Tricks of the Trade: Conducting Research with Financial Service Providers

Senior Program Associate Dan Cassara speaks with Alain Shema (PhD Candidate, Syracuse University School of Information Studies) about his work in East Africa, supported by a grant from CEGA’s Digital Credit Observatory (DCO). Alain evaluates the impact of changing credit limits on small, digital loans for low-income borrowers, in partnership with an anonymous Financial Service Provider (FSP).

Credit: Eilin Francis

Collaborations between researchers and Financial Service Providers (FSP) are at the core of CEGA’s Digital Credit Observatory, which asks questions about how to design financial services to better serve and empower low-income populations. While co-creating research with a for-profit company can involve navigating sensitive things like data sharing, privacy, incentives, and market volatility, both the research teams and the FSPs involved in these partnerships have a lot to gain.

CEGA Faculty Co-Director Joshua Blumenstock puts it nicely: “Since the vast majority of real-world financial products are being offered by for-profit companies, it’s critical to engage those companies in the research process. This sort of collaboration can, on the one hand, provide the researcher with a realistic context in which to run experiments at scale. Perhaps more importantly, close collaboration can help ensure that the findings are relevant to the partner company and other financial service providers — and thus increase the likelihood that the results can improve future product design and business decisions.”

In the following interview, DCO grantee Alain Shema shares his experience partnering with an anonymous FSP in East Africa, and provides tangible insights for other researchers looking to do the same.

How did your partnership with the (anonymous) FSP begin?

Classmates from my master’s degree program were employed at the FSP and shared challenges they were facing, such as increasing default rates. I realized the overlaps between their work and my research interest, and proposed to collaborate. Luckily, the CEO saw the potential opportunities of this collaboration and quickly agreed to the partnership.

What were they hoping to learn, if anything, from your experiment?

What do you think is the value of embedding a rigorous evaluation within the operations of an established FSP?

Researchers can also benefit through this type of collaboration: the infrastructure built by FSPs presents enormous opportunities to conduct experiments at large scale, beyond the affordances of lab experiments and small scale surveys. In this environment, researchers can also better understand the interactions between their experiments and exogenous variables, such as countries’ socio-economic policies.

What lessons would you share with other researchers about running experiments with FSPs?

Second, one needs buy-in from the decision makers (i.e. the CEO or a department head), as well as the people who will actually build the necessary infrastructure to conduct the experiments (i.e. software engineers or data analysts). These are usually busy people working in a demanding environment. To ease the extra burden of the experiments, I tried to have my experiments automated as much as possible. Sometimes I would also share tools and techniques that could make their other work more productive.

Have you shared your results with the FSP and if so, how? Did they share any takeaways with you?

What topics are you interested in tackling (or seeing others address) in the future?

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