As we explore how behavioural science can narrow the gap between customer intention and customer action, we have started to look at examples from specific financial services. Two sectors identified as playing a role in improving the lives of the financially excluded are insurance and formal remittances.

Behavioural interventions and insurance

Insurance penetration is low in sub-Saharan Africa with most providers experiencing high policy-lapse rates. Additionally, although many migrants send remittances to sub-Saharan Africa, very few choose to do so through formal channels.

These two focus notes build on our behavioural science database and look at interventions that have been tested on insurance and remittance decisions.

Some of the behavioural interventions and related findings on insurance products and decisions include:

• Choice set: Uptake of life insurance policies by Mexican microfinance consumers decreased by 30% when they were asked to pay insurance premiums in an upfront lump-sum amount, as opposed to paying in weekly instalments.
• Messenger: Chinese rice farmers increased their take-up of weather insurance by 6.74 percentage points when information about the product was disseminated throughout their social network. This effect on uptake is equivalent to granting a 15% reduction in the cost of the premium.

Behavioural interventions and remittances

Countries in sub-Saharan Africa (SSA) receive fewer formal remittances per migrant than other emerging markets. In 2015, 14% of developing-country migrants in the world came from SSA, yet remittance flows into SSA only accounted for 8.5% of the total formal remittances sent to developing countries (United Nations, 2014; World Bank, 2016).

This indicates that a large portion of remittance flows in SSA remain informal. Remittance providers are increasingly looking for innovative ways to increase formal remittance flows, in terms of number of customers and frequency and value of transactions. Behavioural interventions can be applied to reduce the cost of acquiring new customers, to improve retention of, and usage by, existing customers and to achieve positive customer outcomes.

Some of the behavioural interventions and related findings on remittance products and decisions include:

• Labelling/earmarking: Filipino migrants in Rome were willing to remit 15% more to family members in the Philippines when the transfer was labelled as being for educational purposes.
• Social enforcement and monitoring: When Salvadoran migrants in the US were given up to US$600 and were told that their choice of how much they keep for themselves and how much they remit will be communicated to their families in El Salvador, they remitted a total of US$461, which is US$20 more than those who were not told that their remittance decision would be communicated.

insight2impact (i2ifacility) was funded by Bill & Melinda Gates Foundation in partnership with Mastercard Foundation. The programme was established and driven by Cenfri and Finmark Trust.