Human-centered design (HCD) is a methodology that has existed for a while but began to resemble its current form in the early 1990s. More recently, the development sector has begun to adopt it in various sectors including the field of financial inclusion. HCD differs from traditional research in that it places a much heavier emphasis on end-user input. Interaction with customers in traditional market research might involve a one-time questionnaire but HCD seeks input throughout the research process by having an interactive two-way conversation to understand the motivations and core beliefs of potential customers. The key is to build depth of research by immersing oneself, to the extent possible, within the end-users world to get a deeper understanding of their perspective. This can mean researchers physically sit with the end-users in their environment; sometimes the location of a potential customer’s home or work can provide clues that would otherwise not be available. Often feedback from 12-15 users suffices because it brings richer insights than a one-time market survey of hundreds. HCD techniques can be used not only in the design of the product or service itself but how it is delivered.

Several institutions have put a great deal of thought into how HCD-based research can be incorporated. One of these includes IDEO.org – a not-for-profit design firm. They work with almost every industry and have developed a set of standardized steps aimed at the development sector and social innovation. The steps can be broadly categorized into: Framing the Problem, Ideation, and Prototyping. The key thinking behind HCD is that there have to be three elements in the decision to bring a product or service to market: financially viability, technically feasibility, and desirability by the targeted end-user (see figure below).

Figure 1: Decisioning Elements for HCD

Businesses are already keenly aware of the importance of business viability and technological feasibility. Less well-developed are insights into human behavior and how investing in human-centered research can lead to breakthrough products and services.

Building a product that is not only viable and feasible but is also desired by the target customer will drive customer engagement which will in turn drive growth. To illustrate the difference in approaches, instead of a telco asking itself: How can we raise our customer’s average monthly bill by 10% HCD would force them to ask customer-focused questions such as: How can we help busy families stay connected? The search for answers is directed towards gaining an understanding of how and why a product can be more compelling for the end-user.

There are several examples of HCD being used within the development sphere, specifically the water and sanitation for health (WASH) sector. Two of them are highlighted here and cover both the development of a WASH product itself as well as the delivery of another WASH product thereby illustrating the versatility of HCD concepts. IDEO.org worked and collaborated with the for-profit sector to build a toilet that is affordable and effective for low-income Ghanaians. IDEO.org first set about understanding the process related to in-home waste removal by witnessing it firsthand. This helped them come up with a product that not only catered to the needs of the end-users but also leveraged existing procedures and resources which helped to ensure affordability. Another IDEO.org project exemplifying more clearly how HCD can be used in the delivery of a product is SmartLife in Kenya. The initial round of user-feedback led to insights that allowed for a business model that had previously not seemed feasible, i.e. a pre-paid water delivery service.

The concepts behind HCD have recently been introduced to the agenda of financial inclusion. A helpful guide – based on 3 years of work and 30 prototypes developed using HCD concepts- was recently published by CGAP. Their involvement in these projects led to a distillation of some key design principles out of which a few examples are listed below. Interestingly, these design principles already exist within the informal financial sector and can explain why it is difficult to overcome the inertia of the unbanked to move away from informal services towards formal financial services. If providers in the informal sector cater to their needs and values while providers in the formal sector disregard it, no amount of business viability or technical feasibility will persuade a potential customer to make the switch.

These are just three of nine design principles from the guide along with illustrations of how the informal sector naturally follows the principle:

1 – Build Consistent Support into the System: In the informal sector, a lender will usually be a member of community – and often a member of the extended family – and so can be reached all the time with questions or concerns. Contrast that with the formal sector where customer service representatives are anonymous and not beholden to the sort of social pressure that an informal lender would be.

2 – Talk Like People Talk: In the informal sector, customers readily understand “terms and conditions” because their provider speaks the same language as they do – literally and figuratively. Formal financial service providers, while making efforts towards simplifying language and paperwork, can be overwhelming for those less financially literate.

3 – Offer Benefits Now: In the informal sector, when a customer needs credit to obtain groceries for the week, the process of obtaining this credit is not onerous and results in the customer meeting their needs immediately. There is no parallel in the formal sector. The only way a customer can get credit to meet basic needs such as food would be to have a credit card.

Karandaaz Pakistan has sought to highlight HCD and the possibilities that it brings to the financial inclusion agenda. As mentioned above, HCD can address hurdles in the delivery of a product – some of which were identified here – while delivering effective financial products and services to those less able to take advantage of formal financial sector offerings due to low literacy. Perhaps one of the most easily understood areas in which HCD can make an impact is in the design of smartphone applications for a mobile wallet. We first wrote about it here and since then Karandaaz has commissioned a design firm, GRID Impact, to create a prototype of a smartphone app that would enable lower-income segments to engage with mobile money products. The output from this research will be made publicly available to all mobile wallet providers in July 2016. We look forward both to disseminating these findings as well as working with providers who wish to engage more deeply on products informed by human-centered design. In the meanwhile, we will be unveiling some of the key insights learned so far via Karandaaz Pakistan’s upcoming blogs.