Women’s World Banking ®
Women’s World Banking
Workshop: Savings Mobilization and Financial LiteracyCentral Bank of Nigeria 6th Annual Microfinance Conference
February 7, 2012Jennifer McDonald
Women’s World Banking ®
Objectives for the Workshop
Part I: Designing Products for Savings– Explore design considerations in developing savings products
for the unbanked, especially women– Assess institutional readiness for implementing new products
effectively– Discuss a case study of a product development process (Hasal
MFB)
Part II: Financial Literacy for Savings Mobilization– Develop practical techniques for implementing financial
literacy in your savings program– Ensure that financial education adds value to the customer and
to your business– Explore examples of ways to reinforce financial literacy in day-
to-day operations
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About Women’s World Banking
Women’s World Banking ®
Global Footprint
• Benin• Burundi• Ethiopia• The Gambia• Ghana• Kenya• Uganda
• Bangladesh• India• Mongolia• Pakistan• The Philippines• Sri Lanka
• Bosnia-Herzegovina• Egypt• Jordan• Morocco• Tunisia• Russian Federation Asia
Africa
Central & Latin
America
New York: Global Office
Europe, Middle East
& North Africa
• Bolivia• Brazil• Chile• Colombia• Dominican Republic• Mexico• Paraguay• Peru
RegisteredStichting
in The Netherlands
• Global microfinance network with 39 members in 27 countries• 26 million active clients, 80% women• $7 billion in outstanding loan portfolio, $3.5 billion in deposits
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In the last five years, WWB’s membership shifted from predominantly credit-only MFIs to MFIs offering both credit and savings services
C&S MFIs (21)
Credit-only MFIs (18)
20112011
C&S MFIs (13)
Credit-only MFIs (26)
20062006
Product Focus
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Market Research, Marketing, Branding, Alternative Delivery Channel, Financial Education, Social Communication
Product Innovation
6
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Product Design for Savings
Objectives
Explore design considerations for savings products
Assess institutional readiness for implementing new products
Discuss a case study of a product development process
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Savings for Unbanked Customers
WWB research in different countries finds common themes:– She saves informally or at home but is interested in options that help
her build her savings
– Her income is unpredictable and she continually juggles limited funds to meet a range of needs
– She saves for lump-sum events like school fees, weddings, celebrations or to invest in a business or home
– Key factors for deciding to save at a bank are: trust, proximity, access, and friendly, inviting service
And key differences:
– In Colombia “saving” refers to large sums of money and many poor women say they can’t save, but everyone “keeps” money at home
– In Kenya money in a bank is “dead” and women prefer to put their money to work in a business or to buy assets that generate a return like livestock
– In Pakistan all women save for their life cycle needs, if you don’t save you are “doomed”
– In India gold for your daughters’ marriage is the most common aspiration
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Know Your Customer
What about in Nigeria?What about in Nigeria?
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Know Your Customer
Successfully mobilizing savings is based on a deep understanding of your customers
Who I am * How I think * What I aspire for * How I want to be servedWhat I want from a bank
Focus Group, Kenya
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Customer Segmentation from WWB ResearchAfrican Microfinance Bank
Segment 1: The Hard-Working Dreamer
Loyalists with Group Loans
Segment 2: The
Empowered Achiever
Loyalists with Individual
Loans
Segment 3: The Pragmatic
Planner
Non-Members Who Do Not
Use Loans
Segment 4: The Smart Shopper
Non-Members Who Use Loans
Know Your Customer
New SegmentsNew SegmentsCore Business SegmentsCore Business Segments
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What are my aspirations? Why do I save? Children’s Future: “I want my children to have the best education
possible.”Business: “When I see a business opportunity, I seize it. I take risks to
achieve my dreams.” Security: “I want to buy big assets, such as high-yield cattle, a bigger
shamba or a plot for rental homes, so I can earn more money and have security in my old age.”
What barriers to saving (with the bank) do I face? Access to loans: “I use loans to grow my business and manage big
expenses.” Revolving cash: “I like to keep my money revolving. I don’t like the
idea of having “dead” money.”
How do I save now? Assets: “I save in assets because they earn me income.”
How can YOU sell savings to me? Product Diversity: “The path of success is still important to me: while I’ve achieved a lot, I’d still like guidance on how to continue to grow to meet my goals.”Convenience: “I have choices, and expect quick service, good interest rates, and convenient access to my money.”
