The Connectors Project from MasterCard, produced in collaboration with frog, found that despite differences in the economic climate in Mexico, Egypt, India and Indonesia, there was a common thread among individuals who had demonstrated considerable economic progress in their lifetime.

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Achieving Economic Inclusion Through Connectors

Those operating in the informal sector often exist on the periphery of the economy, without access to basic services, such as education, healthcare, steady employment and capital. They comprise a significant part of the economic activity of a country, yet are typically marginalized and forgotten. While many organizations and governments have launched initiatives to bring this segment of the population into the formal sector, they often lack a complete understanding of the needs, desires and existing processes of this segment.
“The world has worked, especially banks, on the premise that they know the truth. They think they know how to back people, but the reality is they don’t. They treat people like they don’t know how to manage their finances…yet these people have been managing their finances since they were kids. I think that successful business models are those that connect existing behaviors of the poor in a formal way,” said Ana Barrera, CEO of Aflore, a Bogota based social enterprise that provides loans to individuals via a network of informal advisors.
Large financial institutions are catching on to the need for additional insight into the existing behaviors Barrera mentioned. <a href="http://insights.mastercard.com/theconnectorsproject/" target="_blank" rel="noopener">The Connectors Project</a> from MasterCard, produced in collaboration with frog, found that despite differences in the economic climate in Mexico, Egypt, India and Indonesia, there was a common thread across the four countries. The individuals who had demonstrated considerable economic progress in their lifetime recounted a common story; they directly attributed their success to a singular person or “connector” who had provided guidance, mentorship, and often, financial support.
Rosario Perez, Former President of Pro Mujer, a non-profit organization that empowers advisors to provide loans to women in Latin America, immediately began to apply the connector findings to her work. “I told [my colleagues] that they really have to take this study and use it as a tool. We are going through a segmentation process to identify these influencers and migrants and be much more agile at finding those people in the community,” said Perez.
Others in the international development community said the insights validated the way they reach their target market through intermediaries. At the same time, the research also shed new light on segmenting these intermediaries based on five connector archetypes: business influencers, migrators, role models, mentors and introducers.
We’ve found that there are three primary benefits to leveraging connectors to reach those straddling the poverty line.

<h2 style="text-align: center;">Connectors are a trusted point of entry to a new market.</h2>
The segment of the population close to the poverty line typically does not trust formal institutions such as banks, governments, and corporations. While access to services can continue to be improved, if people do not trust the services, adoption will remain low. Employing connectors who have an established base of trust in the community means that an organization can tap into this pre-existing channel of trust to deliver goods and services.
Camilla Nestor is a Senior Vice President at Grameen Foundation, which equips intermediaries to serve the poor in target communities. She explained how her organization leverages trusted connectors—armed with technology—to reach their users. “Trust is so crucial. These are people who often don’t trust government institutions or banks …they do trust their community. That’s what we’re leveraging here,” she said. “It is an opportunity to help these populations to increase their income and improve their lives, but doing it by contextualizing the opportunities, helping them to understand the opportunities better, and adapting behaviors through trusted connectors empowered by technology.”

<h2 style="text-align: center;">Connectors provide rich information about users at a low cost.</h2>
Since connectors are typically embedded in the community of those in their network, they tend to have a holistic view of personal and financial matters in a person’s life. Whereas large institutions have only what is written on paper to evaluate a potential client, connectors have insight into behavioral drivers and the nuances of that person’s socio-economic circumstance. In Aflore’s case, informal advisors “allow us to explain behaviors that for a bank would be completely irrational,” said Barrera. For example, it can be useful to understand why a person has exhausted her credit line, or the reason for late loan repayments. Because connectors already belong to the community, the cost of accessing this information is lower than it would be if the organization had to build a network from scratch.

<h2 style="text-align: center;">Connectors help a solution scale.</h2>
Connectors’ also facilitate word of mouth marketing and results based recruiting, where community members see the work a connector is doing and seek to emulate the connector or be a recipient of the services a connector provides. As such, individual connectors spur on the creation of connector networks, delivering a web of inter-woven individuals who have the potential to reach across geographies. Moreover, because connectors will often promote the product or service naturally in daily conversations with their neighbors, customer acquisition cost is low for organizations that maintain good relationships with the connector network.
For businesses, governments and non-profits, identifying and empowering existing connectors within a community is a low cost, scalable solution for targeting the difficult to reach population operating close to the poverty line. As this population gains increased buying power and access to the global economy, organizations should consider embedding connectors into their business strategy.
For more information on connectors and the research findings, check out <a href="http://insights.mastercard.com/theconnectorsproject/" target="_blank" rel="noopener">the Connectors Project</a>.

Fabio Sergio

Shamina Singh

Alessandra Valenti

Fabio is the global lead of frog&#8217;s Social Impact practice, bringing human-centered innovation to collaborations with organizations such as UNICEF and the World Economic Forum.

Shamina is Executive Director at MasterCard Center for Inclusive Growth. She has deep experience working within the public and private sectors to deliver strategies that contribute positively to the global economy.

Alessandra is a Strategist at frog New York, with over 8 years of consulting experience working for clients in the private and public sector in New York City, Africa, Latin America and Southeast Asia.

