After introducing the National Food Securities Act in 2013, Government of India mandated states to adopt the same by modifying their Public Distribution Systems (PDS). States had the option of choosing from two alternatives: Biometric Authentication of Physical Uptake (BAPU) and Direct Cash Transfers. The Department of Food & Civil Supplies, Karnataka decided to adopt a modified approach – Food Coupons. Based on its evaluation of this new system MicroSave advised the department to make additional changes to come up with a system called Cash Coupons. The cash coupon system addresses all the existing problems of PDS viz. leakages, quality and convenience. It does so by drawing the best from both BAPU and cash transfers to come with a viable third alternative.
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Mobile Wallet Design for Oral Users
The briefing note is to accentuate the need to incorporate usability aspect in the designs of various payment portals and user interfaces. There is a need to customize the screens of various interfaces and portals in accordance to customers’ requirements.
“Usability is something which the consumer are expecting from a product. Whilst at one time it was expected that high tech products are complicated and usability was seen as a bonus, lack of usability is now seen as major source of discontent with consumer products.”
– Patrick Jordon
The effect of user characteristics on usability can be identified by their previous experiences with similar product and their knowledge relating to the task which is independent of the product being used to complete that task. Further it can also be identified by the population stereotypes, by paying attention to the needs of those with disabilities and also by emphasizing on age and gender characteristics of the beneficiaries.
“If we want to help people make better decisions in the future, then we need to understand the psychology of screens, and how people make choices in an age of too much information and too little working memory.”
– Shlomo Benartzi and Jonah Lehrer
Various component of usability which can be checked on field visits are guessability, learnability, experienced user performance, system potential and system reusability.
We were able to check only guessability and learnability, with help of the medium fidelity prototype, due to time constraints. However, many principles of usable design like consistency, visual clarity, language compatibility were also touched upon.
The Four Zones: A Missing Chapter in the Financial Inclusion Guidebook
As of March 24, 2017, a little more than 9 million dormant PMJDY accounts were frozen, because the account holders had not transacted in over a year. A great deal of effort has gone into government initiatives to increase financial inclusion, but perforamance indicators such as dormancy in the PMJDY accounts is a reason for worry. The Government of India’s Economic Survey Report 2016-17 too finds that active use of PMJDY accounts is 40% (active defined as at least one transaction completed in the last 90 days). There could be many reasons for poor account activity – it could be that the product delivery is not quite right (the Economic Survey highlights that distance from nearest bank and the number of people per branch might explain poor account activity rates), or that the products themselves are not suitable.
We sought to answer this riddle with our usual customer-centric approach. We focused on the four personas that represent the majority of the mass market that has been the target for financial inclusion in India: a farmer, a daily wage labourer, a clerk who works in the city, and a security guard.
Shankar Singh is a daily wage earner. Most of his earning of about INR 8,000 (USD 117) per month is committed for household essentials and debt repayment. Since he is risk averse, and wants to avoid the hassles caused by distance, low literacy levels etc., he saves in a box at home. When the money runs out, Shankar is susceptible to falling into debt. Jai Prakash is a security guard who earns a salary of INR 8,000 (USD 117) per month and by the third week, when the money runs out, he turns to his employer for an advance on his salary and/or to his friends for interest free soft loans. He prefers the ease of such informal borrowing avenues and discounts the unreliable nature (in case the employer or friend is unable lend him money) or costs (e.g. interest paid) of these sources of cash. Sundar Devi is a dairy farmer and her daily income amounts to about INR 20,000 (USD 294) per month. In many months, this is enough to manage her household expenses and even put away some savings. Vijay Thakur, a salaried clerk, earns a little under INR 20,000 (USD 294) a month and meticulously saves, invests in insurance and takes loans for specific goals like child’s education, weddings etc. In a financially stressed situation, Sundar Devi and Vijay Thakur compromise on savings and investments, and may even fail to honour monthly loan repayment instalments. Such financial turbulence can be due to sudden spikes in unforeseen expenditure such as sudden illness, an investment in a business opportunity, a family function, or a life event, etc. (Read more about their lives here).
