Design Research for Financial Inclusion

Despite over three decades of strong economic growth, approximately 400 million Chinese are still without access to basic financial services. In recent years, more than 30,000 branches in poor and rural regions have closed, leaving more than 64 percent of these populations unbanked. Citizens at the bottom of the economic pyramid lack the means to save for their children’s education and protect their livelihoods through insurance. They cannot send and receive money or make purchases on credit, preventing many from realizing their full potential and improving their lives.

Mobile banking has the potential to change this status quo in China. High mobile penetration rates, extensive agent networks, and an intensive reliance on remittance payments in rural areas suggest China is primed for the deployment of the kind of national, mobile-based remittance system that has found success in countries such as Kenya, the Philippines, and Paraguay. IMTFI engaged Reboot to undertake an ethnographic study of marginalized communities in China to inform the design of mobile financial services tailored to these underserved populations.

Our approach was guided by the dual objectives of presenting both the human and business cases for advancing financial inclusion in China: the former to raise awareness about the debilitating impact of financial exclusion; and the latter to encourage action by highlighting the significant market opportunity. China’s migrant worker population alone numbers 250 million strong and remits an estimated $132 billion each year.

Select services for this project included:

• Design Research

  We engaged a diversity of respondents in urban, rural, and remote areas of the country using both purposive and snowball sampling. Respondents included village leaders, farmers, formal businessmen, grey market street hustlers, street vendors, bank workers, mobile shop owners, professors, students, construction bosses, employment agents, sex workers, and doctors. Our aim was to paint a holistic portrait of the financial lives of distinct marginalized populations in China.

• Strategic Communications

  Recognizing the multiple public and private sector stakeholders required to advance financial inclusion, we designed and implemented a public engagement campaign to raise awareness among policy specialists, development practitioners, journalists, and other relevant professionals about the issue in China. This included a launch event of our research, media engagement strategy, and direct outreach.

Our research revealed that China’s marginalized populations—such as migrant workers and rural citizens—turn to informal financial services because they lack viable alternatives to maintaining their livelihoods. These informal service relationships are foremost rooted in trust, born of mutual reliance, and built on powerful and longstanding social connections. For example, migrant workers rely on laobans, or labor bosses, to find work, keep their wages safe, and send money home.

Recognizing that new financial products must take current practices and the motivations behind them into careful consideration, we developed a product concept for a mobile remittance service to demonstrate how the financial needs of China’s marginalized may be better served. Branded M-Fu (Fu means “to pay”, “to deliver”, or “to entrust” in Mandarin), the service builds on existing behaviors and networks, illustrating how a new mobile remittance service targeting China’s migrant workers could be operationalized.

Our findings and product concept, were featured by the Center for Financial Inclusion and World Policy Institute and in a variety of media, including The Atlantic, Huffington Post, Monocle, Tea Leaf Nation, Shanghaiist, Tech in Asia, and Technode.