“Save Steady. Dream Huge.” is the tagline of San Francisco’s Kindergarten to College Program. Currently, students at nearly 40 schools (and by 2012 district-wide) automatically get a college savings account at Citibank, with an initial $50 deposit made possible by the City and County of San Francisco. The children and their families can make contributions to this deposit only account in person, by mail, or online as frequently as they like, in small or large quantities, up to $2,500 per year. Among other incentives to encourage savings is a match of the first $100 saved, and more incentives are forthcoming.
The SallieMae Fund also has a similar program, which since 1992, has been building excitement about college in young students and already reached 70,000 students. Its Kids2College program seeks to “Open Doors to Higher Education” and starts with middle school students.
Such a head start to financial citizenship has capacity for significant long-term impact. As we wait for the conclusions and learning from the various ongoing efforts mentioned in a previous post, here are a few personal experiences that I imagine will be revealed among the studies and interventions.
A head start to financial citizenship can:
Foster Dialogue: While conversations about money started with my mom and older siblings, they have expanded to dialogue with my friends, neighbors, parents of my friends, and now my husband. Money has become less of a taboo topic and instead, we share techniques and best-practices ranging from credit cards to taxes. Just as we would share recipes or restaurant reviews, we’ve exchanged stories about credit reports, IRAs, and student loan management. Each month, my husband and I hold budget meetings, where we review our numbers and progress towards our financial goals, responsibilities to our families, and opportunities of philanthropic giving.
Encourage Planning: Knowing at a very young age that my parents not only lacked the financing to send me to college, but also that they would soon need an allowance of support from me spurred me to action and also managed my expectations. As a young child, I did not ask for toys and candy while waiting in line at the grocery store check-out. In middle school, I began participating in various competitions, whether speech or essay contests, to start raising money for college. In high school, I began applying for scholarships my sophomore year. Early planning and a future orientation enabled me to be (i) financially independent upon graduation from high school (ii) start sending money home at the completion of college and (iii) self-finance a year of volunteer work, my wedding, and down payment on an apartment. This would not have been possible without a head start.
Practice Habits: I also think it made a difference for me to start my personal relationship with finance via savings instead of credit. In fact, it has resulted in an orientation toward credit, where I only considered it when necessary to finance graduate school and for a mortgage. Starting young allowed me to practice saving up toward a specific goal and instilled in me the time value of money which helps me overcome some of the biases that research in behavioral economics and the psychology of savings are revealing about barriers to saving. Starting early almost created the same affect—the same discipline—that many develop from debt.
Enable Financial Competency: Finally, an early start enabled me to diversify the sources and types of financial education from which I benefitted. I recall attending workshops at my local library in Tennessee on budgeting; participating in webinars provided by some of the sources of my college scholarships regarding credit; reading books and blogs about investments; and joining workshops provided by my personal banks or the human resources and staff associations of my employers. Cumulatively and over time, I gained the knowledge and attitude towards financial competency. Each intervention provided new lessons, and I still have much to learn.
Secure a Safe and High Quality Financial Passage: I think of all of these experiences are like stamps in a financial passport. They each have contributed to my personal financial citizenship, and hopefully, they will enable me to create financial inclusion and opportunities for others, whether in my personal or professional capacities. These experiences also inform why I believe in initiatives like FAB (Financial Access at Birth), which aim to challenge the process, to make us think differently about whether financial citizenship can start at birth, and how interventions like financial education can ensure a safe and quality experience.
While most people remember their first date, how many of us recall the first time we entered a bank? The two strongest memories of my initial visit were the bowl of lolly-pops behind the counter and the confused look on the teller’s face, when I asked with whom I should speak to open an account.
My first relationship with banking began in elementary school, during a visit to open an account for my single mother and our household of four children. My family came to the United States as religious refugees and had to navigate new systems and start our financial history from scratch—my mother’s credit history did not exactly transfer well from Iran. Although I only knew basic arithmetic and was still learning how to read from Burt and Ernie, my mother had few other choices, as no one at the local bank in rural East Tennessee could speak Persian, and my older siblings were at one of their numerous jobs, which provided income for our family during our initial years in our new life in America.
I was likely this bank’s youngest customer at the time, but it was not long before other clients who were not tall enough to reach the counter were registered among their books. I remember this initial meeting had quite a bit of back and forth between the bank agent speaking with my mother and me and the branch manager-- the kind you experience when you’re negotiating the purchase of a car. He kept going in and out of the office, I assume to figure out how to proceed. In the end, despite not being his typical target audience, he overcame what was necessary to provide us access to finance. Three decades later, I join other practitioners of development finance in asking questions about financial citizenship such as, “At what age can it start? When should it start? What are the best products and services?” Luckily, at least one donor and a number of international NGOs and financial service providers are interested in the answers.
