Discussing finances is never easy. If you are sitting across from someone who has accumulated a lot of debt and ask them about their credit card use, you will see how their shoulders immediately rise up and their face tenses up. If you ask someone about their new flat screen TV, they will probably light up, but then right after tense up as they recall the amount of money they owe on their credit card to pay it back. A conversation about finances is usually never ‘light’ and certainly not one you can have very informally over coffee, no matter who you are talking to, whether it is someone who makes a decent living or someone who makes minimum wage. When we study financial instruments, services and behaviours, we are dealing with a very private and delicate dimension of people’s lives. In order to enter this universe and collect reliable data, we have to use research methodologies that are able to create a rapport, trust, and confidence with interviewees. Moreover, this is a theme surrounded by taboos and in many cases shame and discomfort. Because of this, a discursive approach is not able to cover all the details or the unconscious choices that are only made explicit in practice.
In September 2011, CGAP’s Technology team invited the Brazilian firm Plano CDE to develop a study that would help them understand the behaviour, needs and expectations of low-income Brazilians in relation to financial instruments. The goal of the study was to contribute to the development of a new financial product or service that would attend to the needs of lower-income consumers and enhance their relationship with financial institutions. The research was intended to study the needs and behaviours of the population at the bottom of the pyramid); this meant that the product and business model developed needed to have scale to operate in Brazil, while at the same time being locally relevant. This is particularly important in the case of Brazil as many international companies fail to make their products competitive against Brazilian products.
When considering the peculiarities of the Brazilian financial sector and of the target section of the public, we used two methodologies: ethnographic visits and co-creation workshops. These methodologies are also quite useful in other sectors such as health, education and technology. They are especially useful when investigating the practices, needs and barriers related to a particular industry and in focusing on a segment of the public that relies on very specific social practices to use such instruments.
We conducted a number of home visits in order to understand the social and cultural background of low-income Brazilians. This methodology allowed us to better understand interviewees’ lifestyles, their family structure, and their perception of and relationship with financial instruments. The advantage of this methodology is that we were able to contextualize the real role of financial instruments in everyday life and to map the use of informal instruments in the subjects' social networks. Ethnographic interviews in particular can be extremely helpful in revealing the idiosyncrasies between discourse and practice.
Participants were recruited through a methodology called snow ball sampling, which considers the role of social networking and its influence on the consumer’s decision-making processes. This is a non-probability sampling technique in which a person with a specific profile will point to others in their network, thereby helping to find hidden populations and profiles. Snowball sampling is a useful tool in building networks and in increasing the number of participants. For this reason, it is useful to find the individuals that are central references (or ‘nodes’) in their social network and neighbourhood. Using this recruitment technique, we found individuals who were “network nodes” in low-income neighbourhoods in Recife and São Paulo. We interviewed men and women, who were formal and informal workers belonging to socioeconomic classes C and D (households with a family income of R$ 600 to R$ 3,033.00).
- The study found that class C households have a greater number of people who are formally employed, thus ensuring a greater certainty of income. This income segment is interested in increasing their consumption and in their own comfort. It is common to find families that are paying for their own homes. They have access to paid leisure activities (such as the cinema and eating out) and they are able to indulge a bit in other forms of consumption (frozen foods, yogurt, chocolate, etc.). This segment also has a greater range of financial instruments at their disposal.
- In contrast, families that belong to class D have unpredictable incomes due a high incidence of informal work. These families are searching for access to better opportunities and still have difficulty acquiring certain basic goods and services. Families in this income range tend to share their backyards with extended families. Their leisure activities are more limited and they can indulge even less than class C. In terms of their relationship with finance, they usually know the financial instruments available to them, but have a distant relationship with them. They also have difficulties understanding the rules of financial institutions and the mechanics of financial instruments.
Our co-creation workshop consisted of a dynamic session where some of the interviewees from the ethnographic visits were invited to work together and share their opinion on financial services with a larger group, generate ideas for financial services and create a financial product and/or service that fits their needs.
To warm up and create rapport between the participants, they were prompted to talk about their background, families and social realities. In addition they shared their experience in the use of financial instruments and payment methods, voicing their difficulties with some of them and suggesting ways to improve them.
From this list, they selected the most relevant difficulties and opportunities and used them as a starting point to generate ideas and create solutions. They were invited to create a product or service to help them or their network make better use of the family budget. As a framework for idea generation, we used a canvas for product and business model generation. The group was invited to put together a presentation on the product proposal using flipcharts, collages, and drawings. In small groups, they presented their ideas and were also asked to describe a typical day in which they would use their created product created to test its applicability.
Ethnographic and co-creation methodologies are widely used in other industries. These methodologies have proven particularly helpful in the area of financial services. As noted, for the average consumer, talking about income, expenditure and financial behaviour is usually difficult. These methodologies make participants feel more comfortable, making them more open and willing to talk about their financial lives. Once there are others participating in the conversations, they get animated about their own circumstances and are more willing to share and open up about their experiences.
Co-creation allows consumers themselves to design products that are useful for them, based on the limitations they see in their own lives. They are able to think deeply about what works for them and what doesn’t, suggesting features that would be useful or even essential in their own lives. Even though the product created might not be technically or financially feasible, it gives the supplier a good idea of what would be attractive and helpful to the consumer.
We often found ourselves in situations where we didn't actually hear what really happened to someone until the very end of an interview. We conducted a number of interviews where at the beginning of the conversation an interviewee told us: “No, I don’t have a credit card.” After almost an hour of conversation, the interviewee then admitted to us either that they used to have a credit card and were blacklisted, and therefore didn’t want to have anything to do with credit cards, or that they could not get one anymore. Individuals' financial experiences are a delicate topic of conversation and finding the right venue to foster conversation is essential. The more we learn about the consumer, either as providers or as researchers, the better equipped we will be to provide people with the right product and experience to improve their lives and ease the burden of often difficult financial situations.