00:04:35,674 --> 00:04:38,865 and philanthropy to figure out how to make financial markets more inclusive. 85 00:04:39,510 --> 00:04:42,330 Um, and value adding to people in low income contests. 86 00:04:42,620 --> 00:04:45,980 So very happy to be here and excited to have this conversation. 87 00:04:46,310 --> 00:04:46,659 Thank you. 88 00:04:47,294 --> 00:04:48,444 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you so much, James. 89 00:04:48,454 --> 00:04:51,934 So I guess how we run with this is I'm going to ask you a few 90 00:04:51,964 --> 00:04:55,000 questions, but feel free to free to keep the conversation dynamic. 91 00:04:55,000 --> 00:04:59,189 So even if I pose a question to one of you, let's, you know, jump in wherever we 92 00:04:59,189 --> 00:05:01,289 want to and add to each other's inputs. 93 00:05:01,710 --> 00:05:05,579 Um, so, you know, to begin with this question of just getting 94 00:05:05,629 --> 00:05:09,329 our roots into what is financial inclusion and what does that mean 95 00:05:09,330 --> 00:05:12,840 to each of us given the different perspectives we all bring to the table. 96 00:05:13,100 --> 00:05:17,169 And we've seen over the last few decades, there's so much focus, uh, specifically 97 00:05:17,169 --> 00:05:20,610 in the policy circles about furthering financial inclusion, but really 98 00:05:20,610 --> 00:05:22,340 the term can mean different things. 99 00:05:22,340 --> 00:05:26,129 So let me ask you, James, to begin with, what is your interpretation 100 00:05:26,130 --> 00:05:29,010 of what financial inclusion means and why does it matter? 101 00:05:33,199 --> 00:05:35,809 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: So, um, to me, essentially, what 102 00:05:35,809 --> 00:05:39,169 it means is a recognition of the inequalities that exist within 103 00:05:39,179 --> 00:05:40,459 these societies in the global south. 104 00:05:40,589 --> 00:05:44,769 And I think before I even start is to acknowledge that there's a lot of 105 00:05:44,769 --> 00:05:48,149 differences when you look at different markets, even within South Africa, for 106 00:05:48,159 --> 00:05:54,219 example, around, um, usage matrix, the accessibility of some of these services. 107 00:05:55,015 --> 00:06:00,105 So I think about, um, the social, socioeconomic conditions creates, 108 00:06:00,625 --> 00:06:03,704 um, a landscape that demands different kinds of innovations 109 00:06:03,704 --> 00:06:05,245 and context specific solutions. 110 00:06:05,255 --> 00:06:09,174 So whatever solutions that we have seen emerge in some markets, 111 00:06:09,304 --> 00:06:12,124 um, avoiding an assumption that they're going to work in others. 112 00:06:12,124 --> 00:06:15,314 And I think this is at the crux of the financial inclusion industry is 113 00:06:15,314 --> 00:06:18,194 an acknowledgement of their diversity of challenges and opportunities 114 00:06:18,194 --> 00:06:19,985 that exist in different markets. 115 00:06:21,010 --> 00:06:23,940 But also when we talk about financial inclusion, we also think about 116 00:06:23,940 --> 00:06:25,539 regulation and policy at large. 117 00:06:26,199 --> 00:06:30,750 So, um, there's, we see both buyers and opportunities related to regulation 118 00:06:30,819 --> 00:06:34,130 in the context that some markets have greater risk than others. 119 00:06:34,620 --> 00:06:37,959 But then we also see the need for different kinds of policy initiatives in 120 00:06:38,189 --> 00:06:39,264 the different markets that we work in. 121 00:06:39,755 --> 00:06:40,794 in the global south. 122 00:06:40,875 --> 00:06:46,155 And in some cases, um, there's a role for policy to play in allowing 123 00:06:46,155 --> 00:06:49,465 for innovation and responsible versions of finance to flourish. 124 00:06:49,834 --> 00:06:55,044 And in other markets, we see the need for for policy action to protect 125 00:06:55,054 --> 00:06:58,864 customers from emerging risks that are emerging from from digital and 126 00:06:58,874 --> 00:07:00,645 more traditional means of finance. 127 00:07:02,044 --> 00:07:03,314 Yeah, thank you. 128 00:07:03,324 --> 00:07:04,345 I think I'll leave it there for now. 129 00:07:04,345 --> 00:07:05,234 And 130 00:07:05,610 --> 00:07:06,129 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you. 131 00:07:06,129 --> 00:07:06,449 Yeah. 132 00:07:06,709 --> 00:07:08,299 Susan, do you want to come in on that? 133 00:07:08,299 --> 00:07:11,860 Your view on what is financial inclusion and really who do you think 134 00:07:11,860 --> 00:07:15,520 are the key stakeholders, you know, in this financial inclusion puzzle? 135 00:07:16,784 --> 00:07:17,664 riverside_susan_raw-audio_f_m_podcast studio_0036: Uh, thank you. 136 00:07:17,705 --> 00:07:20,985 Uh, I think that is a very important question because I think, as James 137 00:07:20,985 --> 00:07:26,284 just pointed out, the phrase financial inclusion has been used as if it's 138 00:07:26,284 --> 00:07:29,584 a bucket that is supposed to mean the same thing but means something 139 00:07:29,584 --> 00:07:30,895 very different across the board. 140 00:07:31,294 --> 00:07:37,294 Um, I think of financial inclusion as addressing, um, a sophisticated layer 141 00:07:37,605 --> 00:07:42,834 on top of a very fundamental social phenomenon, which is that households 142 00:07:43,084 --> 00:07:44,344 and human beings tend to save. 143 00:07:44,564 --> 00:07:47,714 And when they save, the question is, what are the choices that they have? 144 00:07:48,054 --> 00:07:51,364 So to me, when I think about financial inclusion, and this might run a little 145 00:07:51,405 --> 00:07:55,694 counter to the standard, you know, Thinking and financial inclusion, which 146 00:07:55,694 --> 00:07:58,514 is how do we increase access to credit? 147 00:07:58,905 --> 00:08:04,214 I think of how do we increase access to all forms of financial instruments and 148 00:08:04,214 --> 00:08:09,635 products so that people who are able to save can do their savings better. 149 00:08:09,874 --> 00:08:12,535 So it's not just about having a bank account. 150 00:08:12,745 --> 00:08:16,575 It's not just about being able to access credit, which in a certain 151 00:08:16,704 --> 00:08:20,684 sense is, Slightly different from what we think of as savings, right? 152 00:08:20,684 --> 00:08:23,944 Savings is what you set aside from what you earn today. 153 00:08:24,235 --> 00:08:28,444 And you hope to be able to support your requirements and your needs in the future. 154 00:08:28,845 --> 00:08:32,964 And the question is, if you are able to save, how is it that you're able to 155 00:08:32,964 --> 00:08:38,809 save so that your future self Can get more than what she would if she were 156 00:08:38,809 --> 00:08:43,809 just keeping the savings say under her mattress Which is what probably our 157 00:08:43,809 --> 00:08:45,720 grandparents generation used to do. 158 00:08:45,990 --> 00:08:53,310 So today we have so many more instruments like, uh fixed deposits we have insurance 159 00:08:53,560 --> 00:08:58,750 we have pensions we have Mutual funds each of these are different different 160 00:08:58,760 --> 00:09:04,099 ways in which people can Access better returns to their savings in the future 161 00:09:04,200 --> 00:09:08,155 and the question that I think that is an important one to ask, particularly 162 00:09:08,155 --> 00:09:12,775 for us in the global south, is that given that we're starting with a base 163 00:09:12,785 --> 00:09:19,014 that is really low, how is it that we can help people to be able to accumulate 164 00:09:19,025 --> 00:09:23,265 to a better life faster, just because they've got access to better ways 165 00:09:23,575 --> 00:09:25,735 of gaining returns out of savings. 166 00:09:26,015 --> 00:09:29,675 And, uh, as I said, a lot of the times people think about this as, 167 00:09:29,964 --> 00:09:31,694 Do you have access to payments? 168 00:09:31,694 --> 00:09:33,025 Do you have access to credit? 169 00:09:33,064 --> 00:09:36,905 But I think that that's a very limited way of thinking about financial inclusion, 170 00:09:37,275 --> 00:09:41,384 which shows up when we think about the way people used to think about financial 171 00:09:41,384 --> 00:09:47,374 inclusion before the 2008 credit crisis, or indeed the latest COVID crisis. 172 00:09:47,515 --> 00:09:53,964 crisis when so many people lost their jobs and suddenly had to give up on 173 00:09:53,974 --> 00:09:58,574 their houses and their ideas of how much they could consume on a day to 174 00:09:58,775 --> 00:10:00,444 day basis or a month to month basis. 175 00:10:00,835 --> 00:10:05,835 And that is when so much more focus came on saying, look, it's for everybody. 176 00:10:06,185 --> 00:10:09,734 But when we think in the global south and we consider that we're thinking 177 00:10:09,734 --> 00:10:14,074 about people who are, uh, disadvantaged in so many ways, it becomes an 178 00:10:14,285 --> 00:10:17,984 especially important problem that we need to think about and solve better. 179 00:10:18,944 --> 00:10:22,555 I hope that helps the definition that you are looking for, Smriti. 180 00:10:22,555 --> 00:10:23,704 Sure. 181 00:10:23,964 --> 00:10:25,675 riverside_smriti_raw-audio_f_m_podcast studio_0038: Yeah, I think it's interesting. 182 00:10:25,675 --> 00:10:29,314 I mean, we framed this conversation around, you know, untangling financial 183 00:10:29,314 --> 00:10:30,774 inclusion in the Global South. 184 00:10:30,774 --> 00:10:33,805 And in both your comments, it really came out that there is something 185 00:10:33,814 --> 00:10:37,475 different about the Global South perspective and this context. 186 00:10:37,815 --> 00:10:40,974 And I was wondering if we can go a little bit more, you know, some of you brought 187 00:10:40,975 --> 00:10:45,194 about some of those points that there is a historical disadvantage context, which 188 00:10:45,194 --> 00:10:47,385 is here, but is there something different? 189 00:10:47,710 --> 00:10:50,569 broader than that, like beyond social economic conditions 190 00:10:51,040 --> 00:10:52,420 beyond historical factors. 191 00:10:52,470 --> 00:10:54,920 Is there something about regulatory capacity? 192 00:10:54,920 --> 00:10:58,180 Is there something about innovation, potential or capabilities? 193 00:10:58,180 --> 00:11:01,730 Is there something different from the supply side as well 194 00:11:01,730 --> 00:11:03,819 in the global south context? 195 00:11:05,984 --> 00:11:06,994 riverside_susan_raw-audio_f_m_podcast studio_0036: Do you want me to go first? 196 00:11:07,189 --> 00:11:07,520 riverside_smriti_raw-audio_f_m_podcast studio_0038: Go ahead. 197 00:11:07,520 --> 00:11:08,130 Yes, please. 198 00:11:08,295 --> 00:11:08,395 riverside_susan_raw-audio_f_m_podcast studio_0036: Yeah. 199 00:11:08,725 --> 00:11:13,885 So I think that, uh, the big learning about what is different from the global 200 00:11:13,885 --> 00:11:18,974 South is, you know, uh, people tend to, uh, look at developed markets, 201 00:11:18,974 --> 00:11:21,925 developing economies and say, look, the business models are working there. 202 00:11:22,535 --> 00:11:25,925 Why don't we just transplant those business models into 203 00:11:26,084 --> 00:11:27,125 every place in the world? 204 00:11:27,454 --> 00:11:30,575 And because we are, uh, those countries are rich, then it will 205 00:11:30,635 --> 00:11:33,995 benefit, uh, the developed markets or the emerging markets as well. 206 00:11:34,454 --> 00:11:36,704 I think that there is a big problem there because. 207 00:11:36,935 --> 00:11:41,604 What drives financial services and products in most of the richer or 208 00:11:41,635 --> 00:11:46,385 the more developed economies is that financial service providers are used to 209 00:11:46,404 --> 00:11:51,284 thinking about their business, giving them or supporting a certain amount 210 00:11:51,324 --> 00:11:56,084 of return and revenue because those customers are higher income customers. 211 00:11:56,434 --> 00:11:57,284 That is not true. 212 00:11:57,294 --> 00:12:00,254 That's not the assumption that we can make about customers or 213 00:12:00,254 --> 00:12:02,744 the citizens of the global south. 214 00:12:03,134 --> 00:12:04,534 They are much poorer. 