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A Model for Innovation in Emerging Markets

In the outskirts of Musanze, in northern Rwanda, mattresses have become a tool for female empowerment, family security, and social change. Hilarie, a softspoken farmer, mother, and wife, is the mastermind behind this association and has become a figurehead of change in her village and over 30 others in the region because of it. How Hilarie became a purveyor of mattresses for social change offers some fascinating insights about human behavior, community dynamics and… financial services.

Yes, financial services. Specifically, the challenge of financial inclusion—bringing financial services to the poor for the purpose of improving their lives. This is one challenge that resists easy scaling across markets. If a solution devised by a bank, mobile operator, or other financial services player achieves some level of success in one market, it's highly doubtful that the same idea will work in other markets. The always-cited example of this is Safaricom's highly successful M-Pesa mobile money platform in Kenya; no other mobile money service in the world has had even close to the same level of success.

One reason for this is that any new financial service targeting the poor will be co-existing (competing, complementing, or conflicting) with a number of other financial services already used by the poor.  Most, if not all, of which are classified as informal services (e.g., hiding money under the mattress, using group savings clubs, borrowing from neighbors, etc.) For a new financial service to be successful, it has to fit well within this broader informal portfolio, meaning this broader informal portfolio has to be well understood. This is where most efforts at financial inclusion innovation fall short.

Recently, frog partnered with Visa to tackle the challenge of financial inclusion in Rwanda. As a first step, we knew that we needed to come up with ideas for new financial services that will better meet the most deeply felt and poorly met needs of Rwandan consumers. We also knew that any ideas we came up with would not operate in isolation, but in the context of existing informal service portfolios. Our challenge was to understand Rwandan consumers and their financial behaviors in a way that was rich enough to inspire winning ideas.

Which brings us back to Hilarie. We only found Hilarie because a team of us (frogs, Visa colleagues, and our local fixers) immersed ourselves in local communities in Rwanda, living in rented basic homes not hotels, hiking to remote villages not taking taxis, cooking with neighbors not eating at restaurants, and socializing the local way by sending our women into women-only video nights and men into men-only bars. This immersive approach to research allows us to form trusted relationships that have a better chance than traditional research of uncovering the deeper human stories that define people's identities.

Hilarie, tired of listening to her neighbors complain about their husbands, founded a local support group where women meet and give advice from topics ranging from domestic violence to the growing infidelity in their towns. Realizing that the impact of these meetings was limited without financial support, Hilarie invented a unique financial instrument. She devised an SLA (savings and loan association) – essentially a savings club in which a number of community members put in a fixed amount every month to save collectively toward a goal. SLAs are commonly used to save for things like school fees, grain for next season’s planning, and byccles to transport produce to the market.

Hilarie’s SLA was designed to save for mattresses. Why? Because the grass mattresses commonly used in homes in the villages were uncomfortable and unsanitary, and husbands often used the excuse of poor mattress quality as rationalization for lustful behaviors. Hilarie's SLA—called Sasaneza ("how to prepare a bed for your husband" in Kinyarwandan)—helps women save for mattresses to not only keep their husbands at home, but also act as a conversation-starter to address a wide range of issues in the bedroom, from infidelity to domestic violence. Sasaneza has since spread to over 30 neighboring villages, where she acts as a financial and community advisor.

What's important here is that Hilarie's solution is so much more than a financial instrument. It is an instrument for social change, community improvement, and broader contribution. SLAs have long been recognized by banks and other financial players as targets for their services, but this targeting tends to focus on the transactional and mechanical aspects of SLAs—how to save more securely, how to make savings grow, how to ensure on-time payments. What would it mean to create financial services that have such a social dimension, or that acknowledge the social nuances of the various informal services in an individual's portfolio?

With Visa and its banking clients, we came up with an idea for a community goals service that helps community leaders facilitate goal-setting and fund-raising using simple mobile technologies. We uncovered many other fascinating stories, like Hilarie's, and used these as inspiration for a number of new ideas that touch all parts of people's financial lives.

We are now going down the path of prototyping and evaluation and are happy to share our progress. Last month, we shared our story with Visa at an event held in Singapore's historic Art House. For more from our time in Rwanda, watch Visa's project video

Ravi Chhatpar is frog's executive strategy director, based in the Johannesburg studio.  Cara Silver is a senior design researcher at frog's Shanghai studio.