Mastercard Taps Into Digital Partnerships To Build Financial Resilience

Originally published by the Mastercard Center for Inclusive Growth

by Luz Gomez, Carlos Alberto Rubio and Avni Patel

Digital platform use is on the rise throughout Latin America, providing a source of income for millions of people. “Gig” work is providing an alternative to low-productivity, low-quality jobs in the informal economy. Online marketplaces are enabling entrepreneurs to reach more customers and expand their offerings efficiently. Fintech credit products are providing vital working capital, helping small businesses grow and bounce back from economic shocks.

While a growing body of evidence points to the expanding role of digital platforms in fostering inclusive growth and resilience, many independent workers and entrepreneurs in the region remain disconnected from social protection benefits like paid time off, sick leave, health insurance and savings that could help strengthen their financial security.

To address this challenge, The Mastercard Center for Inclusive Growth has been working with our research and programmatic partners to test, iterate and scale approaches that use behavioral science to help people increase their earnings, obtain credit and save for unforeseen circumstances.

Behavioral science involves understanding what influences behavior. A range of techniques can be effective in encouraging positive financial behaviors. “Nudges” — in the form of reminders and communications or changes to the user experience — can steer individuals toward a desired action. Gamification incentivizes engagement with products and services, using elements of game playing such as point scoring and competition. 

Most recently, we collaborated with digital platforms and financial service providers, including Mastercard partners Mercado Libre and Gliber, to test behaviorally informed interventions in Latin America. These findings, along with emerging insights from across the Mastercard partner network, point to a future where digital platforms not only thrive in their business endeavors but also contribute significantly to enabling people’s progress on the journey to financial health.

• From 2020 to 2023, 100 million Latin Americans (25% of adults) accessed digital financial services for the first time.
• 65% of surveyed independent workers reported that they lacked saving for emergencies and financial shocks.
• 180k users reached in behaviorally informed interventions with digital partners and Common Cents Lab, with the potential to scale to 12.1 million.

KEY LESSONS

Innovative partnerships incorporating behavioral design offer a promising avenue for advancing inclusive growth at scale.

Behavioral interventions offer an alternative path for fostering financial well-being.

Traditional approaches to financial education have had mixed results and are often difficult to scale. Embedding behavioral science into digital platforms offers an alternative, evidence-based approach to boosting the financial health and resilience of individuals with cost-effective, scalable interventions.

For example, research shows that digital credit can help small businesses maintain liquidity, bridge shortfalls in their account balance and manage financial shocks. In our recent partnership with Common Cents Lab, we collaborated with Mercado Libre to understand how barriers, such as a lack of trust, could be keeping many entrepreneurs selling on their platform from taking actions that could expand their access to credit — such as linking accounts to share financial information. The study tested communications to encourage sellers to link their accounts, resulting in a 73% increase in account linking and at least 137 businesses gaining credit approval.

Other studies show that techniques like default options, auto-enrollment and predefined values are highly effective at changing behaviors with positive results. Common Cents Lab applied these insights with Gliber to help Chile’s gig workers save money. Testing with 755 users over six weeks showed that creating savings pockets by default doubled the number of users with active savings pockets (from 14% to 28%).

With careful research and deep understanding of users’ behaviors, we found these platforms can design and redesign their features to tailor and refine their services, achieving a dual objective: maximizing user benefits and simultaneously driving their own growth.

Integrating behavioral design is a win-win decision.

Collaborating with Common Cents Lab strengthened product teams’ ability to incorporate behavioral insights into digital products while building the case for businesses to adopt these strategies. For instance, reminding e-commerce sellers to stock up during busy times can boost sales. Other research showed that if fintech lenders offered flexible credit payment dates, it could improve repayment rates and help small businesses manage income volatility.

In Bolivia, our partnership with Accion and financial service provider BancoSol demonstrated how gamification can support positive financial behaviors and drive real business outcomes. A recent Georgetown University study showed how the BancoSol gamification tool, which was developed by fintech Flourish FI, contributed to a 21% increase in logins to the bank’s mobile banking app, a 48% rise in online bill payment transactions and a 36% improvement in timely loan repayments.

Nubank, a leading fintech that serves over 44% of Brazil’s adults, attributes part of its growth and success to a focus on integrating financial education and behaviorally informed design into the user experience. A new study with Mastercard sheds light on how these approaches have helped Nubank customers progress along their journey from financial access to financial health. For example, more than three-quarters (80%) of customers used a prepaid card as their first financial product, with 67% going on to access loan products, and 36% making investments, within 1.5 years on average.

Companies have extensive expertise and networks that can be harnessed to support financial security and health.

Behavioral science isn’t just the domain of researchers. The private sector also has expertise and networks to develop and scale behaviorally informed approaches. Every day, companies use behavioral science to better understand and influence consumer actions. They analyze data to personalize products and marketing, use techniques like nudging to guide decisions, and create loyalty programs and incentives to boost engagement. All these strategies can help improve customer experiences and enable people to earn more, save, use credit responsibly and make decisions that enhance their financial well-being.  

Our approach at the Mastercard Center for Inclusive Growth has been to combine philanthropic support for research and connections with Mastercard business partners to design and test sustainable, scalable, evidence-based interventions for financial security. By cultivating diverse cross-sector partnerships with like-minded companies, these lessons and case studies help inspire others to replicate and continue to innovate upon these social impact models. ​ 

"It was an opportunity that was not being explored ... to help those users by making them conscious about their financial health and question ourselves: Is the way we are creating our products going to really help that person be able to create a savings pocket, prepare for a financial shock or a medical emergency?"
Product owner
Mobile banking app

Looking Ahead

Partnerships that bring researchers together with product designers to test and iterate behavioral intervention can help build an evidence base to inform investments that enhance financial well-being.

Targeted interventions conducted in partnership with Common Cents Lab have already marked a significant milestone by reaching 180,000 users and directly influencing the behaviors of 1,000 of them, putting them on track to improve their financial resilience. This is just the beginning.

As part of our efforts, Common Cents Lab is also working to develop an interactive tool that will allow digital platforms and fintechs to diagnose what their behavioral challenges are and replicate successful interventions already implemented to strengthen their product offering. With Flourish FI, we’re supporting the development of financial management tools that will enable small businesses in Brazil to progress through a gamified journey to adopt healthier financial behaviors, which in turn can unlock rewards such as access to responsible credit. 

Working with partners, we will continue to share lessons from these approaches and bring together know-how and networks across the private and public sectors, NGOs and research organizations to meet the evolving needs of workers and small businesses in an inclusive digital economy.

Follow the Mastercard Center for Inclusive Growth's journey to advance equitable and sustainable economic growth and financial inclusion around the world by following us on LinkedIn and Instagram.