215 00:12:04,774 --> 00:12:09,660 So when you take the same business The business models that are playing out in 216 00:12:09,690 --> 00:12:14,620 the global north and you try to transplant them into the global south, the very same 217 00:12:14,620 --> 00:12:18,540 business models just won't work because the incomes of the people that they're 218 00:12:18,540 --> 00:12:19,969 trying to serve will not support it. 219 00:12:20,009 --> 00:12:25,569 So in a certain way, you know, it's, it's odd, but the need for innovation 220 00:12:25,800 --> 00:12:29,900 is so much higher in the global south, because what is, you know, Take it 221 00:12:29,970 --> 00:12:33,710 for granted in terms of what are the kind of business models of the global 222 00:12:33,890 --> 00:12:38,130 not just cannot make it in the global South because you cannot do that Which 223 00:12:38,130 --> 00:12:43,519 is why I think the banks and in India and I know this pays the best So I will 224 00:12:43,800 --> 00:12:49,220 use examples from them for the longest time even for giving access to credit 225 00:12:49,280 --> 00:12:51,270 or giving access to savings account. 226 00:12:51,520 --> 00:12:55,530 It was not the banks that did the first push, not universally, right? 227 00:12:55,530 --> 00:13:00,300 There were places where this worked because the state supported 228 00:13:00,319 --> 00:13:04,849 the effort of the banks to reach out to the last mile customers. 229 00:13:05,129 --> 00:13:09,540 But it was a very, it was a very small, uh, uh, coverage 230 00:13:09,540 --> 00:13:10,900 that we were able to achieve. 231 00:13:11,234 --> 00:13:14,995 Then there was the innovation of the microfinance business model that came 232 00:13:14,995 --> 00:13:19,514 in and made that last mile connect between the existing formal financial 233 00:13:19,514 --> 00:13:22,285 systems and the last mile connect. 234 00:13:22,394 --> 00:13:26,184 And I suspect that's what we are beginning to see, and this is not a beginning to 235 00:13:26,184 --> 00:13:31,214 see, this is the last 10 to 15 or even 20 years of the fintech revolution. 236 00:13:31,460 --> 00:13:36,129 But technology has come in to reduce the barriers off the cost of delivering 237 00:13:36,359 --> 00:13:41,479 old traditional financial services and products to the last mile customer. 238 00:13:41,479 --> 00:13:45,719 We're seeing that increasingly now in the space of payments, in the space of 239 00:13:45,719 --> 00:13:50,929 credit, what we are not seeing so much is how much of that can be delivered. 240 00:13:51,239 --> 00:13:56,520 The same channels can be used to deliver pure savings, long term savings and 241 00:13:56,550 --> 00:14:00,470 conditional instruments like Coverage for insurance or pensions, right? 242 00:14:00,569 --> 00:14:02,900 That's not something that we are seeing too much. 243 00:14:03,180 --> 00:14:07,839 And I think that that's where we still need to have the innovation that how 244 00:14:07,910 --> 00:14:12,869 do the existing firms or new firms come up to be able to look at the 245 00:14:12,889 --> 00:14:17,390 this different customer base and start developing new business models to deliver. 246 00:14:17,660 --> 00:14:21,540 What we think of as the old financial functions or products 247 00:14:21,609 --> 00:14:23,319 to these last mile customers. 248 00:14:23,319 --> 00:14:26,299 And from that point of view, Smriti, I do think that you make a very 249 00:14:26,299 --> 00:14:32,139 interesting link here that just as we are thinking of taking the same business 250 00:14:32,139 --> 00:14:36,594 models for finance, We're also taking the same regulatory frameworks that 251 00:14:36,625 --> 00:14:41,104 we are seeing in the global north and transplanting them that those here, 252 00:14:41,724 --> 00:14:45,365 but that's not going to work as well because it's a very different problem 253 00:14:45,395 --> 00:14:48,584 that that regulation is seeking to solve. 254 00:14:48,774 --> 00:14:49,145 Sure. 255 00:14:49,839 --> 00:14:50,329 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you. 256 00:14:50,349 --> 00:14:53,149 Thanks so much, Susan and James, can I rope you in there? 257 00:14:53,149 --> 00:14:57,020 Because you made a, you know, comment in your opening remarks about how 258 00:14:57,030 --> 00:15:00,749 very often people think of, you know, the African context as one context, 259 00:15:00,750 --> 00:15:05,139 but there is so much diversity within that context and, you know, And that, 260 00:15:05,139 --> 00:15:08,599 of course, extrapolated to the Global South shows that there's so much more 261 00:15:08,599 --> 00:15:12,759 diversity within what, you know, is the global majority, so many countries, 262 00:15:12,759 --> 00:15:14,240 so many perspectives coming in that. 263 00:15:14,240 --> 00:15:17,779 So what would you think is, you know, unique about the Global South? 264 00:15:18,030 --> 00:15:19,549 Is there a Global South perspective? 265 00:15:19,549 --> 00:15:20,999 Is there an African perspective? 266 00:15:21,000 --> 00:15:25,180 Or does it necessarily, you know, boil down to being much more national 267 00:15:25,180 --> 00:15:28,729 or community level in terms of the financial inclusion agenda? 268 00:15:33,515 --> 00:15:34,815 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: I think to answer your question, 269 00:15:34,885 --> 00:15:38,314 I'll pick you back off some of the points that Um, have been mentioned 270 00:15:38,314 --> 00:15:42,635 by Susan, especially around the role of innovation and in particular. 271 00:15:44,105 --> 00:15:48,784 What we've been seeing is, um, someone mentioned that people are shifting away 272 00:15:48,785 --> 00:15:53,214 from this idea that you can apply a global north business model to the global south. 273 00:15:53,275 --> 00:15:58,280 And we started to see much more localized innovation happening within the Maybe some 274 00:15:58,290 --> 00:16:01,290 regions, for example, in East Africa, and you're seeing innovation happening like 275 00:16:01,290 --> 00:16:05,260 in West Africa for new different kinds of financial products, and I think what's 276 00:16:05,260 --> 00:16:11,389 behind that is that constraints often drive creativity and the markets and the 277 00:16:11,389 --> 00:16:14,539 people within them and the innovators are thinking about solutions that work 278 00:16:14,540 --> 00:16:18,359 for the local communities and work for their different geographies, and what 279 00:16:18,359 --> 00:16:22,339 we've been seeing, especially in the last decade or so, is that the Global South has 280 00:16:22,339 --> 00:16:25,190 become a hub for very frugal innovations. 281 00:16:25,694 --> 00:16:29,505 And we're seeing some solutions that are emerging out of necessity, um, 282 00:16:29,525 --> 00:16:33,895 in terms of how can we better solve these, um, local communities and 283 00:16:33,974 --> 00:16:37,004 how can these organizations work with each other to create a better 284 00:16:37,054 --> 00:16:40,685 enabling environment for responsible versions of finance to flourish. 285 00:16:41,645 --> 00:16:42,834 And maybe I can give an example. 286 00:16:42,994 --> 00:16:47,185 So think about, um, East Africa, the African context that I know fairly well, 287 00:16:47,185 --> 00:16:51,595 and in particular Kenya, an innovation like M Pesa, which enables payment. 288 00:16:52,000 --> 00:16:57,200 And this emerged out of necessity because obviously, um, the predecessor 289 00:16:57,369 --> 00:17:01,720 was cash, um, and it was working fine, but then out of necessity to figure out 290 00:17:01,730 --> 00:17:05,790 how to do urban rural remittances, for example, that emerged and it's something 291 00:17:05,800 --> 00:17:07,399 that people picked up fairly quickly. 292 00:17:08,079 --> 00:17:10,490 But on top of that innovation, we're seeing again, out of necessity, the 293 00:17:10,490 --> 00:17:15,845 emergence of Um, platforms for trade, for example, and these take care of 294 00:17:15,845 --> 00:17:20,694 logistics and they help, um, small enterprises acquire business inputs 295 00:17:20,764 --> 00:17:25,744 at better rates, and they help the same micro entrepreneurs get access 296 00:17:25,744 --> 00:17:28,914 to different customers in online spaces and including the metal spaces. 297 00:17:29,875 --> 00:17:33,564 On top of that, again, we think about the role of emerging models of 298 00:17:33,574 --> 00:17:36,375 finance for enabling access to energy. 299 00:17:36,805 --> 00:17:40,495 And so we're looking at the application of pay as you go models of pay go. 300 00:17:40,495 --> 00:17:43,860 Um, Um, which is essentially a model of finance to enable people 301 00:17:43,860 --> 00:17:45,570 to get off grid energy solutions. 302 00:17:45,610 --> 00:17:47,469 And, um, we're thinking about that. 303 00:17:47,600 --> 00:17:48,520 How can that be? 304 00:17:49,520 --> 00:17:53,539 How can this model of finance be enable people to participate in the green economy 305 00:17:53,579 --> 00:17:55,829 and participate in a just transition? 306 00:17:55,829 --> 00:17:59,299 And because some of these off grid solar energy, be it a solar water 307 00:17:59,299 --> 00:18:01,800 pump, these are really expensive products, but we're seeing an 308 00:18:01,800 --> 00:18:03,490 emerging role of finance and enabling. 309 00:18:03,600 --> 00:18:09,350 And so these innovations, they often have a wider global application, but 310 00:18:09,360 --> 00:18:11,450 they stem from specific regional needs. 311 00:18:11,550 --> 00:18:14,129 They stem from particular regional challenges. 312 00:18:14,639 --> 00:18:15,810 And in particular, 313 00:18:17,920 --> 00:18:23,379 fact that they come from local innovators and, um, they help address local needs. 314 00:18:23,540 --> 00:18:27,060 They are better suited to adapt to local cultural context. 315 00:18:27,100 --> 00:18:29,920 And I think that's why we're starting to see a change in momentum for, 316 00:18:29,920 --> 00:18:32,150 um, Locally driven innovation. 317 00:18:32,160 --> 00:18:35,080 So yeah, I think that's, that's how I would, I would summarize 318 00:18:35,080 --> 00:18:36,075 what I think about that. 319 00:18:36,795 --> 00:18:37,285 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you. 320 00:18:37,295 --> 00:18:38,415 Thanks so much, James. 321 00:18:38,475 --> 00:18:41,475 Um, coming back to you, Susan, I know you've been doing some really 322 00:18:41,475 --> 00:18:46,855 interesting work on, you know, bringing, uh, you know, thinking around how do 323 00:18:46,855 --> 00:18:51,304 you measure financial inclusion, uh, among other things to identify what are 324 00:18:51,305 --> 00:18:55,005 the gaps in the way existing services and products are being provided. 325 00:18:55,365 --> 00:18:59,125 Can you just walk us through those ideas and, you know, what you've been calling 326 00:18:59,125 --> 00:19:03,074 the input, output, outcome framework for measuring financial inclusion? 327 00:19:04,905 --> 00:19:07,870 riverside_susan_raw-audio_f_m_podcast studio_0036: Uh, So I think that this is something 328 00:19:07,870 --> 00:19:11,590 that happens when you start thinking about policy interventions, right? 329 00:19:11,590 --> 00:19:15,940 And I think, uh, the fact that there are so many interpretations of financial 330 00:19:15,940 --> 00:19:20,899 inclusion exists all across the globe because we haven't yet bothered doing 331 00:19:20,960 --> 00:19:23,849 this for any policy intervention. 332 00:19:24,010 --> 00:19:27,170 It is great to have clarity at the start of what is the objective. 333 00:19:27,510 --> 00:19:31,730 What is it that we choose to do is very clear, but what is it that 334 00:19:31,730 --> 00:19:33,610 we, that we will get out of it? 335 00:19:33,630 --> 00:19:34,409 What is the objective? 336 00:19:34,409 --> 00:19:35,290 Is what is the problem? 337 00:19:36,010 --> 00:19:39,979 Uh, this is where we come to saying that all policy interventions must be 338 00:19:39,979 --> 00:19:42,700 viewed through the lens of the input. 339 00:19:42,750 --> 00:19:44,100 That is, what is it that we will do? 340 00:19:44,480 --> 00:19:48,240 What is the output, which is, what is it that we expect to see that 341 00:19:48,280 --> 00:19:51,650 to happen immediately by way of actions or changes on the ground? 342 00:19:52,110 --> 00:19:56,560 But, Ultimately, this is not what we seek to achieve by, in terms of the 343 00:19:56,570 --> 00:19:59,100 objective of the policy intervention. 344 00:19:59,820 --> 00:20:04,389 We need to see some fundamental change that happens in the lives of people, 345 00:20:04,489 --> 00:20:05,909 which is what we call the outcome. 346 00:20:06,279 --> 00:20:11,149 I often like to use the example of education because I think it's 347 00:20:11,149 --> 00:20:15,040 core to all of us and it's, we feel sympathy and we feel instant 348 00:20:15,040 --> 00:20:17,790 recognition in the space of education. 349 00:20:17,790 --> 00:20:20,550 So I'm going to use that as an analogy. 