NB Financial Health

Thursday
October 31
2013

Kimberly Davies

Happy World Savings Day: Here are 10 microsavings lessons to help you celebrate today’s other holiday

As our U.S. readers (and many others) know, October 31 is Halloween. But you might not know that it’s also World Savings Day. And this year, the event coincides with the end of a four-year microsavings project at Grameen Foundation. The project has helped create 850,000 new active savings accounts throughout India, the Philippines and Ethiopia, focusing on reaching those earning below $1.25 a day. As our work comes to an end, we’re reflecting on our biggest learnings. We’d like to share them with you, and hear back from you as well – is this similar or different to what you are learning in your own work?

1. Make sure you build the right team

By carefully vetting financial service partners, implementation partners and staff, make sure you have mission alignment will all team members before beginning your work. We’ve found that a partner selection tool can help us ensure a good fit. A strong on-the-ground project manager is also a key to success.

2. Focus on leading organizational change

Change leadership can be hard to define, but it’s necessary for innovations to get to market. We began our work by performing a human capital management assessment (found on humancapitalhub.org), organizing a series of change leadership workshops for managers, and creating a strategic communications plan. Good project management is also good change management.

3. Create a strong research framework

Research is something you do regularly, not a one-time activity. There are many ways to incorporate research into your program – from randomized control trials, to focus group discussions, to surveys, games, and more. Make sure that your research design is aligned with the project objectives, and that it guides product design.

4. Product design has to be iterative

Product design is never truly done. Make adjustments early and think beyond just “financial features.” Gather feedback in the prototyping phase before going to market with a pilot product to save time, money and potential risk. However, when product changes are made, ensure all impacts are thought through – from marketing to finance to IT.

5. Marketing is a skill your organization needs

While many MFIs do not have a formal marketing department, successfully scaling savings as a line of business requires a carefully designed marketing strategy and plan. All the while, the product requires focus on its value proposition, identification of its target market, and a campaign to match. Carefully planned material and events can help bring new clients in the door, but it’s up to the organization to build the trust of those new clients.

6. A strong IT backbone is necessary

Providing voluntary savings comes with a much faster velocity of information – from activation to updates (such as balance inquiries). Specific channels, such as ATMs or mobiles, require a centralized system moving account information away from the branch, along with real-time or close to real-time data. Data collected can be used in a number of ways – like benchmarking social performance, understanding customer needs and behaviors, reducing risks and costs, testing hypotheses, and more. Overall it helps management make better decisions and drive change. While real-time data can be a challenge, data is always available.

7. Train, train and train some more

Savings require a new level of customer service and product awareness compared to credit. Taking someone’s hard-earned money requires trust, much more than when lending someone money. For this reason, staff training in sales, promotion, change leadership, product features, and more may be required. On the customer level, illiteracy is a challenge, so it may be necessary to create programs that map to a customer’s needs. Creative training methods beyond classroom training are helpful.

8. Using a trusted intermediary multiplies success

Partner institutions and agent networks can get much closer to the clients than we can. Leveraging existing infrastructure and relationships can help lower costs, and help clients feel comfortable with new products or new delivery channels. Trusted intermediaries work with customers in the last mile, and if chosen correctly they are members of the communities in which you work. Trust is more easily attained if the selection process for choosing the agents is done with customer input.

9. You don’t appreciate a project manager until you have a really good one

Project management involves managing scope, schedules and resources, communications, risk mitigation, and budget. Managing across cultures can also add an additional level of complexities. Your project manager is your change leader, and often the manager’s value is not fully appreciated until you experience a really good one.

10. You can build a business case for small savings

We have found that you can build a business case for small savings. Adding a savings product offering to a credit-focused organization might only mean adding marginal expenses onto an existing credit-focused infrastructure, helping your financial model. To develop the business case, we follow three golden rules: Understand the present before planning for the future, rephrase questions and objectives regularly, and keep it simple.

For more information, visit Grameen Foundation’s website.

Kimberly Davies is a program officer on Grameen Foundation’s Financial Services team.

Categories
Uncategorized
Tags
financial inclusion, Grameen Foundation, microfinance, microsavings, product design