What comes to mind when you hear the term Positive Deviant – an optimistic misfit, an affirming nonconformist, a heavy metal band with uplifting lyrics? In behavioral science research, positive deviants “… are certain individuals or groups whose uncommon behaviors and strategies enable them to find better solutions to problems than their peers, while having access to the same resources and facing similar or worse challenges.”
A positive deviant is someone who succeeds when all about them are failing, a person who finds a way out when everyone else is stuck. The purpose of studying these deviations from the norm is to learn from the strategies of the positive deviants to see if others can adopt them and get similar results.
I recently was selected as a Center for Financial Inclusion Fellow to study positive deviance in the banking industry. Let me explain the context where I will be searching and what I will be looking for.
In countries around the world, governments provide regular cash payments to those living below the poverty line. Sometimes these payments come with conditions, like keeping the children in school and receiving regular medical check-ups. Sometimes they come as part of a public works project. And sometimes they have no conditions at all. Scientific studies have shown that these regular payments, even when very small in amount ($20 – 50 per quarter), have a positive impact on helping people move out of poverty. Regular payments that can be depended on form a base that families can build on. In addition, these payments help stop the generational transfer of poverty. Parents receiving these payments can afford to send their children to school, so the children end up having better job opportunities than their parents did.
Years ago, governments made these payments in cash. That’s right, a big truck loaded with cash would pull up to a local government office and drop off a bundle of bills. Local officials would distribute this cash to those on the government social welfare rolls. As you can imagine, much of this money never made it to the right people. Today governments use a quicker and less leaky method. They set up bank accounts for each person and deposit the money directly in their account. Now, in most cases, these accounts serve the function of a mailbox for those receiving the payments. As soon as the money comes in, its owner will go to the bank or an ATM and take it all out.
Why don’t they keep any in the bank? People living in poverty have a lot of experience dealing with cash, even when they have very little of it. On the other hand, they have no experience managing bank accounts. Research by Guy Stuart of Microfinance Opportunities, and a CFI Fellow last year, found that the people receiving these payments:
My research will look at the supply side of this challenge. I can make a business case for why banks should invest in this customer base as part of a long-term strategy for building profits. It goes like this:
Unfortunately, most banks do not see it this way. Since the money does not stay in the bank very long, they don’t see a way to make money on these accounts. They will set them up if the government will pay the cost of operating them, but they don’t want to invest any of their resources into this customer base. This means that they don’t offer the types of products that will meet the needs of these customer and they don’t take the time to help their customers learn how to use their accounts.
So, I am on my search for positive deviants, looking for banks that go against the grain and see these customers as part of their strategy for generating profits over the long term. The key criteria for a bank to qualify as a positive deviant in this area are:
I recently participated in a webinar with CFI describing my research. You can see it below:
So far, my desk research has led me to the following financial institution that may meet these criteria:
I’m also interested to see if any of you who read this have some ideas of banks that might qualify. If you’ve run across any positive deviants lately, can you please let me know? You can use the comments section below or email me directly at email@example.com.