(Click on the image to see the complete table)
The results of studying these different segments reveled that cash flow structure and occupation generate distinct financial objectives and therefore, behaviors. The more constant the income (say for a formal worker), the higher the propensity to lean towards savings as a tool for future planning; whereas with more irregular income (informal/seasonal workers) there is a greater need to combine savings with credit that facilitates short-term liquidity.
The main takeaway from this example is that it matters what resources clients have and it matters how they use these resources to pursue strategies to obtain what they want. Why? One may still ask. Because this is an important piece of the puzzle on how to best serve them. Financial institutions can better serve their clients by 1) taking into account their existing resources and existing money management mechanisms and 2) enhancing them with an adequate product design that is more effective and efficient for the client.
This concept resonates with Xavier Martin’s presentation during this same panel in which, within the scope of commitment savings, he emphasized the importance of learning from informal mechanisms in order to design effective products. This is because commitment savings mechanisms incorporate the flexibility in terms of amount and frequency of deposits, and even the liquidity that informal savings mechanisms provide. You can read more about why this is important in Xavier’s most recent blog, where he tells the tale of a taxi driver whose diverse money management strategies hint at the demand for commitment savings products that can address his demand for credit and savings.