Keeping Clients at the Center: Both an art and a science

A recent Financial Times article entitled, “Innovators don’t ignore customers” argued that the rapidly dropping share price of Netflix, a DVD rental and online film service could be explained by the fact that the company lost touch with what its customers wanted.  Keeping a sharp eye on client demand is thus not only the responsible or developmental thing to do–it simply makes good business sense.
This special Clients at the Center blog series has lined up a broad range of voices to delve into what we mean by understanding client demand and how developing a much more profound understanding can further responsible financial inclusion. We encourage you to read and jump into the conversation.


A colleague of mine does not like that I keep on talking about “clients at the center.”  He thinks it sounds obvious and, worse, that it is spatially incorrect. At the center of what, he asks? 
My answer is simple: at the center of all decision-making. That is, all decisions that financial service providers, policymakers, donors and investors make in pursuing financial inclusion.  At CGAP we want to understand what it takes for all individuals, organizations, and governments that can further access to finance to have a relentless focus on clients and their needs.
And we are glad that many have agreed to share with us, in their words, what “clients at the center” means as part of the blog series being launched today, and scheduled to continue each week until early December.
But, what’s new…
The need to understand and stay focused on clients is frankly not revolutionary. Indeed, many would say that is exactly how microfinance started out. And several long-time colleagues, such as Stuart Rutherford, author of the Poor and Their Money, have never lost their way, even apologizing for repeating the exact same messages over decades now.
Back in the mid 1990s, the USAID-sponsored AIMS Project was actively cultivating a “renewed” focus on clients by promoting client assessment tools that ranged from large scale longitudinal studies to practitioner-friendly market research and evaluation tools.  As one example, Microsave has built an entire brand and a strong team on two continents on the very idea of understanding client needs.   Building on this expertise, David Cracknell will share a range of ways that the client voice can be drawn directly in the board room and management decisions of financial institutions in an upcoming blog. About one decade ago, FinMark Trust initiated the Finscope studies to understand consumer demand across transactions, savings, credit, and insurance. Maya Makanjee of FinMark Trust will tell us more about how the methodology has evolved over the years, while Modupe Lapido, CEO of EFIna (Enhancing Financial Innovation and Access) will provide a practical experience from the 2010 Access to Financial Services in Nigeria study.
… Well, quite a bit
So the idea is not new. But we would be short-changing ourselves not to recognize progress made on the foundations laid decades ago. Innovative academic research and business approaches are helping to provide a deeper and more nuanced appreciation for poor people’s’ lives. The financial diariesapproach has advanced our understanding of poor people’s active financial lives, their cash flow management needs, and their agile use of informal and formal financial intermediation.  Monique Cohen of Microfinance Opportunitieswill share the results of her collaboration with Opportunity Bank Malawi using the financial diaries methodology as part of this series.
There is also greater, more refined, and empirical use of segmentation analysis to understand clients across numerous dimensions. Bob Christen of the Boulder Institute will make a case for segmentation that is dividing the market into discrete client groups that share similar characteristics to help tailor products and delivery channels.  Several fellow bloggers will help us focus on various segments – Inez Murray of Women’s World Banking asks whether we need pink check books for women, Jacqueline Urquizo, formerly of Accion International, will provide insights on the financial behavior of rural low income people, Rani Desphande of YouthSave will take us into the minds of young people, and Dörte Weidig of IPC Consulting will delve into the realities of the now very popular small enterprises segment.  We could not focus on specific segments without looking at finding ways to serve the extreme poor and Syed Hashemi of BRAC Development Institute will discuss the role and limitations of financial services in reaching the ultra poor.
Since the mid-2000s, impact evaluations using randomized control trials (RCTs) have become all the rage. The more recent RCTs have focused not only on whether financial services had an impact, but importantly on product innovation and design, thus helping to clarify our understanding of how, and under what conditions, financial services benefit poor people.  An upcoming CGAP paper summarizes the findings of recent randomized evaluations, and will be discussed in another blog series.
Perhaps one of the newest approaches in our toolbox is coming out of behavioral economics, where insights into the psychological underpinnings to everyday money management decisions is based on the idea that a better understanding of social, cognitive, and emotional factors can help us understand why people—poor and rich—do what they do. Sendhil Mullainathan of Ideas42 will take us on a tour of the (ir) rational mind and what it means for microfinance, policy choices, and product design.
Finally, the idea of empowering clients to develop the skills, attitudes, and behaviors to be his/her own best advocate in financial decision-making has taken root in the past few years.  Mike Kurbansky of Monitor Group will share results of a broad landscaping study undertaken on behalf of the Citigroup Foundation.
So, it is time to rebalance
We can hopefully agree that there is exciting momentum today to accelerate our learning about clients. However, the fact remains that the demand side has been less attended to and that microfinance evolved with a heavy supply side bias. I actually think that a success of microfinance was precisely its strong focus on institution building, something sorely lacking in many other development areas.  Viable providers and business models are key to the long-term ability to offer sustainable financial services.
Yet, it is now time to find a more just equilibrium between supply and demand. This is long overdue and both good for clients and for financial service providers trying to function as viable businesses. Getting deeper insights on client demand and responding to that demand with better products, delivery channels, and policies opens up opportunities for robust and responsible market expansion.
As you read this blog series laying out how we can learn about clients, please write in and contribute your thoughts.  Break down for us the science of what you are successfully doing, and share the secrets to your fine art.


By Alexia Latortue, CGAP’s Deputy CEO and lead for CGAP’s new team focused on clients and products working closely with Aude de Montequiou, Jasmina Glisovic, Meritxell Martinez, and Tanaya Kilara. The team is leveraging all the great work done by many CGAP staff and partners.