The two of the key determinants for all four personas’ financial decisions are the quantum and frequency of income – representing ‘how much’ and ‘how often’ for the mass market. These two together define the ability of a family to meet regular household expenses, planned future expense and/or any eventuality. These two factors also play a significant role in paving the way for four discreet financial phases through which a household oscillates.
A household’s disposable income influences the financial behaviour, which changes as the household moves through these four phases:
- The comfort zone when money inflow is enough to meet household expenses;
- The fluid zone when the household money has almost run out;
- The stress zone when small loans are needed to smoothen consumption; and
- The blast zone when credit is not enough, or simply unavailable, and liquidating household (or in the very extreme cases, business) assets is the only way to sustain basic household financial needs.
The mass-market keeps moving through these four zones and a closer look will provide a deeper understanding of the financial choices adopted by them to navigate through these phases.
The household in these zones might have a PMJDY account in a branch close to home, but still lack financial robustness and income security to use these accounts. The challenge, as we see here, is developing a versatile set of tools to service the mass market whilst accommodating the vari0us and changing money management strategies of different households. For instance, how can we offer Shankar a formal savings product that satisfies his liquidity requirements (accessibility), small loans for Jai Prakash without high interest rates, and better investment options for Sundar Devi and Vijay Thakur so that money in the boxes at home can be unlocked, nurtured and grown?
Expecting financial inclusion programmes to succeed by relying on easy credit, a bank account, or enabling hassle free payments oversimplifies the complexity of the challenge. None of these laudable initiatives has attempted to create the behavioural changes that are essential for financial inclusion. As a result, they have only seen limited success – either for specific customer segments or for a specific geography (for instance, there are financial services specifically targeted for migrant labourers, DBT beneficiaries and bill payers). The mass-market prefers tools that provide them with a tangible, trustworthy, and easily understandable approach to manage their money. They want clear visibility into their money, and (ideally) how it is working for them. So, for example, they see and know the whereabouts of creditor/debtor and friends/relatives. They are looking for tools that help them quickly replenish their liquidity when the need arises, ideally without trapping them in debt spirals.
While interacting with Shankar, Sundar Devi, Vijay, and Jai Prakash we kept asking ourselves if there is a product/service that can work for them both in the comfort zone and the stress zone. We did not find any. In fact, we found that existing financial services designs fall short of incorporating geographical, cultural, and literacy heterogeneity, critical to enhance usability. For example, leading mobile wallets rely on aesthetic abstract icon designs supported by text to serve its customers. However, when unassisted, such abstractions mean very little to an illiterate or a neo-literate person like Shankar and Jai Prakash. (Please see our recent work that identifies new dimensions to mobile wallet designs for illiterate and innumerate people).
We are at a juncture that calls for introspection on current design concepts to create a new breed of financial tools (not products) for the mass market. With myriad complex cognitive factors defining financial behaviour, creating products for specific customer segments or use cases will always have limited reach. Given the agenda of financial inclusion, service providers should create a suite of flexible and intuitive money management tools that cater to multiple use-cases, and meet the requirements in all the four zones for the multiple segments of mass market.
Understanding Karnataka’s Food Coupon System
The Department of Food and Civil Supplies, Karnataka began reforming public distribution by rolling-out Food Coupons in Bangalore. While it was a well-meaning and thought-out idea it resulted in much heartburn among beneficiaries. While beneficiary distress was justified, the system itself was a large improvement over the one it replaced as it increased transparency and enabled better tracking of demand. The hiccup was only caused due to hurried implementation and poor communication – a common feature among many large scale government programs.
Learnings from Cash Economy for DFS Providers
Shakuntala is a 48-year old housewife, staying with her husband, two sons, their wives and a grandson in Siswan village, Varanasi. Her husband manages all the household expenses. In his absence, she goes to buy groceries at times. She, however, is solely responsible for purchasing clothes and jewellery for all the family members during the marriage or any other festival. Any purchase she makes, Shakuntala needs to keep an account and has to inform her husband about the expenditure. Although Shakuntala has never attended school, she is adept in counting currencies and doing basic calculations using some very concrete ways – often used by oral people.
