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Research & Development Unit of BRAC Microfinance

Identifying needs, nurturing solutions

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February, 2014

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Inauguration

• Launched in 2010 with four objectives: Identify strategies to improve existing operations and products Assess feasibility for new products through market research and consumer

insight Design and pilot new products and processes Explore and manage “finance-plus” initiatives and partnerships

• In 2013, partnered with BRAC’s Social Innovation Lab in to enabled greater impact and scope of projects

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Two Aspects of this Unit

• Researchcreative work undertaken on a systematic basis for the development of the program’s knowledge and use it to devise new applications

• Developmentdetermination of techniques for the production of new products, services or processes

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Research

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Current research projects

• Branch resilience to disasters• Financial diaries• Feasibility of housing loan• Development of matrices for analyzing scalability and

success/impact of Microfinance pilot projects

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Performance implications of location decisions given different types of disasters

Ongoing research project initiated in October 2013 with Cambridge Judge Business School

Aims to determine how natural and man-made disasters influence location decisions and affect the performance of BRAC Microfinance field offices.

Some of the research questions include: – Do organizations learn from political disasters?– Do organizations learn from natural disasters? – If so, for how long following a disaster do these effects persist?– Do organizations learn differently from minor disasters than they do from major

disasters?– What are the performance implications of location decisions given these types of

disasters?

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Financial Diaries

Ongoing study initiated in October 2013

Research methodology that involves

collecting high-frequency data of household transactions over a certain period

Purpose– serve both as a consumer research

tool on microfinance borrowers and – an impact assessment tool for MF’s

multiple endeavors. The respondents consist of

microfinance clients, both BRAC and non-BRAC, and non-borrowers

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Feasibility of housing loan

Scoping study in collaboration with the University of Notre Dame This exercise is aimed at finding commercially viable housing financing

models used by MFIs around the world that can be replicated in the context of Bangladesh. This could have an effect for urban floating populations Rural housing products would also be thought about These housing models could either lead to ownership or provide

affordable housing for low income households. This study will also look at partnership models and case studies to

understand how partnerships can produce a better housing finance product.

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Standardized system for analyzing success/impact of Microfinance pilot projects

Ongoing research project initiated in October 2013 with Brown University

Purpose Develop standardized matrices to analyze success/impact and

scalability of pilot projects Could be done

By analyzing common indicators of success and failures Constructing a literature review on performance and assessment

standards and also Analyzing how development organizations have designed and evaluated

the performance of similar programs and assess best practices.

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Development

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Overview of Current Pilots, by theme

Technology focused Monthly savings collection through mobile technology-bKash

Skills+ opportunities Youth Employment through Skills (YES)

Product development, integration and partnership Medical treatment loan Loan product for people with disabilities Preventive health care services for Microfinance clients Integrated project for Adolescents and Youth

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Monthly Savings Collection through Mobile Money

Who: existing microfinance clients

What: monthly savings deposits made by mobile money, instead of a trip to the branch office

Why: convenient way of payment, increase the savings behavior, familiarization of technology

Key indicators: in some branches, 25% of clients making deposits via mobile money

What’s next: improving client uptake of the service through increased financial education and awareness raising

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Youth Employment through Skills (YES)

Who: children of microfinance clients, ages (18-30)

What: technical training, training loan facility, stipend and job placement support in several industries including leather, tailoring and garments;

Why: to combat youth unemployment and poverty, and to generate oppotunity for the children of BRAC Microfinance clients.

Key indicators: 121 people trained and 100 of them placed for employment till Feb 2014

What’s next: scaling up to more areas partnering with Ayesha Abed Foundation for job placement

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Medical Treatment Loan for Microfinance Clients

Who: MF clients in need of health care

What: To assist MF clients, in partnership with HNPP, to absorb and manage the catastrophic costs of health care

Why: Poor health and health events are a significant cause of loan defaulting and create vulnerability for economic decline. In lieu of formal loan options, families often delay treatment, sell assets, and/or take loans at exorbitant rates from informal money lenders

Key indicators: 59 loans have been disbursed and the total amount is USD 9,128 till Jan 2014

What’s next: Scaling to 28 Upazillas,150 branches and 200,000 households this year.

