Week of May 29, 2017

Editor's Note: I've been traveling all week and so asked Caitlin Sanford (@caitlinsanford) and Maria May (@mariamayhem523) to fill in as "guest editors" for the faiV this week (thankfully they said "yes"). Caitlin is a User Experience Researcher at Internet.org, Facebook's efforts to connect new users to the internet in emerging markets. Maria recently began to focus on organizational learning at BRAC in Bangladesh, after spending several great years in its financial inclusion and social innovation programs. You can find her on the internet or tweeting occasionally from. I bet you can guess who their views and recommendations belong to (hint: it's not me, FAI or their respective employers)

1. Income Instability and the Cost of Living: Those who have studied financial management among low-income people know that instability and unpredictability of income are a main source of difficulty. The U.S. Financial Diaries project and book bring this challenge to life. This week Jonathan Morduch is quoted in the New York Times examining how the norm of a steady paycheck has been replaced by turbulence, affecting pretty much everyone who makes under $105,000 per year. [I didn't tell them they had to include this, promise!--Tim]

Speaking of $105,000 being a new marker for financial challenges, according to the U.S. Department of Housing and Urban Development’s new income limits, in parts of the high cost Bay Area, a family of four earning $105,350 is considered low income. On the other extreme, in the recent CGAP national survey of smallholders in Bangladesh, 75% of households reported that an annual income of $1,524 would cover their household needs.

2. A Raise or More Frequent Paychecks?: Here’s an interesting fact: More than one in four millennials prefer real-time pay to a raise.  A report by the Aspen Institute’s Expanding Prosperity Impact Collaborative (EPIC), employers and governments are exploring new options for workers to collect their pay more frequently and when they need it. The jury is still out on the effects for managing household finances. We suspect this might be be helpful for short-term volatility management, but may result in difficulty with long-term savings and may diminish the commitment element that some people prefer in being able to keep money at a distance under some circumstances. Let’s hope Uber and Lyft are learning from all the data they have!

3. Global Tech Trends: TechCrunch summarized the 2017 Internet Trends report this week, and there are lots of great insights here. With over 700 million mobile internet users, the volume of mobile pay in China doubled last year to reach $5 trillion. There are 3.4 billion internet users in the world, up 10% since last year.  As consumers increasing look online for shopping and retailers offer customer service through “chat”, we are curious what these trends will mean for call centers, a big industry for several developing countries, like the Philippines. There are also increasing apps developed in emerging markets, such as Kampala’s fast-growing Safeboda which allows riders the convenience of the common motorcycle taxi with the promise of a trained and safe driver.

Meanwhile, on-demand car and bike services are exploding in China and throughout Southeast Asia. Bike-for-rent services experienced a 100% month on month growth, reaching 20 million users in 2016 (a scale which could mean meaningful reductions in CO2 emissions. Helpful given recent developments in US politics!).

4. Digital Identity: Digital identities are a new area where financial services providers are investing heavily; seeing this as an opportunity to leverage their extensive client data and experience in “know-your customer” analytics. Canada and the UK have already launched initiatives to start setting up digital identity platforms.

Globally, remote KYC and account opening can save customers who do have identification documents a lot of headache by using technology to make the process faster and to have better organization of records. But what happens to the 1.5 billion plus people globally who do not have an official national ID? Perhaps we work to get them one. Reportedly demonitization in India led to a 60% increase in enrollment in Aadhaar, the Indian government’s biometric national ID program.

As this data becomes more central in everyday purchases, we wonder whether these efforts will be net inclusive or exclusive--will it mean that those with limited financial access or bad credit now struggle to access basic services like gas and electricity?  We have to keep in mind that there are always “losers” in these moments of transition. With the recent scrutiny and Supreme Court ruling on the identification requirements to vote in North Carolina and other states, we should keep an eye on the various opportunities for mis-use and exclusion (financial or otherwise) of digitization.

5. Our Recommendations for the Weekend: There’s so much interesting stuff out there, it was a struggle to limit ourselves to five topics. So we’re taking the liberty to list a few materials that are similar in the fact that they are thoughtful and awesome!

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