“Orality” refers to the modes of thinking, speaking and managing information in societies where technologies of literacy (especially writing and print) are unfamiliar to most people. Orality encompasses not just speech but a wide range of modes for personal and collective information management that are preferred to text in oral cultures – from pictures, tallies and cash, to apprenticeship, rituals and song.
There is a very large ‘oral’ population like Shakuntala (either illiterate or innumerate or both) who cannot rely on pen and paper-based calculations. This forces them to mental counting and reduces their speed, especially when dealing with large numbers, as they face difficulty in decoding numeric or arithmetic notation.
To better understand both the opportunities and limitations faced by oral people in using financial services, we conducted research in different villages across three states in India – Uttar Pradesh, Punjab and Bihar. We observed that oral people get maximum exposure to numbers when they start participating in cash economy (household or personal monetisation) since this is the time when they begin to apply basic concepts of mathematics, such as addition, subtraction, multiplication and division. This helps them in money management, business and household expense management, and largely governs their financial behaviour.
Our research findings help us strengthen this observation. We have considered three parameters to evaluate the numeracy capabilities of the oral segment:
1) schooling,
2) age, and
3) gender
Basic mathematical problems based on real-life situations were asked to the oral respondents. In the first attempt, they had to calculate the problem mentally. In case the respondents gave incorrect answers or were unable to solve this problem, they were given a stack of cash to help them solve this problem. We constructed a simple indicator with a range of 0-7 (1 point for each right answer calculated mentally).
The average score was 4.2 for the sample. Neo-numerate respondents (5.0) scored substantially better than innumerate ones (3.9).
We found little correlation between mental numeracy skills and schooling. There were respondents like Shakuntala, who have never attended school but were prompt and accurate in answering questions related to basic addition, subtraction, multiplication and division. These respondents however faced problems when our team asked questions testing complex calculations, including interest rates1 and division.2
Older respondents (especially in the age bracket of 46-60 years) outscored younger ones. The question on long division was a bit complex in nature and involved some application of estimation. A direct relationship was observed among the percentage of people answering it correctly and their age-group, i.e. a high percentage of people in the higher age-group answered the question correctly.
On average, young people in the sample had weaker mental calculating skills than unschooled people, and the 16 respondents aged over 45 had mental calculating skills that were equal to those of the 19 respondents who had completed one or more years of post-primary schooling.
Females scored better than expected (3.9 out of 7) as most of them managed their household expenses and were exposed to conducting basic calculations.
What does it tell us?
Individuals who are more actively involved in the economy (either earning money outside their home or actively managing household expenses) have less trouble dealing with numbers. Continual practice sustains or can even enhance their cognitive capabilities. For example, a labourer who paints houses must calculate input costs per square feet. A vegetable vendor must calculate price-per-quantity of different vegetables bought and sold (including spoilage) and all-in profit margin. A housewife who handles household expenses must buy groceries for the family, pay electricity bills and calculate/track total household income and expenditure. Thus, through the frequent necessity of processing numbers, costs and cash, people become quick in calculations.
Like Shakuntala, Ramesh is an oral person. He was asked a question on subtraction: You are in the market on Saturday morning, and you wish to buy a bag of rice from the shop that costs ₹780. How much change should you get from ₹1,000?
He did a mental calculation and arrived at the answer ₹320. Since he was unable to give the correct answer at the first attempt, he was handed ₹5,025 and asked to recalculate. Within a minute he did the calculation with the help of the currency and answered ₹220, correcting himself. When asked how he calculated the first time, Ramesh explained that while calculating mentally he subtracted using two steps: (i) ₹1000 from ₹700 and (ii) ₹100 from ₹80, thus arriving at ₹300 and ₹20 respectively and then he added these two numbers. He was not able to comprehend that ₹780 was a number closer to ₹800 and hence the approximate answer should have been slightly larger than ₹200.
