Key insights and outcomes from Grameen Foundation's four-year Microsavings Initiative
We spoke with Debbie Dean, Director of Financial Services at Grameen Foundation, to gather key insights and outcomes from Grameen Foundation’s Microsavings Initiative, a four-year project focused on creating new savers and transforming partner institutions in the Philippines, India, and Ethiopia from credit-led to market-led.
What was Grameen Foundation's Microsavings Initiative?
This was a four-year project, from November 2009 to October 2013, funded by the Bill & Melinda Gates Foundation where we worked with three microfinance institutions in the Philippines, India, and Ethiopia to create new savers and transform our partner institutions from credit-led to market-led.
What insights have you learned about poor customers?
Use of the Progress out of Poverty Index, a poverty measurement tool that assesses household characteristics and assets, allowed us to segment customers not just by traditional factors like location, occupation, and age, but also poverty level. The cross section of analyzing product usage andpoverty level insights has been incredibly valuable.
Mobile phone usability is an additional area where we have gained insights. We recently completed a series of new research studies on gender, mobile literacy, and the usability of mobile financial services. One key finding from these studies is that generalizations cannot be made across countries - we had very different findings around mobile comfort and independent usage in India, the Philippines, and Uganda. Additionally, in each country we developed a specific list of relatively easy changes that banks, MNOs, and other practitioners could benefit from that would greatly increase the ability of poor women in their markets to successfully use their services. These items include menus in local languages, avoiding specific mobile and financial terminologies, increasing font size, and so on.
Across the three markets, we also found that promotion needs to better reach women where they live for them to understand services. We hope these findings will influence practitioners in these countries to adjust their offerings, and encourage others globally to better understand their customers through their own usability studies instead of relying upon global generalizations and assumptions.Photo courtesy of Grameen Foundation
What have you learned about designing and scaling successful savings products?
At the start of the project, we utilized a more traditional approach to product design. We learned that we would have been more targeted and effective if we had incorporated user-centered design into our approach, like we do now. We learned that an iterative approach to market research and design is most effective. Making adjustments early and thinking beyond just "financial features", such as incorporating business process changes, the design of enrollment applications or tweaking marketing messages, are an important part of the equation that can save time, money, and potential risk.
When the project began, the three MFIs we worked with did not have formal marketing departments. Teaching the organizations about the importance of the marketing function was a big endeavor as successfully scaling savings as a line of business requires a carefully designed marketing strategy and plan. But, you have to invest in hiring staff that are marketing experts and also train your existing staff on the process and value of marketing strategy, market research, data analysis, and product development.
In addition to developing and marketing products, focus on uptake and usage was important to reach scale. In the Philippines, we found that many clients were signing up for new savings accounts and wanted to save but they were not making regular deposits. As a result, many accounts became dormant. We brought in behavioral economics experts from ideas42 toidentify behavioral bottlenecks that widened the intention-action gap. Through a small randomized control trial, we tested minor tweaks to the account opening process, such as new forms and approaches to help customers think through specific savings goals and behaviors. At the end of this pilot, we saw a 37 percent balance increase in our treatment group. Behavioral bottlenecks are just one barrier to reaching scale. We held an event in Dar es Salaam in November 2013 to discuss How to Get Innovations to Scale, and through group brainstorms, identified a number of other barriers and potential solutions.
What other key lessons can others benefit from?
Change leadership is a marathon, not a sprint, and is at the heart of a successful program. We learned that strong project managers that can also serve as the "Change Leader" are critical to success. Building trust among staff at all levels of the organization and understanding the culture of the country, the institution and talking their "corporate" language are critical to breaking down barriers and really understanding how to help drive change within these organizations.
Another lesson we learned about poor customers is how important it is to have a trusted intermediary for those people that cannot read, do not have access to a phone, or simply cannot get to the central locations where the bank branches are.
We also found that you can build a business case for small savings. Adding a savings products to a credit-driven organization meant only adding in the marginal costs associated with rolling out the savings program. We spent quite a bit of time working on different ways to build out the financial model. In the end, the more complex, detailed models were too much for the MFIs to handle. Keeping it simple and regularly checking in to ensure we are staying focused on the key business metrics is extremely valuable approach.
India's regulations only allow for regulated banks to accept deposits, so section 25 microfinance institutions must become business correspondents (BCs) of regulated banks. Few have had success in this area. What did Grameen Foundation learn that others can replicate?
We believe that the work we did with Cashpor, ICICI Bank, and Eko Technologies can guide additional players in India and lead to scalable BC solutions. This channel innovation holds many benefits.One lesson is how we approached the dormancy challenge. Dormancy is a major indicator of the gap to reaching financial inclusion and more than 80 percent of the accounts in India are dormant. Through numerous test approaches, we were able to make improvements, andby the end of our project, only 28 percent of Cashpor's accounts were dormant, largely because of the frequent, active engagements with its clients. Customers were able to conduct transactions during their weekly meetings.
Finally, last year we brought together key players working in the business correspondent space in a forum to discuss best practices, challenges, and lessons learned. Grameen Foundation believes regular communication between industry players is critical to reaching financial inclusion. We need to share insights, lessons learned, successes, and failures.