350 00:20:20,830 --> 00:20:25,840 To explain what I mean by input, uh, output and outcome as a framework for 351 00:20:26,100 --> 00:20:28,719 analyzing, uh, policy intervention. 352 00:20:28,719 --> 00:20:33,310 So, in, in education, we all know that the government spends a lot of, uh, 353 00:20:33,310 --> 00:20:38,130 funds in, uh, promoting primary, primary education or secondary education. 354 00:20:38,150 --> 00:20:42,280 And the programs usually target, uh, Building schools and hiring teachers. 355 00:20:42,580 --> 00:20:45,159 This is what we would call the input, the amount of money or the number of 356 00:20:45,449 --> 00:20:47,409 schools and teachers that are hired. 357 00:20:47,420 --> 00:20:50,260 That's the input part, but that's not the end of the story. 358 00:20:50,539 --> 00:20:53,530 What we would like to see is that once these are built, children 359 00:20:53,530 --> 00:20:54,549 will come to those schools. 360 00:20:54,550 --> 00:20:56,099 And that's what we call the output. 361 00:20:56,440 --> 00:20:58,429 But truly, what is the outcome that we desire? 362 00:20:58,530 --> 00:21:02,650 That it's not just that children come to school and apparently pass some exams, 363 00:21:02,650 --> 00:21:06,609 but for the children that come to school and pass the exams, are they literate? 364 00:21:06,610 --> 00:21:07,469 Are they numerate? 365 00:21:07,630 --> 00:21:13,199 Are they able to pick up a newspaper and read it or go through the internet and 366 00:21:13,429 --> 00:21:14,949 read something new and understand it? 367 00:21:15,199 --> 00:21:16,500 That is what we call the outcome. 368 00:21:16,530 --> 00:21:21,955 Now, if I apply this lens to To the field of financial inclusion, the stated 369 00:21:22,045 --> 00:21:29,004 objective was to get people access to the instruments off finance or the services 370 00:21:29,034 --> 00:21:31,804 off finance, but that's not the outcome. 371 00:21:31,864 --> 00:21:36,685 And that is where everybody gets a little stuck so we can think about applying. 372 00:21:37,199 --> 00:21:41,960 Inputs, outputs and outcomes to financial inclusion by saying what we would like 373 00:21:41,960 --> 00:21:47,520 to get to see is spend money so that people get access to using finance 374 00:21:47,530 --> 00:21:52,480 so they get access to credit cards or they get access to bank accounts or 375 00:21:52,480 --> 00:21:54,190 they get access to pension systems. 376 00:21:54,190 --> 00:21:55,869 And this is something that over the last. 377 00:21:56,315 --> 00:22:01,985 20 25 years in India, we have seen the government putting a lot of effort 378 00:22:01,995 --> 00:22:05,135 into building the frameworks of input. 379 00:22:05,345 --> 00:22:06,525 But what is the output? 380 00:22:06,534 --> 00:22:12,014 And this is where my friend and colleague, Suyash Rai from Carnegie, often points 381 00:22:12,014 --> 00:22:17,114 out that India is very good on doing the inputs part of financial inclusion. 382 00:22:17,364 --> 00:22:21,185 But when we think about the outputs, that is, how much do people use it? 383 00:22:21,685 --> 00:22:25,034 When you have a bank account, is it something that you're 384 00:22:25,065 --> 00:22:27,874 constantly putting more money into? 385 00:22:27,934 --> 00:22:31,424 Is it something that you use to build your savings and to 386 00:22:31,424 --> 00:22:33,584 use or to withdraw your funds? 387 00:22:33,879 --> 00:22:36,509 to use for all kinds of activities that you want. 388 00:22:36,889 --> 00:22:43,759 India scores very poorly on the World Bank Global Financial Index on the outputs 389 00:22:43,989 --> 00:22:48,399 compared to lots of other countries that don't score too well on the input. 390 00:22:48,819 --> 00:22:53,960 And for us who sit in the policy space, we know that that's only halfway there. 391 00:22:54,250 --> 00:22:58,070 And the question that we need to ask ourselves is, Just because we put so 392 00:22:58,070 --> 00:23:02,750 much effort into building financial inclusion and getting access to all our 393 00:23:02,750 --> 00:23:07,750 citizens, to bank accounts, insurance products, are they better off as 394 00:23:07,750 --> 00:23:13,340 compared with those people that do not have this similar access to finance? 395 00:23:13,679 --> 00:23:18,250 And when we pin that down, the measurement that we seek to do is 396 00:23:18,610 --> 00:23:22,705 to talk to people and say, Look, because you have a bank account, are 397 00:23:22,705 --> 00:23:24,295 you able to build savings better? 398 00:23:24,665 --> 00:23:26,274 But that's not the outcome either. 399 00:23:26,284 --> 00:23:31,404 It is because you're have a bank account, you're able to build savings. 400 00:23:31,465 --> 00:23:35,574 And so that when you hit a rainy day, or when there's a crisis, like you lose 401 00:23:35,574 --> 00:23:41,090 your job, or there is a health crisis in the family, Do you have sufficient 402 00:23:41,250 --> 00:23:45,939 resilience to be able to withstand that without going into a complete meltdown 403 00:23:45,949 --> 00:23:51,259 mode where you have to stop eating or take away for children from attending 404 00:23:51,259 --> 00:23:53,250 schools because you can't pay fees? 405 00:23:53,460 --> 00:23:57,509 And that's what we think about as the outcome of financial inclusion. 406 00:23:57,799 --> 00:24:02,350 Which is that once you have people who are able to use finance intelligently 407 00:24:02,350 --> 00:24:07,459 and optimally, uh, they should be more resilient in facing shocks 408 00:24:07,659 --> 00:24:11,330 and adverse conditions as compared with those people who do not. 409 00:24:11,689 --> 00:24:14,184 And this is what we put together as a team. 410 00:24:14,815 --> 00:24:18,095 That's an input, output, outcome framework for financial inclusion. 411 00:24:18,445 --> 00:24:22,235 Now I don't pretend that this is something that we can immediately roll out. 412 00:24:22,545 --> 00:24:25,744 I think part of the reason why when we look around the 413 00:24:25,745 --> 00:24:28,234 world, it is so much, uh, easy. 414 00:24:28,255 --> 00:24:29,354 It is so much easier. 415 00:24:29,845 --> 00:24:33,815 to find financial inclusion input scores, like how many bank accounts, 416 00:24:34,045 --> 00:24:36,945 how many people have bank accounts, how many people have insurance. 417 00:24:37,225 --> 00:24:41,225 This is easy to do, but to find out how many of these people feel a lot 418 00:24:41,225 --> 00:24:46,184 more confident about what it is that their future looks like, are they more 419 00:24:46,185 --> 00:24:48,295 resilient when their shock comes out. 420 00:24:48,624 --> 00:24:54,255 This requires for a large scale perception survey where you go out 421 00:24:54,285 --> 00:24:56,844 and talk to people, run these surveys. 422 00:24:57,045 --> 00:25:02,485 And it should not be something that we expect to see only once, but over the 423 00:25:02,485 --> 00:25:07,035 years, as their savings build up and they're able to use these financial 424 00:25:07,085 --> 00:25:12,834 products in more and more optimal ways, are they able to face their future, 425 00:25:13,074 --> 00:25:18,084 whether it's an aspiration or in terms of resilience to adverse conditions? 426 00:25:18,144 --> 00:25:22,715 Are they able to do this better off compared with those people who do not? 427 00:25:22,765 --> 00:25:23,965 And this is what we call. 428 00:25:24,810 --> 00:25:28,620 The Input Output Outcome Framework for Financial Inclusion Measurement. 429 00:25:29,040 --> 00:25:32,020 And, uh, please note, in this, we are not pretending that, you 430 00:25:32,020 --> 00:25:33,340 know, it's a very simple thing. 431 00:25:33,380 --> 00:25:34,350 It's very difficult. 432 00:25:34,720 --> 00:25:38,760 The complexity that we are at here is that, and this is perhaps even more 433 00:25:38,760 --> 00:25:43,290 true for the Global South, as compared with what we see as individuals in 434 00:25:43,530 --> 00:25:48,150 the Global North, that, uh, it's not just a family, a person by themselves. 435 00:25:48,875 --> 00:25:50,405 It is about their entire household. 436 00:25:50,635 --> 00:25:51,534 It's about the family. 437 00:25:51,565 --> 00:25:53,284 No one in India stands alone. 438 00:25:53,345 --> 00:25:56,695 It's, they stand within the construct of their family. 439 00:25:56,955 --> 00:26:01,754 So these are best measured at the level of households and families 440 00:26:01,795 --> 00:26:03,294 as compared to just individuals. 441 00:26:03,385 --> 00:26:07,115 Although you could do it for individuals, but there are increasingly studies that 442 00:26:07,125 --> 00:26:15,605 are going and starting to ask questions about, uh, whether, uh, about, uh, how 443 00:26:15,605 --> 00:26:21,170 it is that Uh, people are financially included, uh, not just being measured 444 00:26:21,170 --> 00:26:24,929 in terms of the number of accounts that they hold, but in terms of their 445 00:26:24,929 --> 00:26:26,370 confidence in facing the future. 446 00:26:27,429 --> 00:26:28,739 I hope this makes sense, Manjeet. 447 00:26:28,975 --> 00:26:30,054 riverside_smriti_raw-audio_f_m_podcast studio_0038: Makes perfect sense. 448 00:26:30,065 --> 00:26:34,485 Thank you for taking that large body of work and condensing it for us in such 449 00:26:34,485 --> 00:26:38,705 a simple and, you know, obvious make it makes it sound so obvious that you need 450 00:26:38,705 --> 00:26:43,135 to understand the outcomes and on the, you know, the point you were making in the end 451 00:26:43,144 --> 00:26:45,145 about the individual and the household. 452 00:26:45,145 --> 00:26:48,344 One of the things I've come to realize in the field work that I've been doing 453 00:26:48,484 --> 00:26:52,114 a part of my intellectual project is there's also the third link to 454 00:26:52,114 --> 00:26:53,554 is which is at the community levels. 455 00:26:53,810 --> 00:26:56,960 Specifically, when you go into societies that are close knit, there 456 00:26:56,960 --> 00:27:00,290 is some kind of financial inclusion that can happen at the community level 457 00:27:00,420 --> 00:27:04,320 where households help each other out, even when, you know, they may not be 458 00:27:04,340 --> 00:27:08,729 individually at the household level, what we call quote unquote fully included. 459 00:27:08,730 --> 00:27:11,309 So that's been an interesting observation for me. 460 00:27:12,190 --> 00:27:13,639 riverside_susan_raw-audio_f_m_podcast studio_0036: Yeah, so, uh, if I may just take 461 00:27:13,639 --> 00:27:17,050 one more minute of time, uh, in the olden days before there were 462 00:27:17,050 --> 00:27:20,259 banks insurance companies, uh, both. 463 00:27:20,810 --> 00:27:23,810 I mean, certainly for all the people in India, and I know that there are 464 00:27:23,820 --> 00:27:27,909 studies that have documented this for households and communities in Africa, 465 00:27:28,190 --> 00:27:33,199 there used to be these things where there was community savings and lending and 466 00:27:33,199 --> 00:27:34,860 in India, they are called chip funds. 467 00:27:35,034 --> 00:27:39,065 In the, in, in various countries in Africa, they were called Roscas. 468 00:27:39,465 --> 00:27:42,965 And this was a community effort that there was a promise that was made by a 469 00:27:42,965 --> 00:27:46,784 bunch of people in the community that every month they would pull together 470 00:27:46,784 --> 00:27:52,435 some funds and the family that was most needy would, uh, get it right. 471 00:27:52,465 --> 00:27:53,864 But, and, but this was a promise. 472 00:27:54,125 --> 00:27:59,215 All those families had to come once a month and put in their share into a 473 00:27:59,235 --> 00:28:01,315 pot and only one family could get it. 474 00:28:01,374 --> 00:28:02,679 And this would only work. 475 00:28:02,679 --> 00:28:05,550 If there was sufficient trust in the community, which is 476 00:28:05,560 --> 00:28:09,969 something which is critical for such long term promises to hold. 477 00:28:10,545 --> 00:28:11,285 riverside_smriti_raw-audio_f_m_podcast studio_0038: Yeah, yeah. 478 00:28:11,655 --> 00:28:12,205 Thank you. 479 00:28:12,455 --> 00:28:16,255 I'm going to turn to you, James, you know, on this theme of outcomes, 480 00:28:16,255 --> 00:28:19,825 talking about fundamental change, some of these things that Susan brought up. 481 00:28:19,825 --> 00:28:23,955 I think it goes very intrinsically to the questions of, you 482 00:28:23,955 --> 00:28:25,235 know, behavioral factors. 