WWB HOW-TO GUIDE

Introducing Voluntary Savings

 Authors and Acknowledgements

Acknowledgements
Author: Saiful Islam
Co-authors: Yasmina McCarty and Louise Herring

The following team members made significant contributions to the How-to Guide:

Content:
Mariama Ashcroft
Hans Dellien
David Kachoui
Harsha Thadhani
Ursule Yekpe

Editors:
Robin Francis
Kristin Helmore

Design and Layout:

Donald Creedon and Miranda Levy

Cover Photo:
Diane Bondareff
Clients of AFMI, Ethiopia, member of The Africa Microfinance Network (AFMIN)

Copyright © 2006 Women’s World Banking

All rights reserved

No part of this report may be photocopied, translated or reduced to any electronic medium or
machine-readable form without the prior written consent of Women’s World Banking.

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 Table of Contents
An Overview of the How-to Guide to Introducing Voluntary Savings 1
The How-to Guide 1
Objectives 1
Target Audience 2
Further Information 3

Pre-planning 5
Definition of Voluntary Savings 5
Key Differences Between Voluntary and Compulsory Savings 6
Key Benefits of Mobilizing Voluntary Savings 7
Deciding If it is Appropriate for Your Institution to Mobilize Savings 8
Pre-requisites for Introducing Savings 8
Introducing Voluntary Savings 10
How Long Does the Whole Process Take? 12
Is Investing in Voluntary Savings Mobilization Worthwhile? 13

Phase 1: Planning 17
Overview of Phase 1 17
Resource Requirements and Timing 17
Table of Contents

Analyzing the Macroeconomic Environment 18

Estimating Market Size 19
Understanding Your Clients 20
Assessing the Competitive Environment 20
Assessing Your Institution’s Readiness 22
Summary of the Institutional Readiness Analysis 24
Assessing the Opportunity 24
Preparing for the Savings Product Team 25
Creating the Action Plan 29
Preparing the Budget 29

Phase 2A: Product and Process Design 31

Phase Overview 31
Resource Requirements and Timing 32
Conducting Market Research 33
Segmenting Your Customers 38
Assessing Demand 42
Deciding What Products to Offer 44
Preparing Product and Process Documentation 48
Developing Systems and Adjusting Processes to Run the Pilot 50
Designing a Marketing Strategy 55
Designing the Implementation of Your Pilot 58
Training Pilot Staff 60

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Phase 2B: Pilot Test 67

Table of Contents
Phase Overview 67
Resource Requirements and Timing 67
Preparing for the Pilot 69
Planning the Phases of Your Pilot 70
Launching the Pilot 70
Dealing With Issues and Problems During the Pilot 75
Second Pilot Phase 76
Identifying Key Lessons From Your Pilot 76

Phase 3: Implementation and Rollout 79

Phase Overview 79
Resource Requirements and Timing 80
Developing a Rollout and Implementation Plan 80

Phase 4: Monitoring and Evaluation 89

Phase Overview 89
Resource Requirements 89
Measuring Success Against Objectives 90
Monitoring Progress Against Your Action Plan 90
Monitoring Internal Impact 90
Monitoring External Impact 91
Identifying Needed Changes 91

Conclusion 93
Key Points and Lessons 93
Case Examples 93
Final Thoughts 96

Appendices 97
Appendix 1: Savings Product Assessment Tool 97
Appendix 2: Action Plan Template 99
Appendix 3: Competitor Analysis 102
Appendix 4: Specific Activities of Team Members 103
Appendix 5: Planning the Product Costing Process 104
Appendix 6: Product Development Matrix Framework 105
Appendix 7: Product Sequencing 106
Appendix 8: Savings Product Viability Analysis Based on Opportunity Cost –
Example from Uganda 107

Selected Bibliography 109

Further Reading 109

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 List of Figures
Figure 1: Overview of the Process of Introducing Savings 11
Figure 2: Average Time Required to Introduce Savings 13
Figure 3: Stages of Development and Performance in BRI’s Unit Desa Savings 14
Mobilization Program—1984 to 1996 (in millions of U.S. Dollars)
Figure 4: Product Development and Process Design 32
Figure 5: The Five Competitive Forces That Determine Industry Competition 36
Figure 6: Savings Services and Clients’ Expectations 37
Figure 7: Main Savings Mechanism by Market Segment 40
Figure 8: Savings Product Development Framework 45
Figure 9: Characteristics of the Main Types of Savings Products Available to Your 47
Institution
Figure 10: Process Map for Opening a Passbook Savings Account 52
Figure11: Use of Technology for Enhancing Distribution Channels 55
Figure 12: Pilot Test Planning 68
Figure 13: Monitoring, Evaluating and Adjusting Your Pilot 69
Figure 14: Deposit Structure: Demand Savings vs. Term Deposits 73
Figure 15: Pilot Test Evaluation 75
Figure 16: Ensuring Market Penetration – Rollout and Implementation 79
Figure 17: How ADEMI (Dominican Republic) Turned Around Their Savings Program 95
List of Figures

