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Library » Reframing Micro-Finance: Enabling Small Savings and Payments, Everywhere

Reframing Micro-Finance: Enabling Small Savings and Payments, Everywhere
2009, Mas, I.

Analyzing delivery mechanisms of savings and credit products

This paper examines the importance of savings in poor people’s lives, and highlights the advantages of branchless banking in solving their saving challenges.

Savings help poor people cope with life cycle family expenditures and shocks. Only about one quarter of households in developing countries save with formal banking institutions. Large commercial banks find it too costly to reach out to the poor with savings products, and poor people, in turn, do not trust commercial banks.

Saving services must be available close to where poor people live, which requires going beyond bank branches. To meet the savings challenge, financial institutions must:

Identify specific ways in which their offerings will be more convenient, more reliable or cheaper than informal savings mechanisms;
Build a clear brand and reassure clients that their savings are safe and readily available;
Solve the distribution problem by using indirect distribution channels that allow them to be present in a broad array of local shops;
Use technology to ensure that customer interaction can take place remotely and securely through local retail outlets;
Work for the poor and yet be commercially sustainable, leveraging existing retail infrastructure.

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Journal Volume/Pages:
4

Publisher(s):
Henley Media Group