Quality Indicators

Financial Inclusion Data Working Group

Rodrigo Porto Central Bank of Brazil

Index

Concept Note: The importance of indicators

Indicators of Quality Dimensions Summary

Example

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Concept Note The importance of Indicators

Indicators are important to:

understand the current stage inclusion of the population;

of

financial

monitor its progresses and barriers in different dimensions, several indicators should be created. They can be divided according to their purposes into three main groups: Access, Use and Quality.

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Concept Note Indicators of Quality

Purpose:

Indicators of Quality are designed to:

complement the analysis related to identification of other barriers to financial inclusion when access to services is available verify the sustainability of the use of financial services.

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Concept Note Indicators of Quality

Indicators of Quality can provide information on:

The convenience of services

The level of security of users Consumer protection issues Financial education of potential clients Choice

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Indicators of Quality - Convenience

These indicators should measure the extent to which financial services are made available to users, observing the existence of implicit barriers, such as: high cost of service waiting time in queues requirement of criteria to admission, such as documentation, minimum wage etc, not easily available to all potential customers suitability complexity (such as contractual complexity, hindering the understanding of the obligations and risks of services) of services
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Indicators of Quality Security of users

Client security encompasses:

issues related to the possibility of losses by transaction or registration errors due to poor infrastructure or fraud the stability of the financial institution
the continuity of services in the locality the access to safety net, such as deposit insurance.

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Indicators of Quality Consumer protection

The consumer protection scope should embrace both preventive and corrective measures.
Preventive measure: Users should have access to accurate financial information, clearly and transparently available, thus enabling decision-making with full knowledge of their rights and obligations. Corrective measures: focus on conflict solution between clients and institution. Accessible channels to clients must be provided to resolve any problems in their relationship with financial institutions
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Indicators of Quality Financial Education

Financial education should be emphasized due to: the lack of financial education, the existence of information asymmetry regarding the use of financial services and the uncertainty over the budget of low-income people the complexity of choosing one among many of service conditions offered It is also important to monitor the level of indebtedness of users in order to evaluate whether access to credit is sustainable, increasing welfare of its users
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Indicators of Quality Choice

Choice is also an important dimension so customers have the opportunity to select the better combination of: price quality of services treatment Moreover, it reduces the risk of the discontinuity of services in their locality.

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Summary
Dimension Convenience Scope Cost of services; Waiting time in queues; Complexity of services; Opening hours; Product fit Possibility of transaction or registration errors; Stability of the financial institution; Continuity of services in the locality; Access to safety net Preventive actions; Corrective actions; Complaints resolution; Level of indebtedness of consumers Level of financial literacy of users; Level of financial capability of users Level of competition

Client security

Consumer protection

Financial literacy Choice

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Indicators of Quality Different Approaches

Quantitative Indicators: Distribution (mean and variance) of interest rate on loans by range of users income (Convenience/costs) Average waiting time in queues / Number of clients (Convenience/waiting time in queues) Qualitative Indicators: Required information to build concepts: Does regulation defines a standard to simplify loan contracts to low income clients? (Convenience/complexity) How is financial literacy measured? Is measurement of financial literacy already in progress? (Financial literacy)
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Thank you!
Rodrigo Porto Central Bank of Brazil rodrigo.porto@bcb.gov.br

info@afi-global.org www.afi-global.org