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List of Tables

List of Tables
Table 1: Prerequisites for Introducing Savings 8
Table 2: Indicators for Assessing the Macroeconomic Situation 19
Table 3: Basic Information to be Collected About Your Competitors in the Savings 21
Market
Table 4: MFI Financial Performance Indicators 22
Table 5: Core Team Characteristics 26
Table 6: Results of Focus Groups: Savings Needs 39
Table 7: Market Segmentation and Size—Average Savings Amount Stated by Micro 43
and Small Enterprises (MSE) Based on ADOPEM Client Interviews
Table 8: Market Segmentation and Size—Average Savings Amount Stated by 44
Micro and Small Enterprises (MSE) 10% of Disposable Income
Table 9: Required Content for Prototype PRODUCT Description Documents 49
Table 10: Required Content for Prototype PROCESS Description Documents 50
Table 11: Key Characteristics and Abilities of Your MIS Needed to Support Savings 54
Table 12: Designing a Marketing Message for Your Savings Product 56
Table 13: Defining the Expected Output 58
Table 14: Timeline of Pilot Phase Monitoring 72
Table 15: Pilot Evaluation Assessment Areas 74
Table 16: Matrix Communication Plan 83
Table 17: How Bank Rakyat Indonesia Met the Needs of Potential Rural Savers – 94
The Changes That Brought Success

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vi
Key to Symbols
Key to Symbols

Key to Symbols
Throughout this document, WWB included the following symbols to highlight the
relevant parts of the mobilizing savings process:

SYMBOL NAME DESCRIPTION

This symbol highlights that your institution will need to

create a document at this stage. This could mean writing
Document
a report, creating a manual, preparing training materials or
documenting workshop output.

This symbol highlights that your institution may need to

External help seek external help at this stage. This could mean working
Recommended with Women’s World Banking (WWB) or an external
consultant.

Workshop or This symbol highlights that your institution should conduct

Meeting a workshop at this stage.

This symbol highlights that your institution should conduct

Training session
a training session at this stage.

This symbol highlights the tools that your institution should

Tools be using at a particular point or in a particular phase of
savings mobilization.

This symbol highlights a specific point your institution

Warning/Idea should note, such as a key area of focus or a concept
central to mobilizing savings.

Text contained in these boxes is designed to provide useful

information, based predominantly on the experience of
Lessons/ Tips
previous clients which will help you complete steps or
phases.

This symbol indicates a checklist which you must work

Checklist through before moving on to the next phase in the
introduction of individual lending.

vii
Overview
An Overview of the

Overview
How-to Guide to Introducing
Voluntary Savings
The How-to Guide
Women’s World Banking (WWB) presents to you its How-to Guide to Introducing
Voluntary Savings. WWB is pleased that you have decided to use this guide. It reflects
four years of WWB’s practical experience in introducing savings at various institutions
and will walk you through the process of implementing a savings program at your
institution. When you have finished using this guide, you will fully understand how to
offer the best savings products to your clients.

Objectives
This document aims to provide microfinance institutions (MFIs) like yours with a detailed
understanding of the start-to-finish process of introducing savings to your portfolio
of products and services, from the initial planning stage to the final monitoring and
evaluation process.

Mobilizing voluntary savings is complex and

requires a solid understanding of your institution’s
market, a strong product portfolio, capable and
dedicated management support, and a competent
and dynamic organization.

The objective is to create a guide for MFIs that will be easy to understand, focused on
user needs, and results-oriented. The guide supports MFIs in introducing savings by
helping them keep track of the process and learn from best practices and other examples.
However, the guide does not provide all the answers. Mobilizing voluntary savings is
complex and requires a solid understanding of your institution’s market, a strong product
portfolio, capable and dedicated management support, and a competent and dynamic
organization.

1
 Your MFI is not expected to use this guide exclusively. We recognize that the amount
of external input each MFI requires will vary, and we have included suggestions for
soliciting input from external agencies throughout this document.

Target Audience
The target audience for this guide is your institution’s management, board of directors,
and especially the project manager/product champion assigned to mobilize savings. The
team assigned to implement savings may also use the guide, with guidance from the
Manager.

Content of the Guide

Over the years, WWB has developed and successfully implemented systematic processes,
simple tools and frameworks for developing savings products. WWB teams have
worked closely with MFIs to guide and advise them through each phase of introducing
savings. The benefits of this experience have been synthesized in this guide along with
the knowledge and expertise of best practice MFIs and other examples of mobilizing
savings. The guide includes advice on each of the steps involved, as well as tips on how
to address the complex challenges that might arise during the process.