Segment 2: The Empowered
Achiever
Loyalists with Individual Loans
Key Insights by Segment
Know Your Customer
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Know Your Customer
Immersion and Open Dialogue• SEWA Bank, a cooperative
bank for women in India, offers innovative savings products
• Product design was inspired by an Exchange Dialogue – a 3 day homestay with clients
• Instead of discouraging purchase of gold, SEWA Bank understood its place as a coping strategy and to build assets
• Led to products like “Chase Your Worries Away” and “Gold for your Daughters”
Traditional market research through focus groups is only one way Other approaches can be even more effective in putting us in our customers’
shoes
Traditional market research through focus groups is only one way Other approaches can be even more effective in putting us in our customers’
shoes
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Life Cycle Framework•Who is the target customer?•At which points in her life will the product be useful to her?
Customer Insights and Product Design
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Customer Insights and Product Design
Youth Savings• MFB aimed to broaden appeal of
its children’s account from parents of babies to older children and youth
• Key insight: Need to target different decision-makers at different stages
• Implications: Include goal-based savings plans and educational events designed for different ages
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Customer Insights and Product Design
Girls’ Savings• Key insights: Girls value
independence and they like pink
• Implications: Independence reinforced through product name “MINE”, marketing messages “The decision to save is MINE”, pink used in marketing materials and events
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Customer Insights and Product Design
Pensions• SEWA Bank has over 50,000
women who save $1 per month in a pension
• Promoted through an educational program that explains the value of compound interest
• Key insight: Women value being useful in old age, and do not want to be idle
• Implication: Marketing messages appeal to women’s role as care-givers, that even in old age she will be able to help others
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VisionVision StrategyStrategy
LeadershipLeadership
CultureCulture
Structure & Structure & ProcessesProcesses
CompetenciesCompetencies
Capabilities Triad
Leadership Triad
Institutional Readiness
Addition of a new product can imply as
little as minor adjustments in
processes or can have significant impact at
all levels of your organization.
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• Product introductions that cause transformational change often mean that a new sales channel or business unit is necessary to offer the new product
• Significant changes across both the leadership and capability triads
• Product introductions that cause transformational change often mean that a new sales channel or business unit is necessary to offer the new product
• Significant changes across both the leadership and capability triads
• Product introductions that cause incremental change usually mean a new product is offered through the existing sales channel, for example the current set of loan officers
• Adjustments to both triads, with more change in the capability triad than the leadership triad
Incremental change Transformational change
Organizational changes associated with adding a new product can be incremental or transformational
Institutional Readiness
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Example of transformational change: Microfinance bank in Latin America
Background
•Received banking license in 2004•Introduced savings in 2005•Annual deposit growth rate exceeded 100% in the period from 2005 to 2009
However…
•Almost 50% of deposits were dormant (no movement within 6 months)•Predominance of large accounts, especially time deposits – 70% of savings concentrated in 20 time deposits•The brand survey indicated that the bank is perceived by low-income clients primarily as a place to access loans
Background
•Received banking license in 2004•Introduced savings in 2005•Annual deposit growth rate exceeded 100% in the period from 2005 to 2009
However…
•Almost 50% of deposits were dormant (no movement within 6 months)•Predominance of large accounts, especially time deposits – 70% of savings concentrated in 20 time deposits•The brand survey indicated that the bank is perceived by low-income clients primarily as a place to access loans
Institutional Readiness
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Vision
• From focus on microenterprise growth to providing a comprehensive solution to low-income segments
• Broader segmentation includes low wage earners in addition to microenterprises
Performance targets expanded to include savings and deepening the relationship with the customer:
• Number of products per client• Cross-selling targets• Focus on “reactivation” of dormant accounts
Allocation of resources to:• Fund specialized savings sales force• Marketing budget
• Becoming the champions of the savings program• Communicating the savings message at quarterly and
monthly meetings, internal newsletter
Strategy
Leadership
Institutional Readiness
Changes in Leadership Triad
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Competencies
• Specialized savings sales force created
• Training provided to all front-line staff
• Marketing department created, experienced marketing manager recruited
• Key processes modified (for example, deposit slips eliminated)
• Strategy development on branchless banking
• CRM system created to manage sales leads
• Customer-centric orientation
• “Passion for Service” campaign launched
Structures and Processes
Culture
Institutional Readiness
Changes in Capabilities Triad
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Product Design Case Study:
Hasusu Savings
Ruskiyat Badmus, Hasal Microfinance Bank
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Key Messages
- Product based on customer understanding, building on observed savings strategies.