In our field work, we found that cash was being used by oral adults as a kind of simple calculator, which gave them access to ways to calculate larger numbers than they could otherwise reach. The paper rupee banknote offers oral individuals many clues to skills that support microenterprise and household management. For example, cash involves:3
- standardised nominal values, with standardised relationships between them, which refer and evoke the Indo-Arabic number system at the base of the financial system;
- an explicit formal zero and place value;
- denomination values that operate in the useful reference range of the local economy and facilitate rapid large-number counting and processing; and
- a highly developed and established ecosystem of institutions and cultural practices and habits.
This means that the cash economy has become an informal school and reference points for mental numeracy. In this ‘school’, the incentives to pay attention in class are very high.
Does DFS solution provide learning for the oral segment as cash does?
In India, as in many countries, the cash economy appears to be more accessible to the oral segment than the financial system and economically active individuals respond by acquiring surprisingly advanced mental numeracy skills. However, their inability to read arithmetic notation restricts them from directly accessing financial services as they may still have to depend on their literate counterparts. With the advent of technology and mobile wallets being introduced, people today have access to easy and convenient banking services. Since these wallets are highly text-intensive and filled with abstract icons, their usage is limited to the literate segment and does not extend to the oral segment.
An understanding into orality in India does provide a great understanding of why some of the digital innovations (digital wallets, payment interfaces) did not achieve mass scale adoption. In the same line, it triggers the thought that digital interfaces need to be carefully designed, considering the behaviour of oral people.
1Question on interest rate: What is 100% of INR 1,000?
2Question on division: If you have to set a goal of saving ₹50,000 in 5 years. How much do you have to save each month to reach your goal?
3Matthews, Brett Hudson (2016). Oral Financial Numeracy, My Oral Village Inc., Toronto, p. 26.
Lessons from Orality for Digital Financial Services Development
At 6:30 a.m.,in a busy wholesale vegetable market on the outskirts of Varanasi, Shanti Devi is haggling with the wholesale vendor of cauliflower. The price is negotiated at ₹300 a sack. Shanti takes out two ₹500 currency notes from her batua (cloth purse) and hands it to the vendor for two sacks. The vendor hands her ₹400 in change, which she quickly confirms mentally.
Shanti has not been to school and is not able to decode large written numbers (3 or more digits in length) or text. The numbers and text written on ₹1,000 and ₹500 notes do not communicate their value to her.
How does an oral businessperson like Shanti Devi calculate the price of cauliflower, count currency, or even recognise currency when she hardly knows the numbers or alphabet? Probing into these will lead us to a language that is understood by not only her but also millions of people like her.I
We asked a sample of oral people like Shanti Devi to perform certain tasks, like recognising currencies, counting money and performing some arithmetic calculations. Our observations offer useful insights into how this segment should be treated by financial services providers (FSPs).
Recognising currency denominations
Shanti Devi could not read written numbers but she could easily recognise any currency given to her. She cross-checks colour, relative note size and imagery against each other. She may also observe the number of zeros in the number printed on the note. Taken together, these clues are always adequate for Shanti to total the amount, though individually they are not.
- When fake currency notes were given to Shanti and other respondents with the amount clearly marked but without correct colours or relative sizes, participants mistook the ₹1,000 for the ₹20, as the colour of both the fake notes was similar.II
- Asked to count fake currency notes of different denominations but the same size, some confused the two denominations with each other.
Reliance on redundant clues is common among school learners of arithmetic. FSPs can provide information on large numbers in multiple formats: for example, through voice on a mobile phone, or images of currency notes accurately and proportionately rendered, to enhance confidence.
Counting money
We asked 56 individuals like Shanti Devi to count ₹5,025, in a stash of 40 notes and coins. Based on initial screenings by our team, not a single person could decode a 4-digit numeral string (like ‘4,702’ or ‘5,097’). Nevertheless, 35 respondents (63%) accurately counted the cash. However, they varied widely in skill – some took longer and were more likely to err, while others counted quickly and rarely made a mistake.