In support of the above objectives, the savings guide is divided into six main sections,
each describing a separate phase of the introduction of savings at an MFI:

1. Pre-planning—the pre-planning or exploratory phase helps you decide whether

your institution has the high-level requirements to mobilize savings,

2. Phase 1: Planning—how to conduct high-level market, competitor, and customer

research and how to plan for the mobilization of savings,

3. Phase 2A: Product and Process Design—how to conduct in-depth market and
customer research and build these findings into the design of products, processes
and your pilot,

4. Phase 2B: Pilot/test—how to implement, monitor, evaluate, and adjust prototype

products and processes by testing them among a limited number of clients in the
actual market setting,

5. Phase 3: Rollout and Implementation—how to apply lessons learned from the

pilot and roll out savings across your branches, and

2
 6. Phase 4: Monitoring and Evaluation—how to evaluate the success of the
savings products and services you offer and build a long-term vision around the
development of these products and services.

While the authors have aimed to develop a document that is easy to read and understand,
the guidelines contained herein are intended for use by top-level decision-makers. In
addition to a brief description of the steps required during each phase of the process, the
guide contains:

• Examples and templates designed to help your institution develop the ideas
offered here into tools, documents and training courses, and

• Case examples to illustrate the experiences of other MFIs at each stage of the
process.

At the end of each section you will find:

• Details of the resources, time and tools required for that phase, and

• A checklist to help you ensure that you have completed all the required steps
before moving on to the next phase.

Documents that supplement the information in this guide and links to additional sources
of information have been included for the user’s reference both at the relevant points in
the document and in the appendices and bibliography.

Further Information
In addition to the sources included throughout the document, please visit the Women’s
World Banking website (www.womensworldbanking.org) or contact the WWB
Microfinance Services Team at the following address for further information:

Attn: Saiful Islam

Senior Associate and Savings Specialist
Microfinance Products and Services Team
Women’s World Banking (WWB)
8 West 40th Street
New York, NY 10018
Tel: 1-212-768-8513
E-mail: [email protected]

3
4
Pre-planning
Pre-planning

Pre-planning
RESOURCES REQUIRED
At the start of the pre-planning phase, your board and management will
need to take part in a workshop to make a strategic decision as to whether
or not your institution has the requirements to transform itself from a micro-
lending institution to a financial intermediary. To prepare for the workshop,
you will need to review any market and institutional information you already possess.
Do you have the necessary resources and commitment? Is this move commensurate with
your mission and vision? This pre-workshop process should take no more than two days
if sufficient background information is available.

At this point, you may want to recruit WWB or another external consultant to facilitate the
workshop process, to provide an external viewpoint and share international experience
of introducing savings. Any external consultants should be given a minimum of three to
five days to prepare for your workshop. This allows adequate time to gather high-level
information about your market and competitors, your institution and your staff. You
should request that WWB or the consultant help with the workshop by providing an
agenda and an outline for the action plan and that they facilitate the creation of a detailed
action plan during the workshop with your senior staff.

TOOLS
The following tools are used at the pre-planning stage:

PHASE TOOL(S) DESCRIPTION

Used at this stage for senior management and the
WWB presentation/
Pre-planning board to make the strategic decision on whether
workshop
or not to introduce savings.

Definition of Voluntary Savings

Voluntary savings are funds that individuals or organizations may voluntarily deposit or
withdraw. For your clients, the provision of a voluntary savings product means that:

• They can save money in a safe place to meet emergency, consumption and
liquidity needs,

• They can invest in a variety of different products that provide security, especially
during difficult times, old age, disability etc., and

5
 • They can benefit from affordable, flexible and easily accessible products to take
advantage of unexpected investment opportunities.

For your institution, mobilizing voluntary savings can provide a means of:

• Accessing a continuing and reasonably stable source of funds that enables you
to finance the bulk of your loan portfolio in a way that is less expensive than
commercial debt, and

• Improving your organization’s client outreach by offering products and services

that meet the need of a wide range of market segments.

Key Differences Between Voluntary and Compulsory

Savings
Voluntary and compulsory savings are philosophically different. Compulsory savings
have historically been introduced as a condition for obtaining a loan and are designed
to ensure that clients are able to meet their repayments. In contrast, voluntary savings
programs do not assume that clients need to be told how to save. Instead, they assume
that when clients are offered a range of quality savings products that cater to their needs,
they will choose to save.

“Although their incomes may be tiny or irregular, there are many times
when poor people need sums of money that are bigger than what they
have in hand. The need for these ’usefully large lump sums’ arises from
life-cycle events such as birth, education, marriage and death; from
emergency situations, and from the discovery of opportunities to make
investments in assets or businesses. The only reliable and sustainable way
that they can obtain these sums is to build them, somehow or other, from
their savings. So poor people have to save, and financial services for the
poor are there to help them find ways to do so.”

Source: Stuart Rutherford, the Poor and Their Money, Oxford University Press, New Delhi 2000, p. 1

6
Key Benefits of Mobilizing Voluntary Savings
For clients, the key benefits of savings—provided that the right products are available—
are that they:

• Are affordable, flexible and easily accessible,

• Encourage financial discipline and control,

• Facilitate the accumulation of capital,

• Enable clients to earn more when they save more,

• Have no hidden costs and build trust and confidence,

• Provide security,

• Offer access to other financial services, and

• Help build a safety-net for emergencies.