- Developed key differentiator for product compared to alternative savings options.
- Improved product through frequent product review cycles to respond to customer feedback.
- Product based on customer understanding, building on observed savings strategies.
- Developed key differentiator for product compared to alternative savings options.
- Improved product through frequent product review cycles to respond to customer feedback.
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Financial Literacy for Savings Mobilization
Objectives
Develop practical techniques for implementing financial literacyEnsure that financial education adds value to customer and to
institutionExplore ways to reinforce financial literacy in day-to-day
operations
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Financial Literacy for Savings Mobilization
Customers know that saving is important, but struggle to meet goals as they juggle competing needs
Customers know that saving is important, but struggle to meet goals as they juggle competing needs
Financial education presents saving at a bank as a viable and beneficial option
Financial education presents saving at a bank as a viable and beneficial option
Financial education needs to be tied to business outcomesFinancial education needs to be tied to business outcomes
Key Principles in WWB ApproachKey Principles in WWB Approach
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Making Financial Literacy Programs Work
For the Customer:• Bring the classroom to her• Make it interactive, concrete and
practical• Develop goals and savings plan• Introduce tailored account option
• Link to sales team for follow-up• Reinforce financial literacy
through materials used in day-to-day banking
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Making Financial Literacy Programs Work
• Images of her goal on passbook
• Customer-defined account nickname e.g. “Fola’s School Fees”
• Progress bar on receipt, mobile phone or ATM
• Easy savings calculators
• Flip books for sales team reinforcing messages
• Tools for understanding passbook (account balance, etc.)
• Posters, videos in branch
Ideas for Reinforcing Financial Literacy in Day-to-Day BankingIdeas for Reinforcing Financial Literacy in Day-to-Day Banking
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Making Financial Literacy Programs Work
• Financial education needs to drive business or it will not be a priority
– Staff need to see value– Field staff follow up on leads– Customers put education into action
• Set goals for the business objectives– Open X accounts– Increase frequency of deposits– Increase # of transactions per customer– Increase # of accounts per customer
• Measure and monitor– Against targets– Implementation of program e.g. follow-ups by sales team, conversion
rate
For the InstitutionFor the Institution
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Case Study: SEWA Bank, Project Samruddhi
Insight Opportunity
Customers have goals, but need help prioritizing and creating a plan to achieve them
Lengthy classroom training sessions are difficult for customers to attend and yield low recall of concepts
Illiterate customers need help checking basic account information, like balance or interest earned
Saathis cannot always easily answer questions that require calculation, like interest earned on recurring accounts
Help customers articulate their goals, and build a plan around their aspirations.
Re-think FE training: replace long classroom sessions with concrete, practical information in the field
Visual tutorial on how to read a passbook; reinforce with take-home reference and in-branch video
Tools for saathis that help de-mystify areas of confusion
Objective: Identify and test ways to embed financial education into regular interactions with field officers (“saathis”) to:
• Build basic customer financial capability• Increase active customer account participation & use
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Re-focusing Accounts Around Goals
Updated passbook covers explicitly focus recurring accounts around the five most popular customer goals, to help customers link their savings to concrete goals
Rainy Day (“Chase Your
Worries Away”)HousingHousingWeddingsWeddingsGoldGold PensionPension
Client PhotoClient Photo
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Field Agent Applications
New PDA applications help SEWA’s Bank Saathis deliver concrete, practical information and advice in the field.
Recurring Account
Calculator: offers a built-in plan by helping her choose the right account
Recurring Account
Calculator: offers a built-in plan by helping her choose the right account
Impact of a missed
deposit*: shows how missed
deposit today = reduced lump
sum later
Impact of a missed
deposit*: shows how missed
deposit today = reduced lump
sum later
“Smart” prompts for saathis: help saathis keep
customers on track to achieve
their plans
“Smart” prompts for saathis: help saathis keep
customers on track to achieve
their plans
*visual graph coming!
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Key Messages
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Conclusion
During today’s session we have…
Part I: Designing Products for Savings– Explored design considerations in developing savings products
for the unbanked, especially women– Assessed institutional readiness for implementing new
products effectively– Discussed a case study of a product development process
(Hasal MFB)
Part II: Financial Literacy for Savings Mobilization– Developed practical techniques for implementing financial
literacy in your savings program– Discussed how to ensure that financial education adds value to
the customer and to your business– Explored examples of ways to reinforce financial literacy in
day-to-day operations
Women’s World Banking ®
Women’s World Banking
www.womensworldbanking.org