Many people don’t actively use formal financial services. Understanding why can render important policy insights. This note unpacks the various drivers of usage.

Usage at the core. Financial inclusion is recognised as a lever to support mainstream policy objectives like economic growth and human development. A key assumption is that the greater the use of financial services, the greater the impact on national policy objectives. At the same time (as set out in our Measurement Notes series), it is increasingly clear that the link between the uptake of financial products and the ongoing use of those products is neither automatic nor certain. For this reason, we endeavoured (in Measurement Note 3) to develop specific indicators of usage to supplement the existing financial inclusion indicators.

From measuring to understanding usage.

If uptake does not necessarily translate into usage and if usage is necessary to achieve impact, a natural follow-up question would be: “How can you increase usage?” Understanding how to change the current situation and how to encourage or drive sustained financial service usage requires an understanding of why people use (or don’t use) financial services. That is the focus of the conceptual work outlined in this note. The objective is to create a simplified conceptual framework of what influences consumers’ decisions to make ongoing use of a specific financial device by identifying the most important drivers of use and considering the interplay between these.

 Approach.

The conceptual framework developed in this note draws on the current understanding of how humans make decisions and interact within societies, drawing on decision-making theory and literature from a range of disciplines, including psychology, economics, anthropology, marketing, sociology and behavioural science. These general human decision-making models were augmented by financial inclusion-specific research that considers how individuals make decisions about the use of financial services.

From concepts to decisions.

A conceptual framework is only of value if it can inform decision-making. The key target audiences for the conceptual framework developed in this note are policymakers, regulators and financial service providers (FSPs), targeted either directly or via the development organisations that work with them and support them. By giving policymakers and FSPs a framework for understanding how consumers make the usage decision, the intention is to inform strategies for encouraging sustained usage – be it related to the enabling environment, the regulatory framework, the financial services offering or by targeting consumer behaviour directly.

Insight2impact (i2ifacility) was funded by the Bill and Melinda Gates Foundation in partnership with the Mastercard Foundation. The programme was established and driven by Cenfri and Finmark Trust.