ideas42 joining with USAID and CGAP to scale up financial heuristics
Tuesday, October 7, 2014
Project will scale-up pilots applying behavioral economics to create morecustomer-centric financial services
Nonprofit behavioral design firm ideas42 has been awarded over $1 million by USAID and CGAP to scale up an innovative new tool to help microentrepreneurs in developing countries manage their finances better. The mobile phone push notifications tool, which aims to build a better understanding of the financial needs and practices of informal entrepreneurs, will be piloted in India and the Philippines over the next 3 years. This project has the potential to lead to the creation of more effective client-centered financial products that could improve the lives of millions of the world’s poor.
Worldwide, there are approximately 400 million micro, small and medium enterprises, and the sector constitutes an important source of economic mobility for the poor (IFC, 2010). Microentrepreneurs in developing countries face complex financial decisions in many areas of life, whether in their personal finances in the form of savings decisions and retirement planning, or in a business context as small business owners or investors. Still, many lack the training or skills they need to manage the complex finances of a small enterprise. This often represents a stumbling block preventing microentrepreneurs from achieving financial success and lifting themselves and their families out of poverty.