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What if you could save small
amounts each day on your mobile phone? What if your savings also gave you a
chance to win the lottery?
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My research was
motivated by the question: How can Haitian passion for lottery be harnessed to
open more productive financial services? Given
the lack of information available on traditional lottery and financial
strategies, we undertook primary data collection to explore lottery and savings
behavior in Haiti from June through November of 2015. In partnership with
Digicel, the country’s largest mobile operator, we conducted a phone survey of
over 700 individuals. Analysis of the data examines lottery play and saving
statuses and behavior patterns and the relationship between them. The results
suggest there is an opportunity for lottery-linked micro-savings via mobile
money platforms.
An important finding
in our data analysis is that savings and lotto statuses are complementary. This
implies that those who save are also active in other financial strategies and
that lottery may be an ideal mechanism to encourage people who do not yet save
to begin, and those who are already saving to increase their balances. There is
some emerging evidence, that this is the case for other savings mechanisms
linked to lottery. (Read the studies here and here.)
We also now
know that at least 43% of Haitians play the lottery, spending upward of
66,000HTG (1,320 USD) per year on average in wagers. Eighty percent of players
are saving less than this amount during the same period since wager amounts approximate
80% of income on average. The apparently high daily purchasing power reflected
in wager amounts means that there is room to increase savings even and
especially among the relatively least wealthy. Thus there is a ripe opportunity
for innovation in savings offerings. Hello ‘Lotto-to-Save’.
This lottery-linked micro-savings product might resemble traditional lottery but automatically divert a
portion of wagers to a savings account or, alternatively, reward savings
balance milestones with lottery tickets. To make such small transactions
feasible, the product would be built on existing mobile money platforms which were launched in Haiti with USAID support
in the aftermath of the 2010 earthquake. The
most frequent and familiar financial transaction for Haitians, lottery is an
ideal entry point to build trust in mobile financial transactions and (semi-) formal
savings mechanisms.
Plans to pilot a
lotto-linked savings product in Haiti are underway pending funding awards. The
pilot will provide further evidence of the potential for lottery-linked savings
to catalyze savings in Haiti as well as in other markets in the region and
around the world. Such products also hold promise as the gateway to accessing
further financial services as consumers build a trackable record that could be
used for rating credit-worthiness and eventually extending loans. Accumulated savings in lottery-linked accounts may
also prompt similar savings habits in regular e-wallets or mobile savings
accounts.
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