YouthStart at UNCDF: The UN Capital Development Fund (UNCDF) leads YouthStart, an initiative to increase access to financial services for 200,000 low-income youth in Sub-Saharan Africa. With a specific emphasis on savings, YouthStart is a competition-based program that will identify and support up to 12 financial institutions to pilot and roll out sustainable financial services tailored to youth.
The good news is that it is not just NGOs and financial services providers that have been active and learning in this space—governments around the world are taking action, too. It can be hoped that other donors will join The MasterCard Foundation in creating opportunities for learning.
Stay tuned to hear about an innovative public-private-partnership the city of San Francisco and Citibank are leading to unleash the opportunities of youth financial services. They, like my bank back in Tennessee, do not dismiss the idea of getting a head start to financial citizenship.
Credit Suisse is a strong believer in corporate social responsibility, and a key part of its strategy is the establishment of the Microfinance Capacity Building Initiative in 2007. This initiative seeks to strengthen microfinance institutions by investing in training structures and facilitating the flow of knowledge between microfinance institutions and the financial services industry. By combining charitable contributions with employee engagement, Credit Suisse fully invests its resources into building capacity and expanding the reach of microfinance institutions. Credit Suisse officially partners with 4 microfinance institutions, one of which is ACCION. Through this sponsorship, Credit Suisse became a proud founding sponsor of ACCION’s Center for Financial Inclusion. Credit Suisse also supports the establishment of training centers in India and China to provide training in credit methodology, program management, and best practices to staff at all levels.
In addition to sponsorships, Credit Suisse’s Microfinance Capacity Building Initiative mobilizes employees all across the bank to spread awareness of microfinance--educating one another and sharing knowledge. The Microfinance Advocates network was formed globally with regional steering committees in London, New York, and Singapore/Hong Kong and is now more than 500+ members strong, including an impressive pool of individuals to whom an opportunity to virtually volunteer with The Center was presented in Spring 2011.
Financial Access at Birth (FAB) is grateful to the Credit Suisse Microfinance Advocates and volunteers who responded enthusiastically to this call for action and signed up to work closely with FAB program Manager, Rosita Najmi, to help connect this model of social and economic innovation to action. They are helping FAB with a pilot feasibility study, website user-engagement, and fundraising.
Financial Access at Birth (FAB) recently announced its aim to raise $5M to fund its first pilot. You can learn more how you, too, can volunteer, donate, advocate, and organize for financial inclusion, one baby at a time here.
In their television interview, “Taking Down Poverty from Day One,” Charles Payne and Shibani Joshi from Fox Business Network announce Financial Access at Birth (FAB)’s goal to raise $5M to finance FAB’s first pilot. In the interview, they discuss with FAB’s founder (Bhagwan Chowdhry), to what global challenges FAB is responding, and how financial inclusion can be supported through this model, one baby at a time. FAB is ready for its first pilot, has earned an invitation from a host country, and needs help raising funds.
Bhagwan Chowdhry reminds viewers that nearly half of the world’s adult population, 2.7B people lacks access to safe and quality financial services. Poor women in India and Africa are even willing to pay for the opportunity to save safely. Not only do most countries lack unique, universal ID systems, but also, many births go unregistered.
“Poverty knows no season, borders, or race. It affects us all in some way. If we asked those whom we aim to serve, they would say the “right time” is yesterday. We must act now, act together, and act differently, if we want to see full financial inclusion in our generation,” notes FAB’s manager, Rosita Najmi. She continues,
“FAB is about connecting and coordinating key ingredients that have already been tested and proven to be effective and affordable: (1) Research has proven that the poor are saving, but current options are not always practical—not “poverty-smart;” (2) Kenya has demonstrated that mobile banking can work and be sustainable; (3) India has shown us unique, universal IDs can be produced for less than US$1; and (4) For decades, development practitioners have been employing cash transfers effectively.”
“Financial inclusion is within reach—we just have to work together to build the plumbing through public-private-partnerships. A business case exists for the stakeholders that would be needed to implement FAB,” adds Najmi.