483 00:28:25,674 --> 00:28:29,164 So can you tell us a bit more about this fascinating field that you're a 484 00:28:29,164 --> 00:28:33,565 part of, of behavioral sciences, and What lessons does that seem to hold 485 00:28:33,565 --> 00:28:35,635 for furthering financial inclusion? 486 00:28:35,645 --> 00:28:38,585 Would love to hear about, you know, your work, both in terms of the 487 00:28:38,585 --> 00:28:42,145 kind of interventions that have been adopted and what are the outcomes 488 00:28:42,145 --> 00:28:43,955 that you've seen, uh, in your work. 489 00:28:47,215 --> 00:28:47,575 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you. 490 00:28:47,575 --> 00:28:51,445 And I think before I answer that question, I just want to, uh, support what Susan 491 00:28:51,445 --> 00:28:55,195 has been mentioning because I couldn't agree more and I think essentially what 492 00:28:55,195 --> 00:28:58,635 she's been saying is part of the reason why we're seeing a change of taxonomy 493 00:28:59,135 --> 00:29:02,565 from financial inclusion to inclusive finance is that we're now trying to 494 00:29:02,565 --> 00:29:06,745 see if you can ask better questions and think about where we go from here. 495 00:29:07,635 --> 00:29:10,445 We're at this sort of working point where we're thinking a lot more 496 00:29:10,465 --> 00:29:12,075 deeply about livelihood outcomes. 497 00:29:12,395 --> 00:29:15,165 So what is a financial life? 498 00:29:15,535 --> 00:29:17,515 Like, what are the different components of a financial life? 499 00:29:17,555 --> 00:29:22,105 And how can these policies and programs and products actually help improve, 500 00:29:22,555 --> 00:29:27,085 um, livelihood outcomes and, um, improve the financial life aspects 501 00:29:27,085 --> 00:29:28,345 of, of what we're trying to do. 502 00:29:28,895 --> 00:29:32,145 And when it comes to financial inclusion, don't get me wrong, the 503 00:29:32,145 --> 00:29:35,365 progress has been great and it's been significant, but the question 504 00:29:35,365 --> 00:29:36,755 is, how do we leverage these gains? 505 00:29:37,485 --> 00:29:41,975 People are aggregating in both analog and digital settings, but how do we 506 00:29:42,155 --> 00:29:46,495 leverage the momentum that others, and the industry itself has been creating to 507 00:29:46,495 --> 00:29:51,065 build something else on top of that and to really think about, um, what are the 508 00:29:51,075 --> 00:29:54,705 likely outcomes that we aspire to create for, um, people in the global South? 509 00:29:56,394 --> 00:30:00,915 So, to go directly into your question, um, Smriti, is the behavioral factors 510 00:30:00,915 --> 00:30:02,175 when it comes to financial inclusion. 511 00:30:02,205 --> 00:30:05,165 And obviously, as we saw, this is our bread and butter, and this is the 512 00:30:05,165 --> 00:30:06,714 problem that we usually try and tackle. 513 00:30:08,045 --> 00:30:14,325 The first is surprisingly simple, and it's essentially the biggest problem that we 514 00:30:14,335 --> 00:30:19,175 often encounter with different partners that we work with is the lack of relevance 515 00:30:19,245 --> 00:30:21,025 and clarity of value propositions. 516 00:30:21,795 --> 00:30:24,944 And so where we come in is our behavior lens help us understand 517 00:30:25,105 --> 00:30:28,794 if financial products truly fit financial, truly fit people's needs. 518 00:30:29,544 --> 00:30:33,439 Um, and more importantly, it helps us understand why, which is the mechanism. 519 00:30:34,570 --> 00:30:39,860 So, once we understand how and why people prefer certain ways to transact, to borrow 520 00:30:39,860 --> 00:30:44,160 and to save, and I like the example that Susan gave around, um, the savings groups 521 00:30:44,160 --> 00:30:47,980 and the, um, here they're called ROSCas, but you also have SACOs and other, um, 522 00:30:48,479 --> 00:30:53,140 analog grouping mechanisms, is to really understand why do people prefer these, and 523 00:30:53,790 --> 00:30:58,600 our ability to listen and to understand those preferences, um, and to anticipate 524 00:30:58,620 --> 00:31:01,574 what is likely to change and what is not likely to change, is really important. 525 00:31:02,035 --> 00:31:06,545 Essentially how we're able to influence, um, behaviors and I should also say 526 00:31:06,545 --> 00:31:09,915 to positively influence behaviors because obviously, um, the application 527 00:31:09,915 --> 00:31:14,224 of behavioral economics needs to be done responsibly in a way that's 528 00:31:14,224 --> 00:31:18,360 aligned to people's own, um, beliefs and people's own, um, aspirations. 529 00:31:18,970 --> 00:31:19,100 riverside_smriti_raw-audio_f_m_podcast studio_0038: hmm. 530 00:31:19,100 --> 00:31:19,739 Mm 531 00:31:19,970 --> 00:31:22,150 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Second, I would say it's incentives. 532 00:31:22,570 --> 00:31:25,480 Um, so especially when it comes to financial inclusion, not 533 00:31:25,650 --> 00:31:27,775 always, but sometimes there's an expectation of formalization 534 00:31:27,775 --> 00:31:30,600 or digitization, which is great. 535 00:31:30,660 --> 00:31:31,960 Digital is an effective tool. 536 00:31:32,370 --> 00:31:35,860 Um, it's efficient, but it's not necessarily an outcome. 537 00:31:36,590 --> 00:31:41,720 So what we often encounter is asking our partners to really consider what 538 00:31:41,720 --> 00:31:44,880 is the incentive for what is the incentive for people to switch from the 539 00:31:44,880 --> 00:31:46,769 trusted analog methods to digital ones. 540 00:31:47,060 --> 00:31:52,160 So why switch from your savings group and from borrowing from your friends 541 00:31:52,160 --> 00:31:56,679 and family to switching to an app or some other similar form of mechanism? 542 00:31:57,720 --> 00:32:04,260 So, one of the ways in which we approach this problem is through testing. 543 00:32:04,775 --> 00:32:10,005 To understand for this value proposition, to what extent does it resonate with them? 544 00:32:10,135 --> 00:32:11,775 To what extent do they trust it? 545 00:32:11,955 --> 00:32:17,855 To what extent is it similar or dissimilar to the existing mechanisms and the 546 00:32:18,264 --> 00:32:22,880 ways that they prefer to approach finance, be it a transaction, be it a 547 00:32:22,880 --> 00:32:25,200 way of saving or be it a way to borrow. 548 00:32:26,000 --> 00:32:28,780 And the reality is people will always stick to what works 549 00:32:28,780 --> 00:32:30,220 for them and as they should. 550 00:32:30,770 --> 00:32:34,550 So any effort for digitization or even policy should align to 551 00:32:34,590 --> 00:32:35,810 people's needs and preferences. 552 00:32:36,020 --> 00:32:38,689 If we're truly trying to drive meaningful change. 553 00:32:39,320 --> 00:32:39,660 riverside_smriti_raw-audio_f_m_podcast studio_0038: hmm. 554 00:32:39,660 --> 00:32:40,849 Yeah. 555 00:32:41,180 --> 00:32:42,060 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: is the complexity of 556 00:32:42,060 --> 00:32:43,389 financial decision making. 557 00:32:43,910 --> 00:32:47,910 So here we have the behavioral biases, the behavioral biases, sorry, that 558 00:32:47,970 --> 00:32:49,360 I'm sure many of us have heard about. 559 00:32:49,930 --> 00:32:53,190 And this in particular comes into play when you think about aspects 560 00:32:53,200 --> 00:32:56,190 like saving behavior or investing in long term financial products. 561 00:32:56,810 --> 00:32:59,150 And this is where the nuances of psychology, psychology 562 00:32:59,150 --> 00:33:00,040 become more important. 563 00:33:00,699 --> 00:33:05,990 Because, for example, in the informal sectors, um, that are very common and 564 00:33:06,150 --> 00:33:11,295 represent a majority of The economies in the global south is how do you 565 00:33:11,365 --> 00:33:15,365 introduce a concept like a pension to make it something that's more urgent 566 00:33:15,385 --> 00:33:18,764 and also realistic because you also have to think about scarcity of resources 567 00:33:18,775 --> 00:33:21,645 for people to put money away for the long term futures for retirement. 568 00:33:22,725 --> 00:33:26,095 And so understanding these biases allows for the design of financial 569 00:33:26,095 --> 00:33:29,315 products that align with real world decision making, making it, making 570 00:33:29,315 --> 00:33:31,085 it easier for people to engage. 571 00:33:31,395 --> 00:33:32,805 And so you come with this. 572 00:33:33,200 --> 00:33:37,380 Again, global north concepts with its own definitions with his own taxonomy. 573 00:33:37,790 --> 00:33:43,069 And how can you change that and apply it to the local context and not, we're 574 00:33:43,070 --> 00:33:45,980 not just saying sub Saharan Africa, but we're talking about whether it's 575 00:33:45,980 --> 00:33:50,259 Kenya or Malawi, how can we create a program or an initiative that aligns 576 00:33:50,260 --> 00:33:55,610 to, um, better with existing ways of transacting such that they can better 577 00:33:55,610 --> 00:33:58,530 engage with a concept like putting money away for the longterm futures. 578 00:33:59,410 --> 00:33:59,620 riverside_smriti_raw-audio_f_m_podcast studio_0038: Yeah. 579 00:33:59,700 --> 00:34:00,860 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: And lastly, I would 580 00:34:00,860 --> 00:34:02,040 say it's customization. 581 00:34:02,240 --> 00:34:05,770 And again, it goes back to this principle that context matters. 582 00:34:05,970 --> 00:34:07,320 Contexts always matter. 583 00:34:07,699 --> 00:34:10,980 And by using behavioral insights, financial services can be tailored 584 00:34:11,029 --> 00:34:13,340 to meet specific needs and contexts of different groups. 585 00:34:13,529 --> 00:34:16,890 And where we're seeing this becoming more and more prominent is 586 00:34:19,055 --> 00:34:22,835 we know, um, there's huge gender gaps that exist in finance in traditional, 587 00:34:22,925 --> 00:34:27,195 um, finance in particular when it comes to banking and, um, and, and 588 00:34:27,225 --> 00:34:28,625 other forms of financial services. 589 00:34:29,095 --> 00:34:33,815 But the reality is some of these gaps are transcending also into digital spaces. 590 00:34:33,864 --> 00:34:39,535 We're seeing, um, a gender, a gender gap in access to access and usage 591 00:34:39,535 --> 00:34:40,815 of digital financial services. 592 00:34:40,825 --> 00:34:44,285 So thinking about how can we create financial products and services 593 00:34:44,345 --> 00:34:45,585 and how can we prevent programs. 594 00:34:46,160 --> 00:34:50,230 that are able to close this gender gap in access to finance and access 595 00:34:50,230 --> 00:34:51,540 to markets and access to trade. 596 00:34:51,980 --> 00:34:56,249 And so we're really thinking with our partners about what are the unique needs 597 00:34:56,250 --> 00:35:00,200 of women, what the realities that they face, what are the existing ways that they 598 00:35:00,520 --> 00:35:04,800 prefer to engage with finance and how can we build effective markets and products 599 00:35:04,840 --> 00:35:06,130 that better aligned with their men. 600 00:35:06,130 --> 00:35:08,520 So yeah, without going further, I think I'll leave it at that. 601 00:35:08,520 --> 00:35:10,300 But Thank you for that question. 602 00:35:10,940 --> 00:35:11,410 riverside_smriti_raw-audio_f_m_podcast studio_0038: thank you. 603 00:35:11,430 --> 00:35:12,850 That was fascinating. 604 00:35:12,850 --> 00:35:14,490 And thanks for breaking that down. 605 00:35:14,490 --> 00:35:15,270 I was interested. 606 00:35:15,270 --> 00:35:17,690 You know, you talked about pension as one example. 607 00:35:18,110 --> 00:35:20,060 Could we go a little bit deeper into that? 608 00:35:20,060 --> 00:35:23,390 I would love to know, you know, what are the kind of barriers behaviorally 609 00:35:23,390 --> 00:35:26,780 that you see in terms of trying to convince people about the benefits of, 610 00:35:26,840 --> 00:35:28,660 you know, long term or old age savings? 611 00:35:28,770 --> 00:35:32,900 And what what is the kind of intervention that is needed to then change their mind? 612 00:35:32,930 --> 00:35:35,320 Like, is there any kind of example in that space? 613 00:35:40,560 --> 00:35:42,590 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: And so I can give an example that one of 614 00:35:42,590 --> 00:35:43,930 my colleagues is currently working on. 615 00:35:43,960 --> 00:35:48,930 So I'm thinking about the concept of risk management and especially in group 616 00:35:49,029 --> 00:35:53,080 settings is that sometimes when you introduce a product and you call it 617 00:35:53,080 --> 00:35:57,310 insurance, it's um, It's a different context, but essentially what it means, 618 00:35:57,330 --> 00:35:59,650 it's a risk adaptation mechanism. 