For MFIs who introduce voluntary savings, the key benefits are that they:

• Establish a stable, inexpensive and reliable source of funds,

• Enable MFIs to diversify financial service offerings to reach different market

segments while remaining focused on their missions,

• Help establish long-lasting relationships with clients,

• Provide safety and security for clients’ deposits,

• Contribute to asset building for low-income clients, and

• Promote institutional profitability.

Ideally, your institution will have a number of these reasons behind its decision to
mobilize savings. However, you must consider WHY you are choosing to introduce
savings and what impact those reasons will have on the types of products you are able
and willing to introduce. Your institution should clearly understand the supply (industry
and competitor trends) and demand (clients’ requirements) of savings prior to starting
product development.

7
 Deciding If it is Appropriate for Your Institution to Mobilize
Savings
Is your institution:

• An MFI with the appropriate legal structure to mobilize savings or are you in the
process of meeting the legal requirements for mobilizing savings?

• A strong performing MFI with the willingness and capacity to introduce

savings?

• An institution that wants to respond to its clients’ demands?

If the answer to each of these questions is YES, you should look further into introducing
savings.

Pre-requisites for Introducing Savings

The principles listed below highlight the key pre-requisites that need to be in place in
your institution and market before you start to mobilize savings. (Please also refer to
Appendix 1 for a Savings Product Assessment Tool.)

Table 1: Prerequisites for Introducing Savings

PRE- HOW TO
# RATIONALE QUESTIONS?
REQUISITE DETERMINE
Suitable macro- • To attract clients • Do you operate in a reasonably Your senior
economic, to the new stable macroeconomic and political management should
demographic savings products environment? have a reasonable
and political and implement • Do you have the political support and view of the answers
conditions changes, an MFI motivation that enable commercial to these questions.
should operate microfinance?
in a reasonably • Is inflation under control?
1 functioning economy • Is the economy growing at a
and active socio- reasonable rate?
political atmosphere. • Are you experiencing major political
This helps MFIs run unrest?
their operations • Do you have sufficient population
smoothly and helps density to provide financial services
clients make rational profitably?
financial decisions.

8
 PRE- HOW TO
# RATIONALE QUESTIONS?
REQUISITE DETERMINE
Supportive legal For the protection of • Can your institution legally As above.
and regulatory their clients, especially mobilize savings from the public?
framework depositors, MFIs • Are you able to obtain a license to
collecting voluntary
do so within a short time frame?
savings from the
public should be
• Does the government have the
2
publicly regulated and ability to effectively supervise
supervised. institutions that mobilize savings?
• Is the government committed to
applying high standards in ways
that are appropriate for MFIs?
Sound track • The owners, board, • Do you have a clear, accountable As above.
record in and top management ownership structure?
ownership, play a crucial role • Are the owners and board members
governance, and especially when legally responsible for their actions that
management introducing a they take on behalf of the institution?
transformational • Are the board members competent
product (i.e. from to oversee a rapidly growing financial
lending to financial intermediary?
intermediary) like • Are the owners, board members
3 savings. They need and managers certified by using
to have the same international standards as “fit and
vision and be well proper”?
informed on issues
and progress related
to the savings
mobilization program
to avoid and or
minimize future
problems.
Stable and • Sound financial • Has your institution made positive There are specific
financially sound performance is returns during the last three years? performance
institution particularly important, • Do you have a high-quality portfolio? criteria that should
since poor people • Do you have adequate loan loss be met. You will
4 will be entrusting provisions? very likely need an
their hard-earned • Do you produce your financial reports external assessment
savings to the in a timely fashion? from WWB or a
institution. consultant to help
you at this point.
Institutional • When an MFI • Is your senior management team Your senior
assessment and introduces savings, committed to savings? management and
management it increases not • Can you commit a full-time manager to board should be
capacity only the number deploy savings? able to make this
of its operations • Do you have standardized and efficient assessment. You may
but also its financial processes for microlending? also need the help of
intermediation. • Do you have good MIS, internal external consultants.
5 Therefore, managers control and risk management systems?
must have strong
knowledge and
expertise in
operations, treasury
and risk management,
marketing and
promotions.

9
 PRE- HOW TO
# RATIONALE QUESTIONS?
REQUISITE DETERMINE
Competitive • Competition in • Does your institution have enough Your senior
position of providing services data to determine the comparative management and
institution to low-income advantages of savings services? board should be
people is increasing • Do you already have, or will you able to make this
globally, including be able to develop, a comparative top-line assessment
from commercial advantage over competitors? based on what they
financial institutions. know to date about
Therefore, your institution and
6 knowledge about its competitors.
the competition,
including competing
products and services,
is essential for
offering value-added,
excellent products
and services to your
clients.
Your clients’ • Clients will deposit • Do your clients sufficiently believe in Your management
positive their savings only your institution to deposit savings with and front-line staff
perceptions of in institutions they you? should be able to
your MFI consider trustworthy, • Do they believe you will look after provide indicators
safe and sound. their money and guarantee returns? of levels of client
7 • Do you believe that both poor and trust. If not, you can
non-poor customers will want to save use focus groups
with you? or questionnaires
to determine how
customers perceive
the institution.

