MicroSave
Market-led solutions for financial services
EU/ACP Microfinance Program
Microfinance Peer Learning Event
Experience in Development of
Savings Services
Peter Mukwana
October 1 – 3, 2008
Brussels - Belgium
Why Develop Savings Products?
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Respond to client needs and preferences
Operational & financial sustainability
Deepen and broaden outreach/growth
Help clients manage risk and vulnerability
Raise new sources of capital
Retain good clients/reduce drop-out rates
Product Development Process Overview
Research
Issue
Qualitative
Research
Plan
Qualitative
Research:
FGD/PRA
Understanding clients’ needs
Product
Ready for
Pilot-test
Quantitative
Research:
Prototype
Testing
Costing &
Pricing
Concept
Development
Refine the
Concept into
a Prototype
Testing the Product Prototype
Risk
Analysis &
Process
Mapping
Key Innovations in Development of
Savings Product
• MFIs have generally two types of savings products
namely:
• Compulsory savings and
• Voluntary savings accounts (Easy Access a/c at Uganda Finance Trust,
Quick a/c at Tanzania Postal Bank) .
• Providing Value Added Services (VAS)
• Life/health insurance, unlimited withdrawals, free ATM cards, free
statements
• Electronic Banking /Technology-based financial
services
• Branchless , Mobile phone, POS, ATMs
Key Innovations in Development of Savings
Product 2
• Mobile banking – Equity Bank (Kenya)
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A concept that the bank used to reach the remote areas
DFID supported it by provision of 4WD Vehicles
Mobile Vans visit remote areas say 3 times a week
Vehicles were fitted with secure safe and escorted by police
Van has communication link with host branch database
Laptop was used to process transactions
The Challenges for Developing and
Marketing Savings Products 1
• Regulation – restrict provision of open access
• KYC challenges - e.g. physical address, passports and
National IDs requirements
• Technology costs - initial capital required is huge
• Culture change – especially for MFIs that have all along
been Credit-led
• Buy-in across the institution
The Challenges for Developing and
Marketing Savings Products 4
Challenges for Marketing Savings Products
• Poor product knowledge.
• Misunderstanding or misinterpretation of savings
products as being linked to loan products.
• Inconsistent marketing messages on products / services
• Poor customer service (where there has been an
effort, institutionalizing it is a challenge)
• Building strong corporate brands that inspire
confidence from the public
Suggested Solutions / Ideas to think about when
Developing and Marketing Savings Products
• Determine the customers value propositions and integrate
them in the design (sell benefits)
• Corporate Branding
• Competitor analysis
• Staff training – customer service, product knowledge,
processes and procedures
• Financial Education – focus on clients – product
knowledge, etc
• Pilot test savings to ensure fit with existing institutional
structure and infrastructure
Experience With Micro-insurance 1
• Key Risks
• Sickness, Accidents, Theft/Robbery and Death
• Coping Mechanisms
• Savings, Sale of assets, Relatives / friends, Groups, Formal
Insurance, Loans
• Understanding of Insurance
• Very low, negative experience, how insurance works
• What need to be done?
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Change the negative perception
Create linkages with insurance companies
Craft Clear Messages
Train Staff (MFI) and deliver on the promises
Finally …
Stay Alive!!
MicroSave
Market-led solutions for financial services
• Email: [email protected]
• Website: http://www.MicroSave.org