619 00:35:59,900 --> 00:36:05,279 And often, what exists already in these markets is people have group 620 00:36:05,370 --> 00:36:07,640 mechanisms of ways to deal with risk. 621 00:36:07,640 --> 00:36:11,100 So, I've heard these examples about, you know, every month a different 622 00:36:11,100 --> 00:36:15,719 person contributes money to this pool, and at that point everyone withdraws. 623 00:36:15,720 --> 00:36:18,360 So, there's different forms and variations that that takes. 624 00:36:18,755 --> 00:36:23,325 But essentially, it's people recognizing their susceptibility to 625 00:36:23,325 --> 00:36:28,545 shocks in their own environment, be it climate, be it, um, enterprise, 626 00:36:28,555 --> 00:36:31,425 and especially with COVID, we've seen the importance of building resilience. 627 00:36:31,834 --> 00:36:35,884 And so essentially, it's thinking about, from a program perspective and from 628 00:36:35,885 --> 00:36:40,328 a private sector product perspective, is how can these group mechanisms 629 00:36:40,328 --> 00:36:44,050 be optimized such that you create efficiencies in the way that people 630 00:36:44,070 --> 00:36:49,200 transact with each other and think about the incentives for increasing, 631 00:36:49,210 --> 00:36:50,559 for example, the savings behavior. 632 00:36:50,559 --> 00:36:55,010 So can we, can we nudge people towards increasing the savings amounts 633 00:36:55,440 --> 00:36:59,570 and complying with their own set objectives for how often they make 634 00:36:59,580 --> 00:37:03,770 these contributions into this such that we create a more robust environment? 635 00:37:04,150 --> 00:37:06,320 That's people can benefit from each other. 636 00:37:06,360 --> 00:37:11,040 So rather than coming with an alien concepts like insurance as much 637 00:37:11,040 --> 00:37:13,969 as insurance is very necessary, especially in the context of emerging 638 00:37:13,969 --> 00:37:15,460 risks associated with climate change. 639 00:37:15,960 --> 00:37:17,880 But how can we leverage the existing groups? 640 00:37:18,355 --> 00:37:23,045 And think about how we can bundle different products together and optimize 641 00:37:23,115 --> 00:37:27,345 already existing processes to arrive at the same objective rather than coming 642 00:37:27,345 --> 00:37:32,764 with our own predisposed notions about what works and the mechanisms that work as 643 00:37:32,774 --> 00:37:36,964 much as they are true because we've seen the impact in different spaces but how 644 00:37:36,964 --> 00:37:39,014 can we help people transition towards it. 645 00:37:39,695 --> 00:37:44,575 their own ways of adapting to risk their own ways of understanding and 646 00:37:45,025 --> 00:37:49,015 predicting this risk in a way that works for them and instead of us 647 00:37:49,025 --> 00:37:53,524 trying to in a way force people to behave and participate in markets 648 00:37:53,524 --> 00:37:55,425 in a way that we assume they should. 649 00:37:57,535 --> 00:37:58,575 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thanks so much, James. 650 00:37:58,915 --> 00:38:02,875 I think that's an interesting, you know, point of departure from you're 651 00:38:02,915 --> 00:38:06,475 talking from risk management to another kind of product, which I know 652 00:38:06,485 --> 00:38:10,215 both of you have studied in different ways, which is digital credit. 653 00:38:10,695 --> 00:38:13,884 And, um, and I think that's an interesting point of departure. 654 00:38:14,025 --> 00:38:17,585 Product to talk about in the context of financial inclusion of financial 655 00:38:17,785 --> 00:38:22,175 wellbeing, because unlike certain products like insurance or bank accounts 656 00:38:22,175 --> 00:38:26,425 or payments, even, uh, you know, there is a more tricky relationship with 657 00:38:26,435 --> 00:38:31,205 the credit and financial wellbeing because of the potential of overuse and 658 00:38:31,205 --> 00:38:33,495 people getting caught in a debt traps. 659 00:38:33,985 --> 00:38:37,275 Uh, so maybe I'll start with you, Susan, can you tell us a little 660 00:38:37,305 --> 00:38:39,155 bit about your work in this area? 661 00:38:39,175 --> 00:38:45,155 And more broadly, your understanding of what could be responsible digital credit, 662 00:38:45,225 --> 00:38:49,895 uh, you know, given these challenges of, uh, the potential debt traps, et cetera. 663 00:38:51,615 --> 00:38:53,465 riverside_susan_raw-audio_f_m_podcast studio_0036: So when we think about debt traps, 664 00:38:53,465 --> 00:38:57,985 I think that what we usually think about is, uh, over indebtedness, 665 00:38:58,005 --> 00:39:02,735 that there is an individual or a set of individuals within a family, 666 00:39:02,774 --> 00:39:06,175 all of whom are able to get credit. 667 00:39:06,844 --> 00:39:12,645 I think digital credit is, uh, understood today as a phenomenon where, as opposed to 668 00:39:12,645 --> 00:39:17,885 the old traditional process of going to a bank and, uh, doing a lot of due diligence 669 00:39:17,935 --> 00:39:24,410 and, uh, going through a laborious process to validate your ability to repay today. 670 00:39:24,410 --> 00:39:29,740 Digital credit is, um, typically targeted towards much smaller loan amounts, 671 00:39:30,360 --> 00:39:33,899 and then depending upon your instant behavior, you get access to a lot. 672 00:39:33,920 --> 00:39:39,455 I think that Uh, it has been, uh, overhyped in a certain sense because 673 00:39:39,685 --> 00:39:44,524 by its very definition, because the extent of time that the traditional 674 00:39:44,524 --> 00:39:49,505 credit models spend in doing due diligence does not show up in the 675 00:39:49,505 --> 00:39:53,695 digital credit space, most people think that That credit is easy to access. 676 00:39:53,835 --> 00:39:57,005 I, I, I mean, my observation is that that's not true. 677 00:39:57,265 --> 00:39:58,765 It's not the same credit product. 678 00:39:58,815 --> 00:40:03,915 We are much smaller, uh, in, in size so that if a person does not 679 00:40:04,535 --> 00:40:09,244 repay, the lender does not face a crisis, which typically happens when 680 00:40:09,244 --> 00:40:10,945 you have concentrated loan amounts. 681 00:40:11,295 --> 00:40:17,835 So I think that the very nature of digital credit enables a better risk management. 682 00:40:18,220 --> 00:40:22,700 For the person who is making the loan, and if they find that on small 683 00:40:22,770 --> 00:40:28,029 payments, one person does not is not able to repay, they will simply 684 00:40:28,050 --> 00:40:29,880 not issue the fresh credit amount. 685 00:40:29,910 --> 00:40:31,600 So I think that there are some benefits. 686 00:40:31,890 --> 00:40:34,770 And of course, because it's being made instantly access 687 00:40:34,840 --> 00:40:37,380 accessible to the person in need. 688 00:40:37,610 --> 00:40:41,780 Uh, these are typically products which are small in amount as 689 00:40:41,780 --> 00:40:43,460 well as short, short term. 690 00:40:43,890 --> 00:40:49,629 Uh, where I think that it can become irresponsible is, uh, if A, you, you 691 00:40:49,630 --> 00:40:53,769 are lending, uh, these things to many people in the same household and the 692 00:40:53,769 --> 00:41:00,450 same household is going into distress and um, Uh, that there is no information 693 00:41:00,450 --> 00:41:07,080 sharing about the extent to which a household is, uh, overextended as 694 00:41:07,080 --> 00:41:11,520 opposed to just focusing on whether the individual is overextended. 695 00:41:11,520 --> 00:41:15,600 But this is all about the business practices of the lender themselves. 696 00:41:15,600 --> 00:41:19,620 And I think that, um, it is something that is, uh, interesting. 697 00:41:19,620 --> 00:41:24,870 It is evolving, and my suspicion is that there should be more of this because. 698 00:41:25,070 --> 00:41:28,810 The nature of the global south is that households are small. 699 00:41:29,540 --> 00:41:33,580 They don't have that many assets, but they do have requirement of short term 700 00:41:33,580 --> 00:41:38,270 credit requirements at the equivalent of a working capital for companies. 701 00:41:38,490 --> 00:41:41,789 And this is a model that needs to evolve its own risk management. 702 00:41:41,790 --> 00:41:47,490 practices before it can be, uh, considered to be responsible or dangerous. 703 00:41:47,490 --> 00:41:54,069 I think that, uh, the problem might be that the same kind of biases that we see 704 00:41:54,080 --> 00:41:56,770 in the large credit, uh, business model. 705 00:41:56,790 --> 00:42:00,450 Second, this is a very documented phenomenon that women, even though they 706 00:42:00,450 --> 00:42:05,360 end up doing extremely good repayments, uh, because they don't have ownership of 707 00:42:05,550 --> 00:42:10,900 assets that is their own, as opposed to the family owning assets, that Women tend 708 00:42:10,900 --> 00:42:15,960 to be getting seeing a bias in terms of being able to access credit on some of 709 00:42:15,970 --> 00:42:17,850 these platforms as compared to the others. 710 00:42:18,220 --> 00:42:23,259 But overall, when we did our studies and asking whether digital credit platforms 711 00:42:23,940 --> 00:42:30,410 are giving a higher sense of resilience and comfort about their future to various 712 00:42:30,410 --> 00:42:35,900 families or to various people who are using these digital credit platforms, we 713 00:42:35,900 --> 00:42:41,775 found that over and above all the assets that they hold, or the income levels. 714 00:42:42,015 --> 00:42:45,255 So, uh, some of these households are richer as compared with the other, 715 00:42:45,775 --> 00:42:51,105 those who are able to access finance through these digital platforms tend to 716 00:42:51,115 --> 00:42:55,555 be a lot more comfortable about their income, Uh, ability to withstand shocks 717 00:42:55,555 --> 00:42:56,845 in the future as compared with not. 718 00:42:56,845 --> 00:43:02,054 So if we make this link between the outcome of access to credit or access 719 00:43:02,054 --> 00:43:07,274 to finance is supposed to be giving the individual or the household better comfort 720 00:43:07,275 --> 00:43:10,075 about, uh, how they can face the future. 721 00:43:10,324 --> 00:43:13,934 It seems that the early evidence says that these are all 722 00:43:14,224 --> 00:43:15,374 helping as compared with not. 723 00:43:16,284 --> 00:43:17,605 So that's what I would like to see. 724 00:43:17,980 --> 00:43:24,730 Um, and, uh, as for the potential for overuse or in indebtedness, I think 725 00:43:24,730 --> 00:43:30,400 it is in the incentives of the lenders who are able to set up these, uh, the, 726 00:43:30,400 --> 00:43:34,540 the due diligence or the information share to do better risk management. 727 00:43:34,720 --> 00:43:39,400 But if we are focused on the individuals who are getting it, my sense is that 728 00:43:39,400 --> 00:43:43,690 this is a step in the po in the positive direction for financial inclusion. 729 00:43:44,545 --> 00:43:44,975 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you. 730 00:43:45,205 --> 00:43:46,925 That's an interesting perspective. 731 00:43:46,975 --> 00:43:50,725 Uh, James, I know you've also done work around, you know, comparing 732 00:43:50,935 --> 00:43:53,555 the digital credit landscape across different countries. 733 00:43:53,575 --> 00:43:55,205 Tell us a bit more about that, please. 734 00:43:55,205 --> 00:43:59,145 And also whether you looked at only individuals and households as 735 00:43:59,145 --> 00:44:02,615 your unit of analysis, or were you also looking at small businesses? 736 00:44:02,615 --> 00:44:04,432 So, Over to you, James. 737 00:44:04,432 --> 00:44:05,156 Mm hmm. 738 00:44:05,156 --> 00:44:05,880 Mm hmm. 739 00:44:05,880 --> 00:44:06,603 Mm hmm. 740 00:44:06,603 --> 00:44:06,965 Mm 741 00:44:07,185 --> 00:44:07,404 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you Smriti. 742 00:44:07,835 --> 00:44:13,105 Um, so I'll begin by saying when it comes to our perspective on digital 743 00:44:13,125 --> 00:44:18,564 credit is number one is they do no harm principle and so it sounds very 744 00:44:18,564 --> 00:44:20,805 simple but It exists for a reason. 