The template above serves as a basic guide to help you determine whether your institution
is ready to mobilize savings. If you are uncertain about your institution’s situation, client
demand, or external market conditions, you should seriously consider conducting research
or getting an external evaluation. Without the correct preconditions, MFIs can fail to
correctly introduce savings and will consequently spend considerable time, resources,
and energy overcoming the resulting problems. Without collaborative, solid external
support, your institution might not successfully mobilize savings.

Introducing Voluntary Savings

When you review the pre-requisites, be honest with yourselves about your institution’s
capabilities, your clients’ demands and your market. Introducing savings is a big
commitment for any MFI and the costs can be as great as any potential benefits. Mobilizing
savings successfully is not a matter of adding a few products to your institution. Your
institution will change fundamentally and you should not begin to mobilize savings
unless you are ready for this. Having come this far, your institution should now be in
a position to make the high-level decision about whether or not to start the process of
mobilizing savings!

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 Planning
When an MFI gives a loan to a client it needs to trust the client and
try to determine his or her ability to repay the loan. But when a client
decides to save his or her money with your MFI/bank, they need to trust
your institution. This is the fundamental difference between lending-only
institutions as compared with lending-plus-savings institutions.

Source: Saiful Islam, WWB, Multipurpose Workshop, Colombia

If you decide that the initial indicators are good, now is the time to fully understand the
process of mobilizing savings and the changes that you will need to make over the next
couple of years. At each stage of the process, you should take stock and continuously
assess whether you are ready to proceed to the next stage. Following the steps in each
phase and meeting the requirements to proceed are essential in order to ensure that adding
savings to your institution’s portfolio will be as beneficial as possible for both you and
your clients.

The figure below details key phases and steps required for introducing savings. These
phases and steps are included only as a guideline. The exact steps will vary from
institution to institution.

Figure 1: Overview of the Process of Introducing Savings

Phase Description Key Steps

 Determine whether the institution is  Analyze macroeconomic environment

1.
1. PPlan
lan ready to implement voluntary savings  Assess competitive environment
 If answer is “yes,” create detailed  Determine organizational readiness
plan to ensure success of future  Create action plan, including team required
phases  Begin to create shared internal vision

 Conduct in-depth market research

2A  Design and test the new product
2A.. PProduct
roduct &&  Design product
PProcess  Design and establish necessary
rocess DDesign
esign  Design processes
processes  Build institutional capacity to conduct pilot
 Design pilot implementation

 Test and adjust product/service  Train pilot staff group

2B
2B.. PPilot
ilot TTest
est  Monitor and evaluate  Deploy pilot group
 Adjust pilot based on results
 Analyze pilot performance

 Identify key lessons from pilot

 Based on lessons from pilot, begin  Develop rollout and implementation plan
3. Im
3. plem entation
Im plem ent to roll out the product across the  Build institutional capacity for rollout
organization  Develop marketing plan
 Begin rollout

 Monitor success and adjust product  Monitor internal progress against action plan
4. 4.
M onitoring and
M onitor and design and implementation strategy  Monitor impact (both internally and
EEvaluation
valuate accordingly externally)
 This stage should be ongoing  Identify changes required

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 Phase 1: The planning or exploratory phase in which your institution will decide
whether you are ready to introduce savings. If the answer is yes, you should take all the
steps required to mobilize savings, starting with establishing the team you require and
creating an action plan. (See Appendix 2 for an action plan template.)
Phase 2A: The product and process design phase in which in-depth market research
and product and process design take place and the pilot is planned.
Phase 2B: The pilot / test phase in which the pilot is deployed and monitoring and
evaluation of the results take place.
Phase 3: The implementation phase during which lessons learned from the pilot are
applied, if the pilot has been successful. At this stage voluntary savings products are
gradually rolled out to all the branches through a thoughtfully crafted strategy.
Phase 4: The monitoring and evaluation stage at which point savings have been mobilized
in most of the branches and you are ready to monitor and evaluate your progress and
bring in new products to meet clients’ demand.

How Long Does the Whole Process Take?

The implementation of voluntary savings is a long-term, collaborative process that
requires significant commitment from MFIs for a period of two to three years. There is
no exact timeframe for implementation, rather, the length of the process will depend on
factors such as the leadership capacity and systems of your organization and the legal
requirements of the local financial system. Savings mobilization MUST be properly
sequenced and should not be rushed because of portfolio needs.

The diagram below shows the suggested timeframe for introducing savings and indicates
the approximate time required for each phase of the process. MFIs should estimate
about a year of preparation before the first pilot project begins, and 18 to 24 months
before the tested savings products are available at all branches.

