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As part of our podcast series, we spoke to Erin B. Taylor, an economic anthropologist, about what economic anthropologists do, how she researches financial behaviours, and tailoring financial services to the needs of women and minorities. Erin is talking in the FinTech stream at the 2020 conference.
What do economic anthropologists do, and how do they differ from social anthropologists?
Economic anthropologists are a type of social anthropologist. Historically, social anthropologists would go to live in distant places and try to understand all aspects of the society and culture there, including making kinship maps, documenting myths and rituals, and also figuring out how the economy worked. Around fifty years ago or so some anthropologists started specialising in the economic aspects of social life, like how people farmed or used cash, for example.
These days economic anthropologists study all kinds of contemporary economic issues, including how central banks think or how decisions are made on Wall Street. So they study powerful and elite members of society, as well as studying ordinary people. In my work I look much more at ordinary people. I’m especially interested in how people’s economic attitudes and behaviour affect their emotional well-being and their ability to realise their life’s goals.
At what point in your career and academic life did you become interested in financial behaviour?
The weird thing about money is that it affects so much of what we do with our lives, but we don’t understand our own financial behaviours.
I got interested in finance entirely by accident. In 2010 another anthropologist, Heather Horst, asked me to collaborate with her on a project researching the use of mobile phones and value exchange on the border of Haiti and the Dominican Republic. I had done my PhD research in Santo Domingo, the capital city of the Dominican Republic, and Heather knew I was really interested in the movement of people across the national border with Haiti.
So we went there to do this research and we were looking at things like how people used the credit on their phones and also their use of cash. I got kind of hooked on the question of how finances affect people’s lives. The weird thing about money is that it affects so much of what we do with our lives, but we don’t understand our own financial behaviours.
This become obvious when we interviewed the people living on the border about the things they carry with them in their bags and wallets. People carry all kinds of financial items, including cash, cards, receipts, and store cards. When you ask people to explain how they use cash, or why they keep certain receipts, it becomes clear that most people don’t really know why they do the things they do.
I repeated this study in the Netherlands with the same result. Most of our financial behaviours are totally unconscious. But they have a huge effect on us – money stresses us out immensely, it is really important in our relationships with other people, and it massively shapes what we can do with our lives – but we don’t understand it.
Your company Canela Consulting works with a number of FinTech companies and organisations. Can you tell us about some of the projects you’ve worked on?
Sure. Canela does all kinds of consumer research for both companies and not-for-profits. So far, though, the majority of our projects have been in finance and technology. This is because my business partner, Gawain Lynch, comes from a technology background, and I have this finance specialisation. We’ve done projects on things like payments in the Netherlands, financial inclusion in East Africa, and user behaviour in an online technology community.
We did the financial inclusion project with a company called FinTechStage. It was particularly interesting because we mapped out all the stakeholders for financial inclusion in all six countries in East Africa. This meant identifying every single bank, FinTech organisation, NGO or Government organisation that offered financial services or ran some kind of financial inclusion program. We also looked at key development indicators so we could compare the financial inclusion of people with the services being offered to them.
There were massive differences across the region, with Kenya consistently showing the best results, and Sudan being behind everyone else. One interesting insight we developed was that financial inclusion programs work best in countries that are already a bit more developed. Financial inclusion is sometimes touted as being for the ‘poorest of the poor’, but that doesn’t seem to be the case. Institutions have a hard time operating in places that have little infrastructure and a lot of insecurity.
Why hire an economic anthropologist, or indeed any sort of anthropologist, if you’re a FinTech company?
The comparative advantage that anthropologists have is that we are really good at asking questions about non-obvious things. This means we find out all kinds of things you would have never dreamed of.
I have at least one great story to tell about this. So, when I was working with Holland FinTech, we did a series of round tables with FinTech companies to talk about their business issues. One particularly memorable round table focused on consumer issues. One man spoke up and said that he sells life insurance but he can’t get the Dutch to buy it, and he believes it’s because they don’t want to think about their own deaths.
But from a cross-cultural perspective this doesn’t make sense. Life insurance and funeral insurance are the biggest selling insurance products around the world, and historically they have also been the most popular insurance products. You can go back centuries and find people buying life and funeral insurance, because they didn’t want their families to be burdened when they die.
So I think his problem was probably due to something else. For example the Dutch are known to be over-insured so maybe there wasn’t really a need. But unless you know something about the history and culture of finance, you wouldn’t really know this. Anthropologists who specialise in the area do know a lot of these random facts. Talking to them can save your business a lot of time and money chasing problems up the wrong tree.