745 00:44:21,055 --> 00:44:26,835 So we need to be mindful of, um, models and think about policy interventions 746 00:44:26,835 --> 00:44:30,374 for forms of credit that can create harm because, because we know that they can. 747 00:44:31,145 --> 00:44:34,144 And I'll give an example for some other work that we've done here in South and 748 00:44:34,154 --> 00:44:39,075 Africa, in an East African market, is by examining transaction level data from all 749 00:44:39,315 --> 00:44:44,455 mobile money credit providers, we realized that there was a practice of lenders So 750 00:44:44,455 --> 00:44:47,925 essentially what you're doing is extending digital credit loans to novice, novice 751 00:44:48,155 --> 00:44:49,535 borrowers as a way of screening them. 752 00:44:49,545 --> 00:44:53,135 So essentially you're giving someone a loan as a way to see who's 753 00:44:53,155 --> 00:44:54,465 eventually going to be credit worthy. 754 00:44:54,495 --> 00:45:00,845 And the byproduct of that is we have these borrowers who are entering, who 755 00:45:00,845 --> 00:45:04,775 are newly financially included in mobile money and by extension of digital credits. 756 00:45:05,525 --> 00:45:08,605 And they don't understand the consequences for defaulting on these loans. 757 00:45:08,695 --> 00:45:13,849 So what ends up happening is for some of these individuals, As soon as 758 00:45:13,850 --> 00:45:19,660 they're included in digital financial ecosystems, they're excluded, um, not 759 00:45:19,670 --> 00:45:23,470 because they had any intentions to defraud, but they simply didn't understand 760 00:45:23,930 --> 00:45:28,230 the consequences and the terms and conditions of these loans, of these loans. 761 00:45:29,240 --> 00:45:32,970 Also, some of the practices that we've seen are in debt collection that 762 00:45:33,160 --> 00:45:39,535 are particularly concerning is Some lenders, um, in the markets, they often 763 00:45:39,545 --> 00:45:43,735 outsource debt collection practices, um, to other third party providers. 764 00:45:44,175 --> 00:45:49,554 And we're seeing a couple of ways of calling people and, um, threatening them 765 00:45:49,555 --> 00:45:52,855 and, you know, I'll call you mother, I'll call you auntie, and all these things. 766 00:45:52,855 --> 00:45:53,969 And we're seeing some of these. 767 00:45:54,440 --> 00:45:57,310 Um, aspects that are bordering on fraudulent ways to pressure 768 00:45:57,310 --> 00:45:58,780 people into repaying the loans. 769 00:45:58,780 --> 00:46:01,770 And yes, there needs to be a sustainability of these markets. 770 00:46:01,810 --> 00:46:02,789 There needs to be debt collection. 771 00:46:02,790 --> 00:46:06,910 But thinking about how policy can protect people from some of 772 00:46:06,910 --> 00:46:09,945 these, very left field practices. 773 00:46:10,625 --> 00:46:15,355 And finally, I think, which is, um, most important is, is there is interest rates. 774 00:46:15,355 --> 00:46:18,415 So some of these interest rates are extremely high, and I know it's 775 00:46:18,415 --> 00:46:22,575 problematic to convert the rates into APR, but ultimately, we're thinking 776 00:46:22,575 --> 00:46:25,604 about hot state borrowers who have urgent needs, they don't really have 777 00:46:25,604 --> 00:46:29,445 a cool down period, and they take out a loan, not fully understanding how 778 00:46:29,445 --> 00:46:32,645 much it is that they have to repay, and how much that takes away from the 779 00:46:32,645 --> 00:46:34,055 business, or from their household. 780 00:46:34,630 --> 00:46:39,440 Um, and the future implications of taking out that, of taking 781 00:46:39,440 --> 00:46:41,100 out, of taking out that loan. 782 00:46:42,010 --> 00:46:46,190 Now, what that being said around the do no harm principle is also, 783 00:46:46,970 --> 00:46:48,860 um, thinking about what people want. 784 00:46:49,290 --> 00:46:53,969 And ultimately, people want credit, and I can even argue that people need 785 00:46:53,970 --> 00:46:55,450 credit, especially microenterprises. 786 00:46:55,580 --> 00:47:00,140 And like you correctly mentioned, Smriti, we did, um, we did, we have done 787 00:47:00,190 --> 00:47:03,510 multiple studies looking at the role of digital credit for microenterprises. 788 00:47:04,525 --> 00:47:09,765 And so, because of some of the emerging concerns around the growth of digital 789 00:47:09,765 --> 00:47:14,455 credit is there's been some conversations in some circles, obviously not all, to 790 00:47:14,464 --> 00:47:16,165 stifle the growth of digital credit. 791 00:47:16,965 --> 00:47:19,944 But I think ultimately, and this is something that I've also considered 792 00:47:19,944 --> 00:47:22,524 in myself, given the different points of research and the different 793 00:47:22,524 --> 00:47:23,505 kinds of data that we've seen. 794 00:47:24,285 --> 00:47:27,369 But also what I see more of is people want more credit. 795 00:47:28,770 --> 00:47:32,470 People want more credits for to be able to survive household shocks. 796 00:47:32,890 --> 00:47:36,899 People want more credits to be able to help with their liquidity needs 797 00:47:36,899 --> 00:47:39,849 for their businesses and in some cases to help grow their businesses. 798 00:47:40,800 --> 00:47:45,049 And so for me what this means is the industry needs to think about how to 799 00:47:45,050 --> 00:47:50,650 create an enabling environment for quality credit to exist and for it to thrive. 800 00:47:51,400 --> 00:47:53,290 And what do you mean by quality credit? 801 00:47:53,320 --> 00:47:58,200 I think I would put it in for the three or four easy buckets is one is affordability. 802 00:47:58,860 --> 00:48:02,760 So, um, is there a way in which the risk that the lenders are 803 00:48:02,760 --> 00:48:03,910 exposed to can be reduced? 804 00:48:04,220 --> 00:48:07,190 So we're thinking about credit reference bureaus and other mechanisms 805 00:48:07,190 --> 00:48:10,779 by which the risk exposure is lower and hopefully, hypothetically, 806 00:48:10,829 --> 00:48:11,969 that can drive down interest rates. 807 00:48:13,270 --> 00:48:17,950 Second is amount, and this matters a lot, especially for entrepreneurial use cases. 808 00:48:18,485 --> 00:48:22,105 is when you have a loan for your business that can help you get an 809 00:48:22,135 --> 00:48:26,824 asset, whether it's a fridge for your little shop, or whether it's some kind 810 00:48:26,824 --> 00:48:31,484 of labor saving device or some kind of agricultural machinery for, for 811 00:48:31,485 --> 00:48:32,965 you to be a more productive farmer. 812 00:48:34,290 --> 00:48:38,720 When we're able to, um, create an environment where there's higher credit 813 00:48:38,720 --> 00:48:42,780 limits or people have a better ability to grow the credit limits over time 814 00:48:43,240 --> 00:48:46,260 is where you can get towards purpose driven lending rather than the more 815 00:48:46,260 --> 00:48:48,999 generic consumer loans that we're seeing as more prevalent in the markets. 816 00:48:50,640 --> 00:48:53,719 And then similarly for, um, entrepreneurs is the tenure. 817 00:48:53,800 --> 00:48:58,300 So when people take out these loans, when the due date comes before 818 00:48:58,300 --> 00:49:03,415 you've, you've fully realized, um, the impact of that loan. 819 00:49:03,415 --> 00:49:06,215 So for example, if it's some kind of asset before you're able to 820 00:49:06,595 --> 00:49:09,834 actually get the increased revenue from having that asset and if the 821 00:49:09,834 --> 00:49:12,694 loan comes before them, then that becomes problematic for your business. 822 00:49:13,055 --> 00:49:17,035 So how can we support the establishment of business models that are 823 00:49:17,035 --> 00:49:20,215 responsible, but then also think about the supply side mechanism 824 00:49:20,465 --> 00:49:22,075 is in terms of what's sustainable. 825 00:49:22,355 --> 00:49:25,765 How can we reduce the risk exposure of the providers such that. 826 00:49:26,525 --> 00:49:31,455 It's great and strong business case for the supplier of the loans, but then also 827 00:49:31,505 --> 00:49:36,475 supports people at a housing level at a housing level for them to be able to 828 00:49:36,475 --> 00:49:41,240 adapt to shops for them to be able to Get access to, um, education, um, for 829 00:49:41,240 --> 00:49:45,020 them to, and, and also for enterprises to grow their businesses, to expand 830 00:49:45,020 --> 00:49:46,820 their businesses and create employment. 831 00:49:49,055 --> 00:49:49,535 Smriti: Thank you. 832 00:49:49,575 --> 00:49:51,455 Thanks so much for explaining that, James. 833 00:49:54,135 --> 00:49:54,575 Sorry. 834 00:49:55,025 --> 00:49:56,445 Susan: Yeah, so can I just come in? 835 00:49:56,445 --> 00:49:58,655 I think that's a fascinating point, James. 836 00:49:58,655 --> 00:50:03,055 I think we don't think often enough about financial inclusion 837 00:50:03,055 --> 00:50:06,335 as being a two party system, right? 838 00:50:06,335 --> 00:50:09,565 That we often think about the individual. 839 00:50:09,595 --> 00:50:11,144 We think about the household. 840 00:50:11,195 --> 00:50:12,834 We don't often converse. 841 00:50:13,305 --> 00:50:16,245 in the same story as the lenders. 842 00:50:16,245 --> 00:50:20,625 The lenders are playing a role and it is also important to think about 843 00:50:20,625 --> 00:50:22,185 the kind of risks that they face. 844 00:50:22,614 --> 00:50:27,784 And, uh, the one addition that I would make to the narrative that you just 845 00:50:27,784 --> 00:50:33,005 presented is that in a certain sense, we think about the small households 846 00:50:33,495 --> 00:50:37,410 and the small individuals who are, you know, Taking these loans in 847 00:50:37,410 --> 00:50:43,280 order to support an enterprise, more particularly when these are the lower 848 00:50:43,280 --> 00:50:47,830 income households that we tend to see a larger fraction of in the global south. 849 00:50:48,450 --> 00:50:54,885 They have less of a, uh, the support system or the wherewithal To buy 850 00:50:55,155 --> 00:50:57,135 or access risk management tools. 851 00:50:57,135 --> 00:51:02,835 But what is more interesting is that if there is a lender who has given a large 852 00:51:02,835 --> 00:51:07,965 number of loans or even a small number of loans to a set of farmer entrepreneurs, 853 00:51:07,965 --> 00:51:12,005 and the farmer entrepreneurs are saying that it is going take a little longer 854 00:51:12,005 --> 00:51:16,390 for them to repay on those loans, it is actually something that is a risk. 855 00:51:16,845 --> 00:51:21,125 that the lender themselves can take, uh, hedges against or protect 856 00:51:21,125 --> 00:51:26,915 themselves against as compared with the farmer or the individuals themselves. 857 00:51:26,965 --> 00:51:30,425 And I think that that is something, uh, which is an important point to 858 00:51:30,425 --> 00:51:33,075 keep in mind that financial inclusion. 859 00:51:34,055 --> 00:51:39,635 Is not just about, uh, the, uh, people who are doing the access to 860 00:51:39,635 --> 00:51:42,395 finance, but also whether it is, 861 00:51:42,485 --> 00:51:42,575 Smriti: a bit. 862 00:51:42,575 --> 00:51:44,225 I don't know if it's just me. 863 00:51:44,225 --> 00:51:45,154 Susan, sorry to interrupt 864 00:51:48,235 --> 00:51:51,565 you, but there seems to be a, uh, you know, you're blanking out in the middle. 865 00:51:52,145 --> 00:51:54,945 Uh, so we've lost a few points that you made. 866 00:51:54,955 --> 00:51:56,895 Maybe just, if you can, go back. 867 00:51:57,290 --> 00:51:58,190 You know, your last two 868 00:51:58,965 --> 00:52:02,995 Susan: so, so I just wanted to emphasize that it is important when we're thinking 869 00:52:03,005 --> 00:52:08,695 about a sustainable and you brought the phrase responsible digital credit, but 870 00:52:08,935 --> 00:52:14,104 I think I liked James point that, uh, people want credit, they need credit. 871 00:52:14,104 --> 00:52:16,825 So you be always need to have a supply side. 872 00:52:17,080 --> 00:52:22,310 where people are willing to provide the credit and the only point that 873 00:52:22,310 --> 00:52:28,840 I will add to what James said is that, uh, the lenders are better 874 00:52:28,960 --> 00:52:35,039 able to protect themselves against the kind of shocks that, uh, that 875 00:52:35,209 --> 00:52:39,830 even the small farmers and the households, uh, are going to withstand. 876 00:52:40,220 --> 00:52:44,740 Um, and that is something that we should put into our equation when we 877 00:52:44,740 --> 00:52:48,869 think about developing sustainable digital credit or credit markets. 878 00:52:49,050 --> 00:52:49,140 I 879 00:52:49,380 --> 00:52:49,470 riverside_smriti_raw-audio_f_m_podcast studio_0038: Yes. 880 00:52:50,120 --> 00:52:50,590 Thank you. 881 00:52:50,630 --> 00:52:51,330 Thanks, Susan. 882 00:52:51,330 --> 00:52:52,320 And thanks, James. 