Techniques used by online microfinance platforms to stimulate user participation could be useful in helping organizations persuade people to behave in a way that benefits both society and the environment.
Microfinance platforms have popularized the idea that ordinary people can become the bankers of the poor. Communities of lenders meet every day to crowdfund microcredits to disadvantaged micro-entrepreneurs by investing small amounts of only around $ 25.
A new study looks into the world of these microcredit platforms to examine how they manage to attract investors and perpetuate their enthusiasm to address social issues like poverty.
Researchers at the universities of Birmingham and southern Denmark have identified two main ways in which the platforms maintain and leverage loans. Their findings are published in the Journal of Consumer Research.
First, the platforms bring together resources that function as an âaffirmation deviceâ – providing first-hand evidence of impact that helps consumers imagine the benefits of their actions, thereby creating a sense of empowerment.
Second, the platforms translate complex and distant social issues, such as poverty, into personal encounters between lenders and borrowers, creating a sense of connection and familiarity through photographs, stories and loan updates. This set of techniques is theorized as the ârelatability apparatusâ.
Co-author Dr Pilar Rojas-Gaviria, Lecturer in Marketing at the University of Birmingham, comments: âOrganizations such as microcredit platforms, which strive to engage responsible consumers, face two key challenges: overcoming the felt helplessness in the face of daunting problems, and removing the sense of disconnection from “distant” problems.
“Complementing the power of ideas and knowledge with personal stories that inspire hope and aspiration, affinity and connection are powerful techniques that could be useful in inspiring consumers to participate more actively in efforts to fight against social and environmental problems, such as climate change. “
Through storytelling, imagery, platform design, and communication, the researchers note that online microcredit platforms foster a sense that real change is possible through affordable actions. They also develop a sense of affinity and empathy among potential investors with aspiring micro-entrepreneurs, especially those in low- and middle-income countries (LMICs).
For example, platforms publish loan applications to highlight individual borrowers with first names, photographs and short biographies. This personalized strategy effectively frames microcredit as a virtual meeting with a borrower and his history of micro-entrepreneurship. In recent years, celebrities, such as actress Natalie Portman, have helped the microfinance industry promote microcredit as an act of hope that enables the resourceful poor to strive to escape poverty.
Co-author Domen Bajde, University of Southern Denmark, comments: âThe advent of online microcredit has widened the pool of potential investors to anyone with internet access and $ 25 to spare.
“After learning that lenders were more interested in the ’emotional returns’ than the financial gain from their loans, the platforms began to dramatize microcredit as an act of hope and affinity for poor entrepreneurs.”
Research is also important for charitable giving, noting that donors are more likely to contribute when they see their giving as a way to empower disadvantaged people and when donations are seen as high impact investments.
The way you write could impact what you pay for a loan
Domen Bajde et al, Creating responsible subjects: the role of mediated emotional encounters, Journal of Consumer Research (2021). DOI: 10.1093 / jcr / ucab019
Provided by the University of Birmingham
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