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This third case series focuses on the strategies institutions adopt in order to manage the costs of savings mobilization. Financial Institutions, broadly, face challenges in finding ways to profitably capture savings from the public. However, some microfinance institutions have found creative solutions to achieve this.
This series looks at two institutions facing similar challenges in very different operating environments. In each case, the institutions have managed to provide savings products that serve the needs of low-income clients without compromising their financial health. However, each has employed a different technique.
Banco Caja Social (BCSC) in Colombia operates in a highly competitive environment where usury laws and taxes charged on financial transactions have led to the widespread use of fees in the banking sector. BCSC has managed to create attractive low-cost savings products by promoting less costly delivery channels, by using fees as incentives for clients to use those channels, and by designing savings products that limit the number of transactions and reward consistent savers.
DEPROSC Development Bank (DD Bank) in Nepal sees value in mobilizing voluntary savings, even though government subsidized lending capital is abundant in the country. DD Bank believes that small savings are a reliable long-term source of capital to support its rapid growth and better serve the financial needs of its low-income clients. DD Bank has contained the costs of its savings program by standardizing product features and procedures, building staff capacity, and designing efficient incentive schemes.