Fusing Behavioural Science and Human-Centered Design to Accelerate Financial Inclusion Efforts

Pictures from our Banking on Fintech fieldwork showing different ways micro-merchants save money

Whenever a top-down approach is applied to policy making, the pain points and needs for whom these policy decisions are being made often become secondary. Policies that are geared towards accelerating financial inclusion will also face the same challenges if they are not designed with the end users in mind. At the invitation of the Secretariat of the National Council for Financial Inclusion, Pulse Lab Jakarta and the Behavioural Insights Team recently ran a workshop on how to introduce human-centered design and behavioural science approaches to inform innovative financial inclusion policies. The workshop was anchored on one particular policy challenge: How might branchless banking users be encouraged to perform more deposit transactions via agents?

Explaining how human-centered design (HCD) and behavioural science can complement each other was first on the agenda. HCD is a framework designed to solve problems by focusing on the human experience at every step of the process. Behavioral science on the other hand is an approach that examines the behaviour of humans and borrows from the fields of economics and psychology to understand how judgments and decisions are made. Both approaches aim to understand human behaviors and nudge them towards action. HCD places more emphasis on the experiences, emotions, and processes that users of a particular service go through and on involving end users in the development of solutions. Behavioural science projects place emphasis on evaluating the impact of any intervention on the target behavior.

Revisiting Insights from the Field

To better understand the experience of users in relation to financial services, exploratory research is part of the initial step. In the workshop, we used the findings from our recent Banking on Fintech research, coupled with lessons learned from BIT’s work on Reducing Tax Return Errors in Indonesia as practical case studies. The Indonesian Government has a goal of ensuring that 75 per cent of adults have access to formal financial services by the end of 2019, and to realise this goal the Government has made efforts to encourage more users to sign up for such services. One of these efforts has been through the use of branchless banking agents, which are third party personnel who deal with customers directly on behalf of a bank or a fintech service provider. By applying HCD approach, we were able to take a step back during the Banking on Fintech research to develop a thorough understanding about what challenges financial services users faced.

We focused on the user journey of financial services early adopters, in particular to identify challenges, barriers, and other factors that affect their judgement and decisions. Our fieldwork revealed that most decisions taken by the users were influenced by bank agents, thus making bank agents an important and focal intermediary between service providers and customers. Learning from the experience of these agents, we found that their main challenge was ensuring that customers remain active and continue to perform transactions after registering — preventing dormant accounts was more difficult than recruiting customers.

This insight highlighted a difference in outlook between policymakers and users; while the Government’s efforts are focused on increasing the number of new registrations, how to maintain active users after sign up is another aspect of the discussion. This inspired the policy challenge that was presented to the workshop participants: How might we encourage customers to use their bank accounts more actively via agents?

Pulling on Insights from the Field to Shape Intervention Ideas

The workshop segued into the ideation session, where participants brainstormed about how to leverage the findings from the field to develop ideas to address the challenge. Here, we offered a practical framework from BIT known as the EAST Framework. An acronym for Easy, Attractive, Social and Timely, this framework is used to generate fresh intervention ideas, based on evidence from behavioural science literature. Participants were also reminded about the significance of the holistic approach of systems thinking when developing ideas, for instance considering the various constraints and how they may interrelate in certain conditions.

The next stage was prototyping. In general, prototyping methods vary, depending on a range of factors, such as needs, estimated timeline and scope of an idea. For most of the workshop participants, prototyping was a bit unfamiliar. This was an opportunity for them to ask questions about the steps in prototyping and its merits. Based on the questions received, we thought it was crucial to highlight that a prototype does not have to be in a complete or perfect form. In fact, a prototype may start off with sketches (low-fidelity) using pencil and paper, before advancing to a higher-fidelity format (digital, in the case of digitally based interventions) using more sophisticated resources. Prototyping has the benefits of reduced time and costs, and may also enable crucial early feedback from potential users to inform future development. By allowing actual users to test and experience the prototypes, there’s the possibility of gaining greater user acceptance relevant to their conditions and habits.

Low-fidelity prototype(left) and photos from the workshop (right)

During the wrap-up session of the workshop, the discussion was centred around a question posed by the participants: “If we implement an intervention idea nationally, how do we know if this intervention is going well?” There are several methods that can be used to conduct an impact evaluation to assess the effectiveness of an intervention. Randomised Controlled Trials (RCT) is an approach that is often used by BIT. In its simplest form, it involves randomly assigning individuals to two groups: the treatment group, which is given the intervention that is being tested; and the control group, which continues to receive the status-quo treatment (which often means: nothing). While this approach can yield statistically reliable results, there are other aspects regarding the approach that must be taken into consideration when using RCT to measure impact. It may also be beneficial to explore suitable alternative methods for obtaining reliable feedback about the impact of an intervention.

Walking the Talk

A continuation of our collaboration with the Secretariat of the National Council for Financial Inclusion, this workshop included participants from the Indonesian Financial Services Authority, the Executive Office of the President of the Republic of Indonesia, among other representatives from public and private banks in Indonesia. The workshop provided us a unique opportunity to showcase our collaborative work to further address policy challenges related to the acceleration of financial inclusion in Indonesia.

The overarching aim of the workshop was to encourage financial services providers and policy makers to test out new ways to tackle issues related to financial inclusion through the use of HCD and behavioural science. And for us at Pulse Lab Jakarta, BIT and SNKI, we have also accepted the challenge to walk the talk and are conducting a research project that combines human-centered design and behavioural science aimed at encouraging financial services customers to use their bank accounts more actively through the use of bank agents. We will be sharing more on this project in the coming months. Stay tuned!


Pulse Lab Jakarta is grateful for the generous support from the Government of Australia.