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Loan Product for Disabled PeopleWho: People with any form of disability

What: Loan product for disabled people to help find new livelihoods and to boost their confidence. Partnership project with Centre for Rehabilitation of the Paralyzed and ADD International, Bangladesh

Why: In response to the common exclusion of disabled people from microfinance, especially with their needs in mind as part of social responsibility

Key Indicators: in some branches, loan range is from USD 38 to USD 1,026, loan duration is 12 months

What’s next: scaling up with more areas all over Bangladesh

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Linking health care services with microfinance activities

Who: An important regular institutionalized provision in health care services for Microfinance clients

What: Identification and screening of health problems, provide information, education and advice on health measures, refer those who are identified with the signs and symptoms of diseases to appropriate health facilities.

Why: provide need-based health care services to live a socially and economically productive life and actively participate in the development activities of the country along with BRAC.

Key indicators: check up performed 14,864 till Dec 2013

What’s next: scaling up with more areas all over Bangladesh

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Financial products for adolescents and youth

Who: Focused on the youth population of the country

What: Knowledge, skills and rights based services that includes education, health, human rights, and microfinance components.

Why: Would enable the better management and utilisation of the youth population of this country.

Key Indicators: More than half of the adolescent club members from two branches have taken up savings services offered to them until December 2013.

What’s next: Scaling up the current savings services to more areas, and find opportunities to offer credit to the youth.

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Special projects

• GIS mapping• Reviewing and improving current loan appraisal process

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Mapping through Geographic Information System (GIS)

What: Mapping the over 2,000 microfinance programme’s branch offices nationwide

Why: enhanced ability to assess coverage and performance, make programmatic decisions, and facilitate coordination

What’s next: in partnership with the Social Innovation Lab and ICT department, expanding the scope to include all BRAC offices and other types of facilities, such as health clinics, enterprise locations, and training centers; developing a user-friendly platform for wide use across the organization

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Reviewing and improving current loan appraisal process

What: Redesigned and enhanced the loan appraisal process and tools

Why: To make the process more efficient, transparent and client focused.

What’s next: Introduce new thinking in the appraisal methods and collect essential data more effectively.

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Looking back: some past achievements of the R&D unit

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• Introduction to monthly instalment collection process• Region restructuring process• Research on skills

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Introduction of monthly installment collection

Initiative began in 2010 with a view to making the microfinance operations more efficient and cost effective.

Monthly collection as opposed to weekly collection would drastically reduce the number of installments over the same period. As a result this was perceived as a way to save the agents time so they can reach more borrowers.

The borrowers in turn would also be able to use the loan for a full month before they need to begin paying back the loan.

Performance: Currently there are around 950 branches operating on the monthly

schedule. These branches mainly serve urban, semi-urban areas where most clients are salaried employees, small business owners and would be better served on a monthly schedule.

Performance: According to 2014 statistics, currently an agent working on the monthly model supports 364 borrowers on average, as opposed to 266 for agents working on a weekly schedule.

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Region restructuring process

Initiative began in 2012 for the Dabi microfinance program. This was an effort to tackle the overlap of the operational areas between

different branches. This would improve branch efficiency and help better manage the operational areas.

Methodology: Rural branches were demarcated using Mouza, the smallest

geographical unit. The principle followed dictated that one Mouza would only be served by a single branch.

Urban branches due to the density of the population and geographical proximity to each other were more difficult to demarcate using Mouza. As a result they were demarcated using Union Wards and also landmark roads that were used to define the boundaries.

As of now operations in the whole country has gone through the region restructuring process.

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Research on skills

Study conducted in 2012 To obtain evidence based understanding of the demand for vocational

training and expectation of jobs amongst adolescents and youth children (aged 15-24 years) of the Microfinance borrowers

Findings The study finds a clear demand for vocational training, particularly in

computer operating, tailoring, driving and mechanic work. Willingness of the clients to partially finance their children’s vocational

training and Also the cost of travelling of their children to travel away from home for the

purpose of receiving vocational training. Based on the findings, a successful skills project was initiated and its

currently running in different districts of Bangladesh

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Thank You!

For more information please visit http://microfinance.brac.net/

Have an idea for a new product or service? Let us know!

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