883 00:52:52,690 --> 00:52:55,810 Um, you know, just to broaden this conversation, we've been 884 00:52:55,810 --> 00:52:57,330 talking about financial inclusion. 885 00:52:57,330 --> 00:53:01,340 We've spoken about specific products, but to look at this under the broader 886 00:53:01,410 --> 00:53:05,320 umbrella of, you know, the financial regulatory landscape, and we know 887 00:53:05,330 --> 00:53:09,885 within that inclusion is one agenda, but there are others like Consumer 888 00:53:09,885 --> 00:53:14,655 protection like, uh, you know, data protection and privacy of consumers. 889 00:53:14,655 --> 00:53:18,315 So just to understand, like one of the ways this is linked is, uh, you know, 890 00:53:18,355 --> 00:53:22,435 just drawing from the comments that both of you made is this idea of creating 891 00:53:22,445 --> 00:53:27,685 credit registry saying that, you know, We don't have, uh, data about, uh, credit 892 00:53:27,685 --> 00:53:29,685 history of some of the small businesses. 893 00:53:29,695 --> 00:53:33,215 So there is a conversation, at least in India, about, you know, being 894 00:53:33,215 --> 00:53:36,835 able to take data at the individual level of these proprietors and 895 00:53:36,835 --> 00:53:41,325 trying to use that as a basis for, uh, you know, giving them credit. 896 00:53:41,325 --> 00:53:44,085 And that of course brings up some questions around consumer 897 00:53:44,085 --> 00:53:45,915 protection, around data privacy. 898 00:53:46,305 --> 00:53:49,975 And another example which comes to mind is from the payment space where, you know, we 899 00:53:49,975 --> 00:53:55,515 are seeing this push towards frictionless instant payments and the emphasis being 900 00:53:55,515 --> 00:53:59,775 on frictionless where sometimes this is coming at the cost of, you know, an 901 00:54:00,055 --> 00:54:04,535 increase in the amount of fraud of people not understanding the swiftness with 902 00:54:04,545 --> 00:54:06,295 which the transaction is taking place. 903 00:54:06,325 --> 00:54:09,665 So I want to come to both of you, maybe starting with you, Susan, on. 904 00:54:09,950 --> 00:54:14,480 Do you feel that, you know, the, uh, the agenda and the work on financial 905 00:54:14,540 --> 00:54:19,770 inclusion that has been going on has kept pace, um, with the other broader 906 00:54:19,780 --> 00:54:23,180 regulatory developments that we need for this to become like a whole, 907 00:54:23,510 --> 00:54:27,500 uh, you know, a financial wellness package, so to speak, for the consumer. 908 00:54:29,920 --> 00:54:30,970 riverside_susan_raw-audio_f_m_podcast studio_0036: mean, simple answer. 909 00:54:30,970 --> 00:54:36,920 I think no, because the rate of growth of financial inclusion has been really rapid. 910 00:54:37,390 --> 00:54:42,290 I think that, uh, there was a lot of nice work that was done in about 2013, 911 00:54:43,320 --> 00:54:47,790 where we were thought about building a consolidated policy framework for finance. 912 00:54:47,790 --> 00:54:52,630 I think, Smriti, you may remember this well, but this was the Justice 913 00:54:52,630 --> 00:54:56,950 Shri Krishna Committee, the FSLRC, the Financial Sector Legislative Reforms 914 00:54:57,009 --> 00:55:01,750 Commission, and one of the big, uh, Trust in that was to worry a lot more 915 00:55:01,760 --> 00:55:03,710 about financial consumer protection. 916 00:55:04,180 --> 00:55:09,919 I think that it is a challenge to, uh, to the existing large 917 00:55:09,920 --> 00:55:15,270 financial service providers on how to provide good consumer protection. 918 00:55:15,540 --> 00:55:19,345 And if you start consumer protection as saying, We don't know how 919 00:55:19,405 --> 00:55:20,535 things are going to go bad. 920 00:55:20,755 --> 00:55:25,945 Then the first stop is to be able to collect consumer grievances and to set up 921 00:55:25,985 --> 00:55:28,265 a consumer grievance redress mechanism. 922 00:55:28,705 --> 00:55:33,575 And my suspicion is that even for the existing financial service providers, 923 00:55:33,604 --> 00:55:38,254 that is something that we, uh, at least in India, across the different financial 924 00:55:38,254 --> 00:55:43,184 service providers are still working on developing a robust system for. 925 00:55:43,954 --> 00:55:49,960 So, uh, beyond what you said as If we just focus on digital credit or credit 926 00:55:50,010 --> 00:55:55,189 as a product, it is yes, I agree, important for us to have in place good 927 00:55:55,260 --> 00:56:01,109 information systems about who are the defaulters, what is the information about 928 00:56:01,109 --> 00:56:02,809 the loan size that they're defaulting on. 929 00:56:03,090 --> 00:56:07,100 I would take a step back and address the larger question of the approach 930 00:56:07,100 --> 00:56:11,790 that we as a country has taken to financial consumer redress, because 931 00:56:11,800 --> 00:56:15,699 that's the point at which you understand or you have a feedback mechanism. 932 00:56:16,035 --> 00:56:23,545 from the users off or finance into the regulatory space, because I think one 933 00:56:23,545 --> 00:56:28,535 of the things that we have seen very often is that there are a set of harms 934 00:56:28,865 --> 00:56:31,235 that we observed in other countries. 935 00:56:31,294 --> 00:56:36,635 And we presume that those harms will happen in our country or in the In 936 00:56:36,635 --> 00:56:41,425 the global south, the same kind of harms as we see in the global not. 937 00:56:41,835 --> 00:56:43,275 But to James's point, right? 938 00:56:43,695 --> 00:56:48,805 Nothing about these need be the same because they are a very different set 939 00:56:48,895 --> 00:56:53,309 of people and types of people, their desires, their wants, their needs. 940 00:56:53,450 --> 00:56:58,050 They can be similar, but the levels at which they exist are completely different. 941 00:56:58,350 --> 00:57:03,689 So my sense is that we have captured or we have put in place consumer 942 00:57:03,690 --> 00:57:07,739 protection, which is similar to what we see in the global north. 943 00:57:07,810 --> 00:57:11,059 But perhaps there needs to be innovation on that front as well. 944 00:57:11,060 --> 00:57:16,390 So I agree with you that we do need to worry about consumer protection when 945 00:57:16,390 --> 00:57:18,870 it comes to data and data sharing. 946 00:57:19,190 --> 00:57:23,550 But I think that there is, this is one piece of the puzzle when we think about 947 00:57:23,550 --> 00:57:28,849 financial consumer protection, because ultimately it's about asking whether 948 00:57:28,850 --> 00:57:35,129 your customers have faith in the system when they put aside their savings. 949 00:57:35,480 --> 00:57:36,780 into financial products. 950 00:57:36,780 --> 00:57:38,340 Financial products are tricky, right? 951 00:57:38,340 --> 00:57:40,160 It's not like buying a refrigerator. 952 00:57:40,890 --> 00:57:45,290 You are putting money into a product which will only give you 953 00:57:45,290 --> 00:57:47,499 returns over a very long horizon. 954 00:57:47,740 --> 00:57:50,909 It can be short term, it can be medium term, it can be long term, 955 00:57:50,910 --> 00:57:52,180 but you need to have the faith. 956 00:57:52,519 --> 00:57:57,200 And so it is critical for us to put in place consumer redress. 957 00:57:57,370 --> 00:58:00,090 Where grievances go back to the regulator and they see the 958 00:58:00,090 --> 00:58:01,350 regulators are taking action. 959 00:58:01,350 --> 00:58:04,950 So I would worry about that not being fully understood 960 00:58:04,950 --> 00:58:06,180 and put in place in India. 961 00:58:06,820 --> 00:58:07,230 riverside_smriti_raw-audio_f_m_podcast studio_0038: Right. 962 00:58:07,450 --> 00:58:07,890 Thank you. 963 00:58:07,920 --> 00:58:08,640 Thanks, Susan. 964 00:58:08,980 --> 00:58:11,880 James, I'm going to come to you with, you know, two points. 965 00:58:11,880 --> 00:58:15,860 One on anything you want to add in terms of the consumer protection 966 00:58:15,860 --> 00:58:20,270 framework in the African context, uh, which, you know, you might want 967 00:58:20,270 --> 00:58:21,860 to add to what Susan was saying. 968 00:58:21,870 --> 00:58:25,160 And the other is, uh, you know, Susan mentioned something about, you know, 969 00:58:25,160 --> 00:58:29,665 the that the harms from one context will not necessarily translate to the other. 970 00:58:29,665 --> 00:58:33,465 We spoke about how, you know, regulatory factors, regulatory features may not 971 00:58:33,485 --> 00:58:37,495 translate, but are there positive lessons which actually could be translated, 972 00:58:37,805 --> 00:58:39,575 uh, from one country context to other? 973 00:58:39,575 --> 00:58:43,705 Is there anything in, uh, you know, Busara's global work that you 974 00:58:43,705 --> 00:58:47,055 have seen where you feel that, uh, there are some interesting cross 975 00:58:47,055 --> 00:58:49,145 country linkages that can be made? 976 00:58:55,140 --> 00:58:56,370 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: Thank you Ji for that question. 977 00:58:56,370 --> 00:58:59,760 So, um, to respond to that, I'll first start with that example. 978 00:58:59,760 --> 00:59:05,040 So I remember reading an article a few years ago from the former governor of 979 00:59:05,040 --> 00:59:08,780 Kenya Central Bank, and essentially he was saying that there are a number 980 00:59:08,780 --> 00:59:12,620 of issues that come to his table, uh, when it comes to consumer protection 981 00:59:12,620 --> 00:59:14,660 in the digital credit environment. 982 00:59:15,895 --> 00:59:19,595 Take up so much of his time and yet in the context of the larger scheme 983 00:59:19,595 --> 00:59:22,405 of things when it comes to the overall credit markets, the digital credit 984 00:59:22,645 --> 00:59:26,484 environment represents about 10 percent of the overall borrowing economy. 985 00:59:26,945 --> 00:59:34,465 And so I think it's what this speaks to is the stage or the environment and a lot 986 00:59:34,465 --> 00:59:39,084 of digital credit markets in especially in South Africa are at an embryonic stage. 987 00:59:39,124 --> 00:59:40,054 They're still early. 988 00:59:40,514 --> 00:59:42,015 There's still a lot of innovation. 989 00:59:42,045 --> 00:59:42,975 There's new entrants. 990 00:59:43,525 --> 00:59:47,315 Um, and there's also new borrowers and, um, what this leads to is. 991 00:59:48,165 --> 00:59:53,445 Um, undesirable outcomes, both at the borrower level, but also 992 00:59:53,485 --> 00:59:55,355 at the, at the supplier level. 993 00:59:55,895 --> 00:59:59,195 But again, we go back to the principle of impact first priority 994 00:59:59,234 --> 01:00:02,345 and consumer protection first priority of doing, of do no harm. 995 01:00:02,395 --> 01:00:06,374 The role of the regulator is to ensure that the borrowers who are in the 996 01:00:06,375 --> 01:00:11,575 millions are protected from variations of digital credits intentionally 997 01:00:11,575 --> 01:00:15,395 or not, that creates less than the desirable outcomes for customers. 998 01:00:16,200 --> 01:00:20,620 But also an important principle here is to think about the regulator capacities. 999 01:00:21,300 --> 01:00:25,980 And so different regulators in different markets have different, um, regulatory 1000 01:00:26,870 --> 01:00:30,650 capacities, be it technology, be it oversight based on the different 1001 01:00:30,650 --> 01:00:35,869 constitutions to actually implement and protect customers from these laws. 1002 01:00:35,899 --> 01:00:38,619 And so regulators themselves are having to innovate. 1003 01:00:38,699 --> 01:00:41,899 They're having to update how they view the markets and they're having to update 1004 01:00:41,959 --> 01:00:47,120 how they think about The legislative oversight to protect customers, and I 1005 01:00:47,130 --> 01:00:52,550 think the development space at large has, um, come to, um, has, has caught up with 1006 01:00:52,560 --> 01:00:57,969 this, um, with this dynamic and thinking about how can we create sandboxes, for 1007 01:00:57,969 --> 01:01:03,100 example, where, um, a provider can come and they can figure out, uh, they can 1008 01:01:03,110 --> 01:01:06,640 test it in a controlled environment, and we are able to anticipate some 1009 01:01:06,640 --> 01:01:10,140 of these negative consequences before they're actually scaled into the market. 