Rebooting Financial Services in China
Reboot explores how to design inclusive financial services for China’s marginalized and rural populations.
China is a country in seemingly perpetual transition, where each transformation begets another still. The state’s slow retreat from economic life has enriched many and threatens to leave behind still more: rural farmers and minorities find their livelihoods stifled by inconsistent restrictions on private economic activity, and an increasing number of China’s workforce has become transient, migrating en masse in search of economic opportunities. Simultaneously, the government services that these marginalized populations have relied on are evaporating.
Focusing on high-margin, low-risk markets, China’s four largest banks—all state-owned—have closed a combined 30,000 branches in poor and rural regions over the last few years; rural credit operatives have followed suit, further eroding the already weak financial foundation that many of China’s poor currently stand on.
There is a lucrative but delicate opportunity for firms such as China Mobile, which recently acquired a 20 percent stake in the Shanghai Pudong Development Bank, to create well-designed financial inclusion services that build trust and improve the lives and livelihoods of China’s poorest.
Reboot’s project team included a three-person local team, and two staff from our New York headquarters. We traveled to six locations across China—from hyper-urban to extremely remote—to investigate the needs and experiences of its people.
To understand the needs of the people we met, our team conducted over 100 interviews, with a particular focus on marginalized populations. We used group interviews to quickly learn about the unique dynamics of each new community we visited, and one-on-one interviews to uncover the intricacies of people’s individual grievances and aspirations.
In order to understand the experiences of the people we met, we had to live those experiences ourselves. We shadowed villagers, living, eating, washing, and sleeping with poor families in their homes, in order to truly understand what their daily lives were like. We tried first-hand the services that they used in order to discover where needs were being met and not met. These experiences armed our team with necessary empathy and understanding to design better mobile banking services for China’s marginalized.
Our time in China was pockmarked with examples of the stasis many rural Chinese find themselves in, caught in the undertow between retreating government support systems and lingering economic restrictions. Take the example of woman we will call Ni Lar, a herdswoman from Inner Mongolia. Forced to give up sheep herding due to government prohibitions, she now watches her promised government subsistence payments dwindle as she struggles to find a new living.
People like Ni Lar are in need of financial services that will allow them to climb out of this rut. But what form will these services take?
A publication of our findings outlining service design strategies for China’s marginalized, will launch in June 2012, but here’s a sneak peek at a few key insights:
We must design to build trust.
A service, at its root, is a relationship, and like any relationship, its success is founded upon trust. When people feel disconnected or left behind by larger trends, they tend to turn inward, trusting only those in their immediate circles or communities. Services and technologies need not try to fight, circumvent, or replace these social bonds, but should instead build on top of existing human networks and, where possible, find ways to positively enhance them.
We must design for uncertainty.
“During Mao’s reign, things were bad. But at least we knew we were poor and that we would continue to be poor. That’s better than not knowing.” -A elderly farmer in Yunnan Province
The lives of the rural, poor Chinese we met were characterized by uncertainty, caused by a sprawling, rapidly privatizing economy and society. New services must be built for stability, and provide a foundation for them to both fall back on and to build their lives upon.
We must design for mobility.
In today’s China, it is commonplace for a worker to uproot his environment—and therefore his needs—at a moment’s notice. Many take the risk of doing so outside the household registration system, or hukou, and as a result are not afforded the same protections and services they might enjoy in their authorized geographic area. Services must not only account for that reality, but embrace it. Service providers will do themselves and the communities they are trying to reach a disservice if they fail to tailor their services to account for “outlier” populations or scenarios. Here, “good enough” won’t be. Services must be designed to follow people, no matter where they go, so that they will be unafraid to pursue better work in a neighbouring city or province.