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Figure 2: Average Time Required to Introduce Savings

Monitoring
Monitoring
Phase: 4

Evaluations
Evaluations and
and
Market
Market Penetration
Penetration
Phase: 3
Activities under Different Phases

Implementation
Implementation
and
and Rollout
Rollout

Pilot
Pilot Monitoring,
Monitoring,
Phase: 2B

Evaluation
Evaluation &
&
Launching
Launching Adjustment
Adjustment
Pilot
Pilot Product
Product

Product
Product
Phase: 2A

Development/
Development/
Engineering
Engineering

Market
Market
Research
Research
Phase: 1

Planning
Planning

1st Qtr 2nd Qtr 3 rd Qtr 4th Qtr 5 th Qtr 6th Qtr 7th Qtr

Time Required for Completing Different Phases

Source: Saiful Islam, WWB, Microfinance Products and Services

Is Investing in Voluntary Savings Mobilization Worthwhile?

One of the key challenges for growth for MFIs

around the globe is the availability of low-cost
funds for expanding their portfolios.

Savings could be potentially a cheap source of continued funding. The experience of

MFIs shows that loan portfolios can be capitalized when savings are mobilized from
different market segments (both the poor and the non-poor) and from different account
sizes (i.e., small, medium and large accounts).

One of the most successful institutions is the Unit Desa (BRI-UD) or Village Bank of
Bank Rakyat Indonesia. BRI-UD was established as an independent profit-center of the

13
 Bank Rakyat Indonesia (BRI), a State-owned rural bank, in 1984. As you can see in
the following graph, in its sixth year of operation (1989), the BRI Unit system achieved
self-sufficiency in funding when the volume of deposits equaled to the outstanding loan
amount. As deposits continued to rise and lending operations did not expand at the
same pace, the BRI Units soon experienced a case of ever-increasing excess liquidity – a
situation which has prevailed for the past ten years in varying degrees until today.

Figure 3: Stages of Development and Performance in BRI’s Unit Desa Savings

Mobilization Program—1984 to 2000 (in millions of U.S. Dollars)
25,000 400%

350%

20,000
300%

250%
15,000

200%

10,000
150%

100%
5,000

50%

- 0%
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00
Years
Deposits in Rp
Outstanding Loans in Rp
Deposit to loan ratio

Source: H. D. Seibel, How an Agricultural Development Bank Revolutionized Rural Finance: The Case of Bank Rakyat
Indonesia. IFAD Rural Finance Working Paper No. B5

In another example, Caja Municipal Arequipa (CMAC), Peru, was able to increase its
savings deposits and thus reduce its reliance on debt. The trends in capital structure
evolution show an important growth in public deposits from 80 percent of total liabilities
in 2000 to 95 percent in 2004. Public savings became the main source of funding in the
organization where deposits increased from USD 38 million to USD 119 million in that
period of time becoming a key source to finance the rapid portfolio growth during that
period. This also helped reduce the leverage of the banking sector from 8.05 to 4.84 in
the same period.
Source: Socorro Acuna Otero, Caja Municipal Arequipa, Peru. Microfinance Products and Institutional Growth: Optimal
Management Tools for Credit and Savings Products, May 2005

14
CHECKLIST
In the pre-planning stage of mobilizing savings, your management team and
board should have talked through the challenges and opportunities of
introducing savings. Using your own high-level knowledge of the market and
your institution, you will have decided whether or not you are ready to begin to look more
closely at introducing savings. Now is the time to start to think about how ready your
institution is, what will be your particular challenges, who will lead the savings
mobilization, who will be your target clientele, and how you will set up a pilot.

The following checklist will help to highlight whether you are ready to proceed with
mobilizing savings:

STEP KEY QUESTION YES/NO

1 Does your organization meet the pre-requisites for introducing savings?
Do you fully understand and are you willing to institute the fundamental changes to
2
your organization required for introducing voluntary savings?
3 Are your vision and mission aligned with savings mobilization?
4 Have you evaluated the time and resources required for mobilizing savings?
Have you understood the process which your institution must follow to mobilize
5
savings?
Have you identified a potential candidate to be the full-time, competent and
6
knowledgeable manager of savings during its introduction and on an ongoing basis?
Have you evaluated the extent to which you will require external support to
7
implement savings and taken steps as required to recruit that support?

If the answers in your checklist are all YES, you are ready to start the process of mobilizing
savings!

If any or some answers to the questions above are NO, you need to re-evaluate them
carefully and make informed decisions.

15
16
Phase 1: Planning
Phase 1: Planning

Phase 1: Planning
Overview of Phase 1
During Phase 1, you should make certain that your institution:

• Articulates your vision for savings and agrees on, and documents, your short-
and long-term objectives,

• Undertakes high-level research and analysis, primarily based on secondary

research, to define the scope of the project to introduce savings,

• Develops a good understanding of the key success factors for the introduction
of savings,

• Agrees on, and documents, how you will define the attributes of your product /
service, your processes, your pilot and the quantitative and qualitative measures
for analyzing results,

• Completes a high-level joint action plan outlining HR and financial resource

commitments and next steps, and

• Assesses the potential impact of the proposed change on your institution.

