Jimmy Chen has been working with CGAP’s policy team to learn more about “financial capability” of branchless banking clients. Financial capability means the ability to make informed judgments and effective decisions about the use and management of one’s money.

Even when low-income people have access to financial services, poor financial capability can hamper their ability to use those services effectively and securely. While branchless banking can increase access to financial services, a question remains as to whether – and how - efforts to improve consumers’ financial capability may increase adoption and promote responsible use of these services. Recently, the policy team at CGAP surveyed several branchless banking providers to better understand their attitudes about financial capability.

Based on this, most providers appreciate the relevance of financial capability to branchless banking. They recognize that financially capable consumers may be more likely to seek out mobile money services and use them effectively. However, branchless banking and financial capability are new fields, so except for companies that incorporate financial capability  in their corporate social responsibility agendas, providers hesitate to pursue product-neutral financial capability training because they lack concrete evidence of its profitability. Furthermore, many providers view themselves merely as suppliers of a mobile channel, not as suppliers of a financial service: they understand the importance of financial capability, but they consider it the responsibility of banks and governments.

No branchless banking provider has yet mounted a full, product-neutral financial capability campaign, but several have implemented small aspects of financial capability training.Examples include financial capability for customer acquisition and financial capability education through agentsor through the mobile device  itself.

First, on the topic of customer acquisition, many providers have found that educating consumers about managing their money is the best way to communicate the value proposition of branchless banking. Mobile money advertising campaigns often  explain the dangers of transacting in cash. For example, Orange in Cote d’Ivoire uses television spots and street theater to highlight the security risks of using cash, presenting its mobile money service as a safer, cheaper alternative.

Second, branchless banking agents can teach their customers financial capability. Agents are often trusted members of their communities and can communicate personally with customers at the point of sale. None of the providers that we spoke with are providing explicit product-neutral training through their agent network, but South Africa’s WIZZIT is indirectly using its sales network to teach financial capability. WIZZIT  employs “WIZZKids” from low-income communities to promote its service. WIZZKids can leverage their status as community members to explain WIZZIT’s value proposition, which centers aroundthe risks of cash. The growth potential of agent-based education  may interest donors and governments looking to fund financial capability pilots.

Third, branchless banking providers and mobile network operators have a unique opportunity to provide information to millions of low-income individuals through their mobile devices. For example, Kenya’s Safaricom occasionally sends SMS messages  reminding customers to keep their PIN numbers secure. However, most providers that we spoke to were skeptical that such direct financial capability education would improvetheir profitsand they don’t think that mobile phones are advanced enough yet to deliver meaningful financial education.

Nokia, a recent entrant into the branchless banking market, is planning to challenge these assumptions by packaging a module with information about financial management with their mobile money service. Nokia has already shipped handsets with an application called Nokia Life Tools, which contains region-specific information for developing country consumers on topics like agricultural techniques and learning English. An additional module about financial management may be tied into the Nokia Money application being piloted in several locations.  Nokia’s CSR department is guiding this initiative; companies with no CSR agenda may need different incentives.

Branchless banking has established anexciting new link between low-income consumers and financial services. Teaching those consumers how to use those services, and manage their money better, could be the next step towards opening up the true potential of branchless banking.