Authors

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It is time to think across social innovation silos, and promote initiatives that drive economic inclusion by addressing human beings holistically.​

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The Human Side of Inclusive Growth​

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Ugandan Market

Technology, especially mobile technology, continues to offer unprecedented opportunities to improve pressing social issues in both developed and emerging economies. Still technology is too often touted as an all-encompassing answer to problems that are ingrained in human value and belief systems. Understanding these complex human systems and their underlying dynamics is an essential step in establishing a more inclusive society.
The goal of many financial inclusion initiatives is to empower <a href="http://www.cgap.org/topics/financial-inclusion">half of the world’s population</a> to join formal financial systems. While this is a laudable goal, any path leading to the desired end-state must account for people’s perceptions of what a “financial system” actually is.
In the same way that poverty is not necessarily a permanent state — the world’s most vulnerable often drift in and out of it — inclusion has to be seen as a dynamic condition. People in many emerging economies comfortably live across the formal and informal financial system, and often do not perceive any difference between the two.
For people who live straddling the poverty line, every single decision has survival implications. Deciding to invest money today to reap benefits at a later stage, for example by opening a bank account, is carefully weighed against the impact on access to essential necessities tomorrow. The same is true for a visit to the doctor, or investing in micro-insurance for one’s crops. For people living in poverty, every decision is perceived as a survival decision.
This does not imply a lack of hope or aspiration — quite the opposite — but it does undermine an inclination for long-term thinking. A survival approach, and the associated continuous stress it creates, tends to shape a risk-averse mindset. Such a mindset favors short-term economic certainty, even at the conscious risk of undermining better opportunities in the longer term.
How should we account for these factors when supporting initiatives promoting economic and financial inclusion?
I’ll focus on three possible vectors: cross-silo synergies, local solutions to local problems and adopting a human-centered innovation process.
<h2>Thinking across economic inclusion silos</h2>
<a href="http://frogdesign.com/platforms/frogimpact.html">frogImpact</a>, frog’s social impact practice, works across different facets of inclusion, such as education, health, agriculture and finance. What we have often seen is that many of the initiatives promoting inclusion, especially the ones that rely on technology interventions, risk falling victim to a silo syndrome. They become mBanking, mHealth, mAgriculture or mLearning initiatives, and fail to leverage the opportunity to work in synergy. Here we see why belief and value systems are so important: many of these silos are essentially trying to address different facets of the same human mindset.
Looking after long-term physical health is not dissimilar from looking after long- term financial health. The same mindset also informs decisions around one’s professional activity, or the education of one’s children. Just as the aspirations of the person or the family are similar in these scenarios, the “mechanics” of possible interventions in these apparently diverse areas are not only similar, but deeply intertwined. Making someone a “better farmer” or a “better entrepreneur” by giving them access to innovative mobile technologies, without considering what they will do with the extra income, risks facilitating only a short-term strategy.
My personal opinion is that many interventions stay at the pilot stage and do not scale because they are not integrated with other initiatives happening in complementary sectors.
Human beings hardly ever separate financial stability from other essential factors like health or self-fulfillment. We all live one life, with many different facets. Digital technologies inherently provide opportunities to instantly share data, information and knowledge. It is time to think across social innovation silos, and promote initiatives that drive economic inclusion by addressing human beings holistically.

<h2>Fostering local solutions to local problems</h2>
Nobody understands the problems of a specific socio-economic context better than those who live in that very context. To promote inclusion it is essential to create local capacity for innovation, so that both individuals and organizations can autonomously generate and sustain solutions for the markets they comprise.
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Nairobi’s current technology and start-up scene is a good example of this model. Spurred by local initiatives such as those promoted by the long-standing <a href="http://www.ihub.co.ke/">iHub</a>,the current explosion of innovative high-tech <a href="http://trendwatching.com/trends/utilit-easers/">companies</a> has resulted in what — for good and bad — has been called the “<a href="http://www.theafricareport.com/East-Horn-Africa/african-tech-start-ups-dream-ofsilicon-%20savannah.html">Silicon Savannah</a>.” Many global players have been investing in the area as a result, with innovation labs opened by diverse organizations such as <a href="http://www.unicef.org/innovation/innovation_73201.html">Unicef</a> and <a href="http://www.gsb.stanford.edu/insights/ibms-frugal-innovation-takes-root-africa">IBM</a>, not to mention the recent <a href="http://www.fastcompany.com/3039332/change-agents/breaking-news-mastercard-launches-innovation-lab-in-nairobi-unlocking-the-bene">partnership</a> between Mastercard and the Gates Foundation aimed at creating a Financial Inclusion Lab in Nairobi.
Building local capacity for innovation, technology, and design in emerging economies and low-resource areas of the world is, once again, a way to focus attention and investments on the human end of the innovation spectrum.
<h2>A first step: adopting a Human-Centered approach</h2>
How can organizations effectively harness innovative technologies in an effort to influence deep-set human behaviors dictated by culture and context? It probably won’t surprise you that I think they must start from a solid understanding of human belief and value systems, in order to establish a solid foundation to build upon. I strongly believe that a Human Centered Innovation process can be a crucial asset to achieve these objectives. Such a process requires involving the end-users of a product, service or strategy in the definition, development, deployment and evolution of that strategy.
As demonstrated by organizations like <a href="http://www.cgap.org/events/human-centered-design-and-financial-inclusion">CGAP</a> applying a human centered innovation process can result in solutions that match existing habits and behaviors, thus reducing barriers to adoption. In addition, this type of process helps to identify needs and aspirations that are currently unmet, pointing to new possibilities for intervention.
Technology offers unprecedented opportunities to improve inclusion at all levels. Organizations that are actively working in this space would benefit from adopting a Human-Centered Innovation process. It will help them better understand those they are trying to help, and keep them focused on the needs and aspirations of real people. This type of innovation also fosters a culture with the capacity to source its own innovative solutions to societal problems that have so far proven to be very resistant to change.
A version of this article was originally published on the <a href="http://mastercardcenter.org/insights/human-side-inclusion/">Mastercard Center for Inclusive Growth Blog</a> on January 20, 2015.

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