A new understanding of financial services usage

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Framework components and key indicators

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Apply the FinNeeds approach

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Data collection options and techniques

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How to approach data analysis

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Answering key policy and private sector questions

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About FinNeeds

What do we mean by financial needs?

Money and/or financial services typically serve four functions:

  1. To make a payment or transfer (transfer of value)
  2. To meet expenses on an ongoing basis liquidity)
  3. To meet a large expense resulting from a financial shock (resilience)
  4. To provide for larger life or work goals that cannot be funded from regular income (meeting goals)

These four (transfer of value liquidity, resilience and meeting goals) are universal functional needs for financial services. Each need is the combination of a number of use cases. In practice, people express a specific use case (such as making grocery payments or saving for old age), which is then categorised into the corresponding need, such as “transfer of value” for grocery payments, or “meeting goals” when saving for old age.

Click here to explore a detailed explanation of the FinNeeds indicators section.

Why a FinNeeds measurement framework?

For financial inclusion to have any impact, people must first have and then actively use financial services. Current financial inclusion indicators are effective at telling us whether people have different financial services. The FinNeeds objective is to better understand how people use different financial services and what determines their choice of financial service and usage patterns.

Our starting point is that people use financial services because it can help them to achieve some underlying financial need. If we can understand the prevalence of use cases, how people achieve their use cases and why they choose one way of meeting a use case over another, it provides us with a new perspective on what the role of the financial sector is in serving needs. It could also reveal what the gaps are and therefore what policymakers, regulators and market players can do to ensure the formal financial sector more effectively meets financial needs.

insight2impact has developed the FinNeeds measurement framework to place financial needs at the centre of financial inclusion measurement and generate new types of financial inclusion indicators for which progress can be tracked over time to inform policy and market strategy interventions.

Read our introduction and overview of measurement frameworks here.

Does FinNeeds replace existing financial inclusion measures?

No, the FinNeeds approach does not replace existing financial inclusion indicators or measurement approaches. This approach provides a “needs-based lens” for viewing the core financial inclusion problem of how to increase formal financial service usage and impact.

The FinNeeds approach can be applied by analysing existing data or by gathering new data. The FinNeeds indicators complement, rather than replace, existing financial inclusion indicators.

For example, two traditional financial inclusion headline indicators are:

  • % of a population who have at least one (formal) financial service
  • % of a population who have an account at a financial institution
    To these, FinNeeds adds the following indicator:
  • % of a population not meeting their financial needs through formal financial services

While the traditional indicators may show progress, the FinNeeds indicator will provide a reality check and highlights the potential role that financial services could fulfil. Let’s look at an example based on data from one of our pilot studies:

Traditional FI Indicators: Access and ownership
Have at least one formal financial product (National Financial Inclusion Survey, 2018)
Have an account at a financial institution (National Financial Inclusion Survey, 2018)
FinNeeds Indicator: % of people not meeting their need through formal financial services
Meeting goals
FinNeeds insight: Formal financial sector failing to meet financial needs
Policy implication: Improve formal value proposition by learning from informal


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Please write to us and give us your feedback. info@i2ifacility.org

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