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Designing Savings and Loan Products
Feb 2010, Wright, G.

Designing market-driven savings and loan products

This paper describes challenges that poor people face in managing the little income they have. It uses a case study method to examine the year-long income, expenditure, loans and savings of a poor household.

Poor people not only suffer from having low and unpredictable income, but also are financially excluded, lacking access to financial instruments that would help them manage their incomes. Research suggests that managing basic needs, coping with risk and raising lump sums for big-ticket expenses are the three needs that drive most of the financial activities of poor households. To meet these needs, poor people need different types of loans and savings products that are delivered in a reliable, convenient, flexible and structured manner. Grameen Bank, for example, has successfully implemented such products.

Designing and implementing market-led products and delivery systems requires systematic product development processes. They include:

Market research;
Prototype development;
Product pricing and costing;
Risk analysis;
Process mapping;
Pilot testing;
Product marketing;
Rollout.

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