Banks stand to save costs on customer acquisition and cross-selling to create product demand--1000’s of new accounts a year send a loud and clear message. As financial markets continue to both struggle and to grow in competitiveness, customer retention will prove critical to going concern. Loyalty from efforts like FAB will help secure this. Further, unique, universal IDs will also lower the costs of fulfilling KYC (Know Your Client) requirements as well as reduce losses due to fraud.
Telecoms will have a chance to better integrate into daily activities of customers—as an electronic wallet, they can enter and guarantee a spot in the pocket and palms of clients.
Governments could eventually employ the new delivery channel to more efficiently and effectively disseminate information (via SMS text) and resources to citizens during crises and natural disasters. FAB can help reduce leakage and reach the last mile.
Central Banks and Markets can better inform policy and decisions when cash is being saved in accounts, not mattresses—access to accurate data about money supply is critical for both the public and private sectors.
Family Members Abroad can send remittances directly to FAB accounts and possibly with less costs and time.
How do we connect the FAB model to action? FAB needs your help!
Fundraise: Help raise $5M by the end of 2011. Spread the word--you can donate online here.
Volunteer: FAB welcomes students, professionals, and retirees to contribute their time and technical expertise to a number of specific projects. You can sign up to volunteer here.
Advocate: FAB urge viewers to friend FAB on Facebook (FABcampaign), follow FAB on Twitter (@FABirth), and stay tuned by reading the blog (www.financialaccessatbirth.org).
Organize: FAB would embrace opportunities to speak at conferences, contribute to publications, and to explore partnerships. Contact us here.
Stay Tuned: Become a Friend of FAB to receive updates--click here.
Washington, DC, August 25, 2011 – Entourage will host a cameo appearance by the founder of Financial Access at Birth (FAB), Bhagwan Chowdhry, on August 28 during an episode in the HBO television series’ final season. The Center for Financial Inclusion at ACCION currently hosts FAB as it prepares for pilots.
“It’s incredibly exciting to bring Entourage’s massive audience a taste of what we can accomplish with FAB, a social and economic innovation that seeks financial inclusion…one birth at a time,” said Chowdhry, a professor of Finance at UCLA’s Anderson School. “FAB presents an innovation to the delivery of financial and social services that helps us reach the “last mile” into rural areas and minimizes costs for reaching the bottom of the pyramid by using technology.”
“Solutions to poverty do not have to be as complicated as the problems they aim to solve,” said Doug Ellin, Executive Producer of Entourage. “I imagine among the million viewers of Entourage, there are others who also have good ideas. Hopefully, they, like Bhagwan Chowdhry, have the courage to share their vision and collaborate with others to connect their ideas to action to benefit us all.”
Entourage is an American comedy-drama television series that premiered on HBO on July 18, 2004 and is now in syndication around the world. The series was created by Doug Ellin and chronicles the acting career of Vincent Chase, a young A-list movie star, and his childhood friends from Queens, New York City, as they navigate the unfamiliar terrain of Hollywood, California. The show is known for its array of guest stars, usually featuring at least two celebrities per episode.
Rosita Najmi, who leads FAB’s day-to-day operations notes, “The Center for Financial Inclusion is proud to host FAB, prepare it for pilot, and looks forward to disseminating the knowledge that its demonstration will teach us all about creating new, innovative delivery channels that are sustainable and poverty-smart. ”
“I’m grateful to be able to play myself on Entourage,” said Chowdhry, an innovator in financial services for the poor, whose work has been featured in The Economist, CNN, Forbes, SmartMoney, and Fast Company. “FAB promotes one idea of how to respond to the global challenge of financial inclusion, in a world where nearly 2.7 billion people still lack access to a wide range of quality and safe financial products and services – a life and death matter for many.”
Program Manager at the Center for Financial Inclusion, Rosita Najmi, observes, “Television has done much to bring the idea of financial services to the poor into our living rooms and water cooler conversations. Oprah featured KIVA’s innovative model, while the Simpson’s introduced Mohammed Yunus to its viewers. Even financial education is being promoted by Bollywood Stars and via sitcoms as far away as Mongolia-- the industry of financial services for the poor is learning how to reach audiences in new, creative ways.”
“Reaching financial inclusion by 2020 just might be possible if we act now, act together, and act differently. FAB provides such an opportunity and remembers to put clients first,” says Elisabeth Rhyne, Managing Director of the Center for Financial Inclusion at ACCION, which in addition to hosting FAB takes innovative approaches to client protection, investing in inclusive finance, and financial inclusion for vulnerable populations like persons with disabilities.