Resource Requirements and Timing

Phase 1 requires a significant investment of time from your senior management and
board. They will be making the initial feasibility assessment and, provided the decision
is made to go ahead, recruiting a project team. The senior management team will then
be involved in developing an action plan with the project team and agreeing on how the
mobilization of savings will be undertaken.

EXTERNAL HELP RECOMMENDED

Consider bringing in external help with experience to guide you in creating
your savings product team. External resources at this stage can be extremely
helpful in training staff and building institutional capabilities.

17
 TOOLS
The following tools are used at this stage:

PHASE TOOL(S) DESCRIPTION

Financial analysis that helps both you and external consultants
Financial Ratio Analysis
understand your organization’s financial health.
This analyzes your relative performance vis-à-vis best practice
Performance Bench-marking institutions, especially MFI’s that have already successfully
mobilized savings.
Diagnostic tool to understand institutional strengths,
1 Institutional Diagnostic Tool
weaknesses and readiness to implement savings.
Used for determining a rough estimate of the potential savings
Market Sizing Template
market size.
Used at this stage to discuss the results of the high- level
Workshop market analysis and institutional readiness assessment and to
develop an action plan.

These tools are available from WWB and other organizations such as CGAP, Mix market,
etc.

Analyzing the Macroeconomic Environment

The first and most important step in mobilizing voluntary savings is to ensure
that your MFI operates in a reasonably politically stable macro-economic
environment. Secondly, legislation must legally allow you to mobilize savings,
or you must be certain you can obtain a license to mobilize savings within a short time.
At this stage your analysis is mostly internal and should be:

• At board and management level,

• Based on information already available to your institution, and

• In need of minimal external support.

Quantitative measurements to be analyzed to help you understand the macro-economic

situation include:

18
Table 2: Indicators for Assessing the Macroeconomic Situation
KEY TRENDS WHERE AND HOW TO FIND THIS INFORMATION
Available online from institutions such as the World Bank, the
GDP trends
U.N., CIA fact sheets.
Central bank statistics, national data base, World Bank and U.N.
Inflation rates and trends
reports.
World Bank, U.N. reports and the reports of development
Poverty levels
institutions working in your country.
Consulting and reviewing trade magazines and newspapers;
Trends in the banking industry purchasing analysis reports; reviewing the Central Bank website,
Chamber of Commerce reports, etc.

Gathering the information above should enable you to draw conclusions on the general
health of your market, the main players in the industry, as well as threats and opportunities.
You should also be able to develop a high-level view of current and future trends in terms
of:

• Growth potential in the numbers of customers wanting to save, and

• Likely future government legislation.

Any information you do not have can be supplemented by information in news sources or,
if required, input from external consultants.

The most suitable regulatory environment for your operations is characterized by

liberalized interest rates and appropriate regulations, such as specifications for minimal
capital requirements adjusted by the annual inflation rate every year, paid-up capital;
paid in cash, and other regulatory characteristics comprise minimum stock ownership
requirements for voting rights, capital adequacy ratios, liquidity ratios, accounting and
audit standards, criteria for opening branches, and reporting requirements.

Estimating Market Size

At this stage you should use secondary sources to estimate the potential market size for
different types of savings products. Conservative estimates on savings amounts will give
you a preliminary idea of the total amount of savings in the market in which you will be
operating. To estimate the market size, you can apply the rule that households tend to
save 10 percent of their disposable income. The results may be useful to demonstrate the
amount of potential savings for the institution to board members and other stakeholders.
In addition to quantitative secondary data, you can also use interviews with industry
leaders and careful observations of products offered by competitors to different segments
of the market to piece together a picture of the savings demand and estimated market
size.

19
 Once you have obtained the above information on your market, it should be
analyzed and compiled in the form of a report. This will form the key first
section of a feasibility report on the opportunity and market size for savings in
your service area. You will add an analysis of your institution and more
detailed plans for mobilizing savings. Creating this report will help to establish a unified
approach toward savings and ensure buy-in from external and internal stakeholders.

At this stage, you may require help in producing a format for your report and understanding
the level of detail required. WWB or other external consultants will be able to assist you
by providing templates, case examples and advice on high-level feasibility research.

Understanding Your Clients

It is well known that clients save for safety and security, convenience, access, and
return. Typically, your clients will not vary largely in terms of their savings needs and
preferences. However, a deep understanding of clients’ needs and preferences is the
key to the successful development of new products. Therefore, you should focus on
understanding the answers to the following questions:

• Why does each segment save?

• What formal and informal savings mechanisms do they use?

• What are the perceived advantages and disadvantages of these exiting savings
mechanisms?

• What importance does each segment attach to specific product attributes?

• How are your clients satisfying their current needs?

• What are your clients’ future needs for savings, and

• How much are clients prepared to pay for savings products and services?

At this stage, you should not conduct extensive research to understand your clients’
savings needs. Rather, you need to gather information from existing research, loan
officer interviews and client satisfaction surveys.