Of course anthropologists can also help you design research to find out about your existing users. The comparative advantage that anthropologists have is that we are really good at asking questions about non-obvious things. This means we find out all kinds of things you would have never dreamed of. Like in the payments research we did in the Netherlands, we realised that although the Netherlands has a very digital money culture – they hardly ever use cash – this doesn’t mean that they are all totally comfortable with digital finances.
Some people never use cash but they refuse to download a banking app as they don’t believe it’s secure, they only check their finances on their computer. Other people will download the app but only use it at home. Yet other people will use the app on the street but be extremely careful in case someone sees them logging in. And finally you get people who are keen to try all kinds of new products.
So it is a mistake to assume that just because a nation’s financial culture is digital, people are going to readily adopt the latest products. You need to do research to figure out what people’s fears are and where their pain points lie, as well as identifying their needs and design preferences.
RESEARCH METHODS AND DIRECTIONS
Money is such a difficult subject for some people to talk about. Can you share with us some of the strategies you use in your research to get people to talk openly about their finances?
The thing to realise is that the idea that people don’t like to talk about money isn’t really true. Of course people can be very private around things like revealing how much they earn or what debt they are in, and that makes a lot of sense. And there are also cultural taboos against speaking about money, such as how much you paid for luxury items. But that doesn’t mean that people don’t like to talk about their finances at all. For the most part they just don’t know how.
This is another thing we noticed when we did the Portable Kit Studies in Haiti and the Netherlands. At first people are really unsure how to answer questions. But once they warm up they get really excited. They start to get curious about their own behaviours and ask, ‘Yeah, why DO I keep all these receipts in my wallet?’ Or, ‘Why do I pay for some items in cash, but others with a card?’ We’ve had people start cleaning out their wallets in front of us, getting rid of receipts and storecards and generally putting things in order.
Beyond this study, there are many ways to get people to talk about money. We talk about these at length in a toolkit we made with the Institute for Money, Technology, and Financial Inclusion. The toolkit explains the different methods being used by researchers working in academia and in companies to understand specific aspects of financial behaviour.
It includes methods like interviews, financial diaries, online research, and experiments. All of these methods have their advantages and disadvantages for understanding finances. The trick is to have a range of research up your sleeve so you can design research that is suitable for what you want to find out. If you’d like to take a look you can download it on the Canela website.
You have stated that “mobility is a central feature of money, and it’s transforming consumer finance practices today”, noting that “mobility is generating more market diversity, [meaning] a greater number of research problems are located in the long tails”. Could you elaborate on this?
Whereas banks had to create generic products to have a viable business model, these small FinTechs can create niche solutions – that is, solutions that do one thing only (like currency conversion) or for one small target group. This is what I mean by ‘long tails’ – not designing for the average person but for the less common use, case, or person
Happy to. The whole point of money is that it’s mobile. Cash developed to be light and portable because people needed to take it to markets to exchange it for goods. There are some exceptions, such as in Micronesia where one island uses these enormous stones as money (Rai stones on Yap island). They don’t move them, but everyone remembers which part of the stone belongs to them. There is a story that one of them was being transported on a boat and it fell overboard and has been on the bottom of the sea ever since. The islanders decided that it still counted as money, and so they continued to use it to record wealth and debt.
Today, digital money is kind of like that. Nothing tangible actually moves, it’s just a record of who owns what and who owes what. Yet the ownership of value does move around faster than ever. And the other thing that is moving is new products on the market. Increasingly we do not need to depend upon local banks to manage our finances, we can access thousands of products offered by thousands of companies.
Whereas banks had to create generic products to have a viable business model, these small FinTechs can create niche solutions – that is, solutions that do one thing only (like currency conversion) or for one small target group. This is what I mean by ‘long tails’ – not designing for the average person but for the less common use, case, or person.
Research can help us understand how to design products for these long tails. For example, designing financial services for people with disabilities, or groups with particular financial literacy issues. Or women, who are of course not a minority but can have specific financial needs.
WHY WOMEN NEED THIER OWN FINANCIAL SERVICES
Most recently you published a report called Female Finance with Dr Anette Broløs in which you explore the question, “Why would women need their own financial services?”. Can you provide a summary? What are the opportunities for FinTech companies?
Yes, so the curious thing for me was exactly this question. Financial services mostly work because they are neutral. The whole point of cash is to be fungible, anyone should be able to exchange cash for anything. Having cash for men and cash for women makes no sense. And it’s the same for most financial services. When you go to make a payment with a cash or card or a digital wallet it should just work.
