Financial Services

Poor families around the world face various financial challenges and have differing financial needs. Their income may be irregular and varied – generated from different sources throughout the year or even in the span of a single day. A bad crop yield, a sick child, the death of a parent can quickly topple a family’s financial balancing act. Managing these complicated demands to achieve short- and long-term goals requires a full range of financial services designed with the customer firmly in mind.

Here are just a few examples of the diverse financial needs of poor people (there are many more):

  • Many smallholder farmers need financing for fertilizer or seeds;
  • Some observant Muslims need products that do not use interest;
  • It is common for women to need a way to save discreetly;
  • Youth often benefit from small-value savings accounts;
  • City laborers need convenient ways to send money to family members in remote areas.

Photo Credit: Nayan Sthankiya, 2013 CGAP Photo Contest

Given financial needs such as these, poor customers need to be able to access and effectively use a range of financial services to improve their lives and to truly experience financial inclusion. The basic basket of products generally are savings, credit, payments, remittances, insurance and pensions.

More and more providers in recent years have attempted to expand offerings, but not without challenges. Traditional microfinance institutions have found it difficult to go beyond credit. While digital financial services show great promise, payments are the only digital financial service that has reached scale so far. The business case for offering products such as insurance and small-balance savings is not always obvious. In all scenarios, providers struggle to go beyond adoption to active use of a product or service (e.g. only 30 percent of registered mobile money accounts globally had been used at least once in three months).

CGAP over the last few years has worked with financial service providers and their customers to better understand what it takes to create and offer financial services that poor customers truly value and will actively use. Using new methods of products innovation, including an approach known as Human-Centered Design, CGAP came to better understand the limitations of product design alone. Creating and offering poor customers services they will adopt and actively use comes down instead to customer experience. Customer experience includes products but also encompasses channels, customer service, customer empowerment and much more.

CGAP continues to work with providers and customers to further study and define the elements of customer experience. Recognizing that no one type of provider will be able to overcome the very different business model challenges of specific products, CGAP also seeks to encourage the development of an ecosystem of financial service providers that serve low-income markets effectively and sustainably.



15 August 2017
Customers are turning to formal channels that use digital and mobile technologies for remittances because these are often able to offer services at lower costs. As more customers turn to formal services, remittances will have an even stronger developmental impact, notably in countries where protracted humanitarian crises affect large numbers of people.
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English (91 pages) | Arabic (12 pages)
10 August 2017
Financial services providers for low-income customers typically believe that their business case is based on expanding the number of accounts or the number of transactions made by these customers. This is only part of the equation to business success.
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English (57 pages)

From Our Blog

Man behind counter in Kenya
09 November 2017
1 comment
In Kenya, where nearly everyone knows about mobile money and a majority live within walking distance of an agent, why do nearly 2 in 10 adults lack access to formal financial services? And what can be done to reach them?
Tanzanian merchant
20 September 2017
A behavioral economics experiment in Tanzania increased customers' savings by up to 11 percent using SMS messages about the balances of better savers.