- The least experienced tried to keep running cash totals, without organising the notes first. This method is stressful and rarely yields a correct answer.
- More experienced counters have learned to organise notes in groups, which they can then add together. Nevertheless, to reach a correct total, these groups of notes also have to be easily processed: the sub-totals have to be few and easy to remember.
- Skilled counters first form one high-value group with an easy total to remember (such as ₹4,000), and then clean up the rest when this essential sub-total is securely memorised.
- Skilled counters try to chunk currency in 10’s, 100’s or 1,000’s as addition or subtraction of one is the easiest.
For oral individuals, cash is a bridge to large-number understanding. Those who cannot read Indo-Arabic code (e.g. ‘4,702’) can arrive at the number using cash notes and coins. However, the speed at which they do this varies considerably. FSPs should not expect oral customers to process large numbers quickly. If given time, however, they often succeed, increasing their confidence.
Calculations
Shanti bought two sacks full of cauliflower and each sack had around 48 to 52 cauliflowers. The total cost of the two sacks is ₹600. She knew that to make a profit she must sell the cauliflowers at ₹10 apiece. She also knew that some pieces would sell at ₹12 to ₹15 while some will sell at ₹8 to ₹10 apiece. After some waste, she expects her total revenue to be around ₹1,000 and profit of around ₹200 a sack.
Respondents were surprisingly good with these sorts of calculations. We asked them three questions. The first question involved a mental calculation of 5 X 25. The second involved division of 50,000 by 5, while the third involved division of 50,000 by 60. Most were able to answer the first two questions accurately, and nearly half came within a reasonable estimate range of answering the third (between 750 and 900).
When cash is at stake, errors are very stressful, so there are significant incentives to learn. Neuroscientists have found that the human mind has very limited ‘working memory’.III In school, we learn facts like the times-tables and algorithms like multiplication and division by constant repetition and practice. These mathematical tools economise on our working memory, offering very powerful shortcuts that support fast, accurate and low-stress numeric processing.
Without these tools, unschooled adults use cash as a simple calculator that gives them access to ways to calculate larger numbers than they could otherwise reach. Without multiplication-tables, for example, working out the value of seven ₹500 notes cannot be done by multiplying “5X7”. Instead, one will count “500+500+500+500+500+500+500”. This process is longer and involves greater risk of error (“how many “500’s” have I added so far?”), especially under time pressure. When available, rupee notes will be used to support calculations.
Lessons for FSPs
While developing digital financial products and services for the oral market segment, FSPs can adapt their interfaces in ways that accommodate oral habits and practices. Oral customers may use multiple clues to decode large numbers, and with time, they may graduate to more advanced cognitive tools provided through schooling.
In fact, such an approach can be used for all facets of financial services development. For example, while designing financial literacy campaigns, designers can build on ways that people like Shanti manage money. See also our pitchbook on ‘MoWo mobile wallet design for the oral segment’.
iAs per latest data, around 264 million adults, aged 15 or more, in India are illiterate.i There are also many millions of ‘neo-literate’ individuals with very weak reading and writing skills. Illiterate and neo-literate individuals together form the ‘oral’ market segment, of which nearly two thirds are women. “Orality” refers to the modes of thinking, speaking and managing information in societies where technologies of literacy (especially writing and print) are unfamiliar to most people. Orality encompasses not just speech but a wide range of modes for personal and collective information management that are preferred to text in oral cultures – from pictures, tallies and cash, to apprenticeship, rituals and song.
iiFieldwork was done in pre-demonetisation period.
iiiThe classic paper on working memory is Baddeley, Allan D., and Hitch, J.G. (1974). Working memory. In G.H. Bower (ed). The Psychology of Learning and Motivation: Advances in Research and Theory. Vol. 8, pp. 47-89. Academic Press, New York.