The thinking is that women need services tailored to them because, on average, they are at a financial disadvantage compared with men. They tend to earn less money throughout their lives, and they retire with less wealth… Historically most financial services have really been pitched at men.
So why would women need their own financial services? The thinking is that women need services tailored to them because, on average, they are at a financial disadvantage compared with men. They tend to earn less money throughout their lives, and they retire with less wealth. They are less likely to know how to make investments, how to grow their wealth. And historically most financial services have really been pitched at men. Women can be put off by male-centric advertising.
And so it does actually make sense to put thought into both the design and delivery of financial services to women. In the report we look at what’s being done in five areas: payments and credit, financial management, insurance, investment, and raising capital. For each category we provide descriptions of two examples of services for women.
One of my favourites is Sheilas’ Wheels, which offers car insurance aimed at women. Originally you had to be female to access it but a change in European laws stopped this and now men can buy it too. But it is still very much directed at women. While the insurance products are quite generic they take women’s needs into account with things like offering advice on family-friendly mechanics and publishing videos to help women know what to do if they have an accident.
And the advertising is very girlish, with lots of pink and a singing trio of women called The Sheilas. Now, I would not normally condone this approach – research shows that women don’t really appreciate the ‘pink it and shrink it’ strategy – but in this case it seems to work well.
A different example is a company called Nav.it which offers a financial management app. Their product is far more gender neutral, but it was very much designed with women’s needs in mind. One of the app’s features is a kind of social network where customers can talk with each other about money issues. They designed this knowing that women often appreciate the ability to get advice from a community.
In fact, Nav.it’s founder, Erin Papworth, states that she wants to change the way in which women talk about their finances, because most financial talk is done in a language developed by men. That is actually quite radical.
You’re involved in the European Women Payments Network which “strives to create more opportunities for women and minorities, as well as being a champion for a more diverse and inclusive industry for all.” Can you briefly tell us about this network?
The EWPN is a kind of support network for women working in the payments industry and in FinTech more broadly. It was founded by Martha Mghendi-Fisher, who also founded a similar network in Africa. The EWPN runs an annual conference in Amsterdam and is actually one of my favourite conferences to attend for a couple of reasons.
One is that the atmosphere is always very supportive and social. The second is that they have a good mix of content, covering industry issues and also inviting academics from all kinds of disciplines to speak about research. So you never know what exactly you’re going to get, it’s always a pleasant surprise.
Anette and I started a research group as part of the EWPN’s network to bring more visibility to the wide range of financial research being done. The conference is great but we felt the conversations need to be taking place year-round. There is just so much great research being done that can benefit the industry.
We have a LinkedIn group where members can post their own research or interesting articles they have discovered. If you search LinkedIn for ‘EWPN research group’ you should be able to find it. Everyone is welcome to join.
BIASED HUMANS = BIASED ALGORITHMS
The FinTech stream at the conference poses the question, “How do we ensure that the already profound inequality worldwide is not further exacerbated” by artificial intelligence and technology more generally in FinTech? What are your thoughts on this?
I don’t think you are ever going to see an algorithm that makes decisions that are aligned with humanistic values. I suppose it is technically possible, but it probably isn’t in the interest of companies to design such an algorithm.
The problem with algorithms is that they take on human biases. Plenty of research has been done showing that algorithms can be racist or sexist, they’re not neutral at all. Since finance increasingly uses algorithms to make decisions it runs the same risks. For example, letting algorithms decide who can receive insurance or a loan is likely to increase discrimination about certain people. This is why the insurance industry is generally very highly regulated, especially in Europe.
I don’t think you are ever going to see an algorithm that makes decisions that are aligned with humanistic values. I suppose it is technically possible, but it probably isn’t in the interest of companies to design such an algorithm. In order to counter this tendency of both companies and algorithms we need to focus more on what kind of society we want to be, how we want people to be treated, what values we want to implement. With respect to finance, this means we have to ask questions about what we mean by financial well-being and what our financial human rights are.
The fintech stream especially has a really exciting and unusual line-up of speakers, and I’m looking forward to hearing what conversations emerge. We have speakers from academia, law, and fintech. They will be coving topics ranging from financial products to critical issues like the human impact of machine learning and the role of regulation. I think this diversity is really productive and we need more of it!
Erin’s book, “Materializing Poverty: How the Poor Transform their Lives” deals with socioeconomic transformation in the Dominican Republic, and is available here.
You can listen to the full interview here.