Exploring the use of digital financial services in daily life

Snapshot 3: “How do clients use digital finance in daily life and daily practice?” is one of 16 learning themes designed to address a range of topics within the digital finance space. The FiDA Partnership synthesizes and disseminates the digital finance community’s knowledge of each of these learning themes as “Snapshots” that cover topics at the client, institution, ecosystem, and impact levels. The Snapshots give a current view of “What We (in the digital finance community) Know” about the topic in question, highlight “Notable New Learning” and call attention to “Implications” for future research and investment.

When it comes to the adoption of digital finance, the data says it all. In 2017, there were 690 million registered mobile money accounts globally, and  sub-Saharan Africa accounted for almost half of these registered mobile money accounts (GSMA). While access challenges persist, the industry is doing better and better at getting digital financial services into the hands of low-income, underserved individuals.

However, researchers know less about what individuals do with digital financial services once they have adopted them. The available data indicates that the most popular services are  remote payment and transfer services, which are  typically used on a monthly basis. This  data unfortunately reveals little about exactly why clients use (or don’t use) specific digital finance products. This knowledge gap impedes the digital finance community’s ability to drive “effective use” of these services and ultimately  hampers  meaningful financial inclusion. As discussed in FiDA’s Learning Advances in Digital Finance 2017, Meaningful financial inclusion is not achieved simply through 'access to' or 'the ability to use' these services. It is achieved through the effective use of these services.

Key findings

To drive “effective use,” the digital finance community needs to understand not only the breadth and frequency of use, but also, and perhaps more importantly, the rituals of digital finance use and the motivations to use (or not use) a given digital financial service. For example, why did one provider see customers cashing-in at one location and cashing-out at another location 8 km away the next day? Why do customers save through bundled digital savings and credit services? Are they saving towards a fixed goal, or are they just trying to increase their potential loan size limits?  Unpacking the nuances of use brings to light deeper insights around how the digital finance community can better drive regular, effective use of the digital financial services on offer.

Snapshot 3 reviews current research on the breadth of use, frequency of use, and rituals of use. As noted above, breadth of use is generally limited to a few payment and transfer services and frequency of use tends to be monthly rather than daily. To date there is limited research around the rituals of digital finance use. Delving into rituals of use suggests that individuals repurpose digital financial services to fulfill their own needs, that clients use  single products to fulfill a variety of needs, and that users sometimes adapt digital financial services for unproductive, ineffective, and risky purposes.

While this Snapshot only  introduces the rituals of digital finance use, we hope that it will motivate and guide deeper research.   Access and adoption, while a crucial step towards financial inclusion, is only the first  of many. Arguably, ensuring that the services on offer are used, and used effectively, is a bigger challenge still.

Read Snapshot 3 for more details on the key findings and a list of the top-10 reads in the space this year.