1010 01:01:10,930 --> 01:01:15,000 Um, and so I guess I would say that's one of the aspects that's transferable 1011 01:01:15,060 --> 01:01:19,240 from market from other markets, although we have not directly been involved 1012 01:01:19,240 --> 01:01:22,740 with them, but they do feature in our research is seeing how we can create, 1013 01:01:23,640 --> 01:01:27,729 um, sort of these testing environments that sometimes we do or like on our own, 1014 01:01:27,839 --> 01:01:31,930 um, well, not only in credits, um, using our lab apparatus, we have different 1015 01:01:31,960 --> 01:01:35,610 mechanisms for testing people's ability to understand terms and conditions. 1016 01:01:35,610 --> 01:01:41,165 For example, And what we see is that we have a lot of assumptions around people's, 1017 01:01:41,265 --> 01:01:44,405 especially now that we're speaking extensively about digital credits, 1018 01:01:44,405 --> 01:01:45,974 we often have a lot of assumptions. 1019 01:01:46,405 --> 01:01:51,615 about people's ability to understand and compare information and to make 1020 01:01:51,615 --> 01:01:55,835 decisions that are consistent with their own priorities for their own well being. 1021 01:01:55,985 --> 01:02:01,024 And so, for example, thinking about how people are able to compare, 1022 01:02:01,635 --> 01:02:04,795 um, terms and conditions from the interest rates to the tenure from one 1023 01:02:04,815 --> 01:02:06,435 provider of a kind of loan to another. 1024 01:02:06,785 --> 01:02:10,035 And from some of the research that we've done, um, that's also been 1025 01:02:10,035 --> 01:02:14,045 applied to different regulatory contexts is that People often struggle 1026 01:02:14,075 --> 01:02:17,785 to make calculations because of information asymmetry, for example. 1027 01:02:17,805 --> 01:02:21,565 So in one provider, the information is simple. 1028 01:02:21,595 --> 01:02:25,625 The other one is complex and people's ability to compare financial products 1029 01:02:25,654 --> 01:02:29,290 leads to Um, or their lack of ability to compare financial products leads 1030 01:02:29,290 --> 01:02:34,380 to their inability to switch and their inability to, um, have behavior that 1031 01:02:35,080 --> 01:02:39,439 makes them choose a cheaper option or an option that's more optimal for 1032 01:02:39,439 --> 01:02:43,079 their entrepreneurial activity, for example, and that also has negative 1033 01:02:43,079 --> 01:02:44,389 consequences at a market level. 1034 01:02:44,410 --> 01:02:50,340 So Maybe you have legacy providers that are able to keep customers captive because 1035 01:02:50,350 --> 01:02:52,990 they don't really understand what's what else is available in the market. 1036 01:02:53,050 --> 01:02:56,560 They're not able to compare and they're not able to find another deal 1037 01:02:56,670 --> 01:02:58,850 elsewhere besides the first provider. 1038 01:02:58,870 --> 01:03:02,049 And so those are some of the nuances that we're seeing that from a 1039 01:03:02,049 --> 01:03:06,260 regulatory perspective, the power and the power of information or 1040 01:03:06,260 --> 01:03:07,820 the power of quality information. 1041 01:03:08,195 --> 01:03:13,115 Can help customers behave in a way they're consistent with what they want, but also 1042 01:03:13,115 --> 01:03:16,485 has positive outcomes for the market at large, particularly when it comes to 1043 01:03:16,485 --> 01:03:20,135 competition that can drive down prices and have other positive impacts as well. 1044 01:03:21,600 --> 01:03:22,170 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thanks, James. 1045 01:03:22,170 --> 01:03:25,570 Yeah, I think that's a really critical point on the role of competition 1046 01:03:25,570 --> 01:03:29,370 and, you know, the effectiveness of the market as an intervention in 1047 01:03:29,380 --> 01:03:31,940 furthering into the inclusion agenda. 1048 01:03:32,510 --> 01:03:37,060 So we're about to close our conversation and before we end, since both of you have 1049 01:03:37,060 --> 01:03:41,490 been so good, I'm going to hand each of you a magic clamp with a genie, which is 1050 01:03:41,490 --> 01:03:46,120 going to let you envision what you see as the future of digital financial inclusion. 1051 01:03:46,130 --> 01:03:48,810 So starting with you, Susan, maybe can you tell us. 1052 01:03:49,240 --> 01:03:52,170 What are the kind of outcomes that you expect to see in the 1053 01:03:52,170 --> 01:03:53,610 future of digital finance? 1054 01:03:53,630 --> 01:03:56,330 And what do you think are the steps that will take us there? 1055 01:03:58,700 --> 01:04:02,705 riverside_susan_raw-audio_f_m_podcast studio_0036: So All our research work on understanding, 1056 01:04:02,735 --> 01:04:07,055 uh, financial inclusion, the entire chain through input to output to outcome, 1057 01:04:07,625 --> 01:04:12,195 leads us to believe that the more access to finance, people will get better off. 1058 01:04:12,295 --> 01:04:12,515 Right? 1059 01:04:12,724 --> 01:04:16,074 Irrespective of what is, how rich they are, poor they are. 1060 01:04:16,415 --> 01:04:17,635 Financial access does matter. 1061 01:04:17,655 --> 01:04:20,595 It's not the only thing that matters, but it certainly has 1062 01:04:20,665 --> 01:04:23,025 a non zero significant effect. 1063 01:04:23,425 --> 01:04:24,515 Uh, what is the future? 1064 01:04:24,665 --> 01:04:28,725 I think that that all stands in the hands of the environment, 1065 01:04:28,764 --> 01:04:33,654 uh, of regulation, because I do, I do agree with James, right? 1066 01:04:33,655 --> 01:04:38,285 I think that when people see their neighbors who have access to finance 1067 01:04:38,565 --> 01:04:43,115 being better off, they tend to learn through that process as well. 1068 01:04:43,115 --> 01:04:44,644 I agree with James that. 1069 01:04:45,110 --> 01:04:51,030 Uh, regulators on policy makers, uh, do play an important role in doing the 1070 01:04:51,030 --> 01:04:56,309 learning, allowing or facilitating for people to learn faster, to understand 1071 01:04:56,320 --> 01:04:57,900 better, to get better clarity. 1072 01:04:58,320 --> 01:05:00,650 I remember that our securities markets regulator. 1073 01:05:01,135 --> 01:05:05,525 has made lots of changes on how information about products should be 1074 01:05:05,525 --> 01:05:07,805 more clear in larger pond of the like. 1075 01:05:08,175 --> 01:05:12,464 Uh, but it does say that if we want to go down the path of digital financial 1076 01:05:12,464 --> 01:05:17,115 inclusion, there needs to be a lot more innovation that is permitted in the space 1077 01:05:17,145 --> 01:05:21,725 before we can get those links between people and the financial products done. 1078 01:05:22,580 --> 01:05:23,830 How does that pan out? 1079 01:05:23,830 --> 01:05:28,780 I think that it's all positive the but the question that comes to my mind 1080 01:05:28,780 --> 01:05:32,360 when I think about the global South are who are the people who are going 1081 01:05:32,360 --> 01:05:36,389 to take the business risk in terms of building these models, because there 1082 01:05:36,390 --> 01:05:37,769 is still a lot of work to be done. 1083 01:05:40,730 --> 01:05:41,510 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thanks, Susan. 1084 01:05:41,600 --> 01:05:46,000 James, your, uh, wishes and what it takes to get there. 1085 01:05:49,495 --> 01:05:52,035 riverside_james_ogada_raw-audio_f_m_podcast studio_0037: For me, again, I want to agree 100 1086 01:05:52,035 --> 01:05:54,894 percent with what Susan mentioned is that there's still a lot of work to be done. 1087 01:05:55,564 --> 01:05:58,064 And how I often think of this is a pyramid. 1088 01:05:58,445 --> 01:06:02,825 And so when it comes to inclusion, um, I think there's a lot of 1089 01:06:02,825 --> 01:06:05,495 questions that are being asked for good reason about the livelihood 1090 01:06:05,505 --> 01:06:06,945 outcomes associated with inclusion. 1091 01:06:07,604 --> 01:06:11,175 But also I do believe that those gains shouldn't be watered down 1092 01:06:11,184 --> 01:06:14,795 because it's a foundation upon which other things can be built upon. 1093 01:06:15,254 --> 01:06:17,635 So at the base of this pyramid, you have inclusion. 1094 01:06:17,665 --> 01:06:22,460 So getting the masses into formal or informal, uh, financial systems 1095 01:06:22,460 --> 01:06:25,400 that they can, they have options of different ways to transact. 1096 01:06:25,420 --> 01:06:28,310 They have options of different ways to save different ways to borrow. 1097 01:06:29,220 --> 01:06:31,300 Now, what comes beyond that is usage. 1098 01:06:31,640 --> 01:06:36,040 So thinking about how not only are we giving these people access, you know, 1099 01:06:36,079 --> 01:06:39,290 you get them an ID, you get them an account or you get them like a mobile 1100 01:06:39,290 --> 01:06:43,720 phone, but getting them to actually use these products in a way that is 1101 01:06:43,760 --> 01:06:48,679 convenient for them in a way that Helps them get other tertiary benefits that 1102 01:06:48,679 --> 01:06:52,730 would come after and so naturally at the pinnacle of this pyramid I would 1103 01:06:52,770 --> 01:06:57,859 say that that's where the value addition is And so this is like susan said where 1104 01:06:58,080 --> 01:07:02,205 it's a more difficult question, but I do believe it's very surmountable So 1105 01:07:02,215 --> 01:07:05,725 how do these different initiatives, how do these different products actually 1106 01:07:05,795 --> 01:07:07,925 add value to people's financial life? 1107 01:07:08,445 --> 01:07:10,495 How do they increase household resilience? 1108 01:07:10,824 --> 01:07:15,184 And how do they help enterprises grow and create more jobs is where a 1109 01:07:15,185 --> 01:07:19,605 lot of, um, the financial inclusion, um, industry is looking at is like 1110 01:07:19,614 --> 01:07:21,715 that value creation, um, pinnacle. 1111 01:07:21,735 --> 01:07:25,605 But then also, like I mentioned before, is the diversity of the different 1112 01:07:25,605 --> 01:07:26,995 contexts in sub Saharan Africa. 1113 01:07:26,995 --> 01:07:31,615 For example, some markets, need more attention to the inclusion stage. 1114 01:07:31,910 --> 01:07:35,400 Some markets like in Kenya need more attention to the value addition 1115 01:07:36,010 --> 01:07:39,660 stage where we've seen people aggregated because of aspects like 1116 01:07:39,940 --> 01:07:42,580 money, there's data available, but what do we do with that data? 1117 01:07:42,830 --> 01:07:47,319 How can we actually optimize the financial lives of people who 1118 01:07:47,320 --> 01:07:49,400 are using these products that have been using them for years? 1119 01:07:49,440 --> 01:07:53,970 And I think that's the pinnacle that my team and I in particular are really 1120 01:07:53,970 --> 01:07:56,020 excited about working with our partners. 1121 01:07:57,825 --> 01:07:58,315 riverside_smriti_raw-audio_f_m_podcast studio_0038: Thank you. 1122 01:07:58,345 --> 01:07:59,175 Thanks so much, James. 1123 01:07:59,175 --> 01:08:00,335 And I think that's interesting. 1124 01:08:00,335 --> 01:08:03,255 We seem to have come a full circle because the, you know, the peak 1125 01:08:03,255 --> 01:08:07,325 of your pyramid really points back to the outcomes limb of what Susan 1126 01:08:07,325 --> 01:08:08,775 has been explaining from our work. 1127 01:08:08,775 --> 01:08:12,865 And so we all seem to be kind of on the same page of understanding the 1128 01:08:12,865 --> 01:08:16,535 importance of outcomes in this whole conversation, the key learning for 1129 01:08:16,545 --> 01:08:19,795 me has been that, you know, you just don't need good intentions or good 1130 01:08:19,795 --> 01:08:24,645 policies or a good financial product to actually get to the finishing line on 1131 01:08:24,685 --> 01:08:26,905 terms of outcomes you need a lot more. 1132 01:08:27,500 --> 01:08:31,150 And hopefully for everyone who's been listening, we've managed to bring out 1133 01:08:31,160 --> 01:08:35,350 the importance of interdisciplinary work in this space and the role that 1134 01:08:35,350 --> 01:08:39,690 the research community, which all of us here are a part of, has been playing in 1135 01:08:39,690 --> 01:08:43,690 our own ways to deepen the understanding of financial inclusion and kind of 1136 01:08:44,110 --> 01:08:48,280 help the ecosystem assess how we are faring in terms of measurable outcomes. 1137 01:08:48,930 --> 01:08:52,510 So with that, I'm going to thank you once again, Susan and James for this 1138 01:08:52,510 --> 01:08:57,080 rich and insightful conversation and to the intellectual foundation for 1139 01:08:57,080 --> 01:08:59,280 inviting us to this episode of the salon. 1140 01:08:59,330 --> 01:08:59,770 Thank you. 1141 01:08:59,780 --> 01:09:00,260 Have a good day. 1142 01:09:01,199 --> 01:09:01,780 riverside_susan_raw-audio_f_m_podcast studio_0036: Thank you.