Patience, a restaurant owner in Goma in the eastern DRC, has a dream of owning her own land. She saves a modest 2000 Congolese Francs (just less than USD 2) every day. This is no small feat: it requires daily sacrifices and a lot of self-discipline. So she doesn’t tell her husband about her stash, as she fears that he may claim it for himself.

How do you keep your money safe and make sure it can be spent only for its particular savings goal? In the eastern DRC, it is common practice for women like Patience to bury money in a bottle. The bottle empowers them to keep their savings safe from thieves, but also helps them to guard against an unlikely threat: household and community pressures to spend the funds.

Following conventional financial inclusion thinking: Would formal savings accounts not be more effective than a bottle? A bottle can be lost or stolen and earns no interest. And a Personal Identification Number (PIN) would surely protect funds more effectively from outside pressures than hiding it in a bottle. So as long as bank accounts are affordable and accessible, it should be a preferred way to build assets, right?

Exploring exactly this question, women in Kenya were presented with free access to savings accounts at a formal institution. In this experiment, all the minimum balances and transaction costs were taken care of. This allowed their funds to be protected and earn interest, with the only cost being the travel and opportunity cost of visiting an ATM or branch. However, the study found that pressure from the respondents’ husbands to hand over the money was far stronger than any of the benefits that formalisation of the savings brought. A PIN didn’t offer sufficient protection, after all.

Could different product features have changed the outcome? Evidence from the Philippines suggests so. In this experiment, women were also given free access to savings products, but with one difference to the experiment in Kenya: a commitment device was attached to the account. They would only be allowed to withdraw their savings under certain conditions, such as having met a savings goal. The study found that having the ability to ‘blame the bank’ for not being able to access your savings significantly helped respondents to retain control of their funds.

These examples would suggest that the outcomes that financial inclusion seeks to achieve might not be served merely by peddling a basic service. Rather, the features or conditions attached and their interplay with a client’s needs, behaviour and social context play a critical role.

Take another example from Kenya: a study amongst 771 individuals (113 Rotating Saving and Credit Associations) found that savings specifically earmarked for health events (both preventative and emergency or shock events) have a positive impact on health outcomes when compared with savings in a ‘general’ savings pot. And a randomised control trial in Malawi found that, while providing savings accounts did lead to increased savings, these were often withdrawn soon after, meaning that ultimate impact on welfare was limited. This was different for commitment accounts, which led to an increase in inputs into agricultural activities, crop sales and household expenditure.

Features and conditions are also emerging as relevant in other financial service fields: in credit, for example, seven randomised control trials from around the world assessed by Innovations for Poverty Action found that tweaks in product design may significantly improve desired outcomes. Notably, repayment conditions and favourable grace periods strongly decrease default rates in the long term. A closer look at product features is also emerging in the insurance literature alongside an emphasis on behavioural analysis.

These studies signal a gradual shift in focus when trying to measure the impact of financial inclusion on people’s lives. The literature is starting to move away from just measuring the impact of uptake of a basic service – an approach that did not yield consistent evidence of impact across studies – to a more feature-centric framework. Shifting the focus to the impact of the specific features and conditions attached to a financial service, such as whether or not earmarking spending for a specific goal supports defined household welfare outcomes, holds promise for more consistent findings across studies and thus tangible lessons for financial service providers and policymakers.

But what exactly are the features and conditions that drive positive – or indeed adverse – welfare and livelihood outcomes for users of financial services?

We at i2i do not yet have the answer – but we feel that these questions are crucial to ensure that the work done around financial inclusion is sustainable and actually lives up to its promise of improving people’s lives. If you as a regulatory authority, research institute, donor, or financial services provider are interested in working with us to improve the global understanding of how use of specific financial services impacts people’s lives, please get in touch. The answer may mean ways for people like Patience to finally derive more value from a bank account than from a plastic bottle.

The Measurement work stream at i2i seeks to deepen measurement in financial inclusion. In collaboration with different partners, the team will be developing and testing up to ten financial inclusion measurement frameworks. As an input, we are exploring how financial inclusion impacts people’s lives.

Sources drawn on: Innovations for Poverty Action (IPA) , Jameel Latif Poverty Action Lab(J-PAL), Grameen Foundation, Consultative Group to Assist the Poor (CGAP).