The "missing middle" of small businesses with Shamina Singh

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This Kenyan small business platform is built for the hustle

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How data and AI can drive change: 4 ways forward

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5 ways to propel inclusive climate change

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KEY LESSONS﻿Innovative partnerships incorporating behavioral design offer a promising avenue for advancing inclusive growth at scale.

Behavioral interventions offer an alternative path for fostering financial well-being.Traditional approaches to financial education have had <a href="https://doi.org/10.1093/wber/lhx018" rel="noopener noreferrer" target="_blank">mixed results</a> and are often difficult to scale. Embedding behavioral science into digital platforms offers an alternative, evidence-based approach to boosting the financial health and resilience of individuals with cost-effective, scalable interventions.For example, <a href="https://medium.com/strive-community/exploring-the-evidence-the-power-of-tailored-digital-financial-services-for-small-businesses-d7e69bd66195" rel="noopener noreferrer" target="_blank">research shows</a> that digital credit can help small businesses maintain liquidity, bridge shortfalls in their account balance and manage financial shocks. In our <a href="https://www.mastercard.com/news/insights/center-for-inclusive-growth-common-cents-lab/" rel="noopener noreferrer" target="_blank">recent partnership</a> with Common Cents Lab, we collaborated with Mercado Libre to understand how barriers, such as a lack of trust, could be keeping many entrepreneurs selling on their platform from taking actions that could expand their access to credit —&nbsp;such as linking accounts to share financial information. The study tested communications to encourage sellers to link their accounts, resulting in a 73% increase in account linking and at least 137 businesses gaining credit approval.Other studies show that techniques like default options, auto-enrollment and predefined values are highly effective at changing behaviors with positive results. Common Cents Lab applied these insights with Gliber to help Chile’s gig workers save money. Testing with 755 users over six weeks showed that creating savings pockets by default doubled the number of users with active savings pockets (from 14% to 28%).With careful research and deep understanding of users’ behaviors, we found these platforms can design and redesign their features to tailor and refine their services, achieving a dual objective: maximizing user benefits and simultaneously driving their own growth. ​&nbsp;

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2023 Mastercard Impact Data Summit Highlights

Integrating behavioral design is a win-win decision.Collaborating with Common Cents Lab strengthened product teams’ ability to incorporate behavioral insights into digital products while building the case for businesses to adopt these strategies. For instance, reminding e-commerce sellers to stock up during busy times can boost sales. <a href="https://advanced-hindsight.com/wp-content/uploads/2024/04/CCL-Mastercard-Report-2-KONFIO-240109.pdf" rel="noopener noreferrer" target="_blank">Other research showed</a> that if fintech lenders offered flexible credit payment dates, it could improve repayment rates and help small businesses manage income volatility.In Bolivia, our partnership with Accion and financial service provider BancoSol demonstrated how gamification can <a href="https://www.accion.org/digital-financial-inclusion-in-bolivia-transforming-microfinance-with-bancosol/" rel="noopener noreferrer" target="_blank">support positive financial behaviors</a> and drive real business outcomes. A <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4530239" rel="noopener noreferrer" target="_blank">recent Georgetown University study</a> showed how the BancoSol gamification tool, which was developed by fintech Flourish Fi, contributed to a 21% increase in logins to the bank’s mobile banking app, a 48% rise in online bill payment transactions and a 36% improvement in timely loan repayments.Nubank, a leading fintech that serves over 44% of Brazil’s adults, attributes part of its growth and success to a focus on integrating financial education and behaviorally informed design into the user experience. A <a href="https://mastercardcontentexchange.com/news/media/1q0hfryx/mcg-24054-nubank-financial-inclusion-whitepaper_final.pdf" rel="noopener noreferrer" target="_blank">new study with Mastercard</a> sheds light on how these approaches have helped Nubank customers progress along their journey from financial access to financial health. For example, more than three-quarters (80%) of customers used a prepaid card as their first financial product, with 67% going on to access loan products, and 36% making investments, within 1.5 years on average.Companies have extensive expertise and networks that can be harnessed to support financial security and health.Behavioral science isn’t just the domain of researchers. The private sector also has expertise and networks to develop and scale behaviorally informed approaches. Every day, companies use behavioral science to better understand and influence consumer actions. They analyze data to personalize products and marketing, use techniques like nudging to guide decisions, and create loyalty programs and incentives to boost engagement. All these strategies can help improve customer experiences and enable people to earn more, save, use credit responsibly and make decisions that enhance their financial well-being. &nbsp;Our approach at the Center has been to combine philanthropic support for research and connections with Mastercard business partners to design and test sustainable, scalable, evidence-based interventions for financial security. By cultivating diverse cross-sector partnerships with like-minded companies, these lessons and case studies help inspire others to replicate and continue to innovate upon these social impact models.

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