Assessing the Competitive Environment

Increasing competition in microfinance markets around the globe has increased the
need for a more systematic and rigorous approach to tracking and interpreting market
signals. However, at this stage, you do not need to conduct in-depth research; rather,

20
you are expected to conduct a basic competitor analysis based on information collected
from secondary sources such as: central bank reports, websites, economic publications,
newspapers and articles, institutional brochures, and annual reports. This analysis can
be conducted either by your staff or with external help, depending upon your institution’s
level of comfort with gathering data from competitors and analyzing it.

Table 3: Basic Information to be Collected about Your Competitors in the

Savings Market
BASIC COMPETITOR
WHAT DO YOU NEED TO KNOW?
INFORMATION
Year of opening, mission and vision, main stakeholders, total number of
Institutional information
employees, services offered, target market, market share, etc.
Size and type of Geographical area of operations, total number of clients (i.e., savers, borrowers,
operation etc.), and service delivery mechanisms.
Type of products and services offered, such as loans, savings, insurance and
Products and Services
leasing.
Name and number of savings products, target segments, key features of these
products, such as account opening requirements, minimum balance, withdrawal
Savings accounts
related policies and procedures, penalty for falling below minimum and fees for
all transactions.
Name and number of loan products, target market, basic information on
Loans purposes of loans, minimum loan qualifying criteria, important terms and
conditions, fees and processing time, etc.
Name and number of products (i.e., payment of utility bills or payroll, etc.),
Other products
perceived advantages, terms and conditions, value added for the clients, etc.
Use of technology such as interactive kiosks, remote transaction systems (RTS),
Use of technology
ATM transactions, charges for card issue, withdrawals, and deposits.
Financial status Asset value, portfolio quality, return on investments, profitability, and efficiency.
Future trends High-level patterns of growth and decline.

In Appendix 3, you will find a template of the Competitor Analysis that WWB used when
working with U-Trust, an MFI in Uganda. The information used in this case was publicly
available on the website of the Central Bank of Uganda and was analyzed to build a high-
level competitor profile for the client. In cases where data is unavailable or insufficient,
your MFI should make an effort to develop a profile based on secondary research.

At this stage, your competitor data should be basic and easily available. More
comprehensive analysis of your competitors will take place in Phase 2A.

Documenting the above assessment will constitute the second section of a

feasibility report on the opportunity for savings in your region.

21
 Assessing Your Institution’s Readiness
As highlighted in the pre-planning stage, your institution’s readiness to introduce savings
is based on strategic, organizational and operational factors. At this stage, you will want
to look at some simple measurements within each of these three areas to help determine
your readiness to embark on the lengthy and deliberate process of developing a new
product.

EXTERNAL HELP RECOMMENDED

Since voluntary savings is a fairly new concept in microfinance, it may be
difficult for management to assess an MFI’s institutional readiness to
introduce savings. It is advisable to bring in external support from
individuals who are experienced in introducing savings in a microfinance
institution. An independent, outside review of your MFI may also provide the “wisdom
to know the difference” between an institution that is ready and one that is not.

In order to understand your organization’s capacity to mobilize savings, you should now
take a closer look at your institution’s key performance indicators1.

STRATEGIC ASSESSMENT
Before introducing savings, your institution should have a clear and shared vision,
mission, and objectives2 that are aligned with the mobilization of savings. In support of
this, your organization’s core competencies must also be aligned with the introduction
of savings, and you must have carefully considered the financial ramifications of
introducing a new product.

FINANCIAL ASSESSMENT
Understanding the operational and financial readiness of your institution to introduce
savings is not simple. At this point, you will need to analyze your institution’s financial
and operational performance for the last 3 to 5 years. Your assessment should include
the following:

Table 4: MFI Financial Performance Indicators

MINIMUM
INDICATORS DEFINITIONS/FORMULA
REQUIREMENT
Number of individual clients served by the MFI for the
Outreach: period, derived by adding the number of active borrowers,
Number of Active number of active savers and number of non-credit and 20,000+
Clients savings clients and deducting the clients who were double-
counted.

22
 MINIMUM
INDICATORS DEFINITIONS/FORMULA
REQUIREMENT
Portfolio Quality
Outstanding Balance of Loans with Arrears>30 days/
Portfolio at Risk, 30 5%
Total Portfolio Outstanding
days
100%, after adjusting
Sustainability Total Internally Generated Income:
income for inflation
Financial Self- (divided by) Total Expenses + Imputed Cost of Capital
and assuming all debt
sufficiency
is at commercial
Measures the MFI’s ability to fully cover costs.
interest rates
Profitability:
Earnings after Taxes - Imputed Cost of Capital/
Adjusted Return on 5%
(divided by) Average Total Assets
Asset
Cost-efficiency
Operating Costs/
Operating Cost 15% to 20%
(divided by) Average Portfolio Outstanding
Ratio
Liquidity Cash & Bank Accounts + Short Term Investments
10% to 15%
Quick Ratio (divided by) Total Assets
Capital structure Total Assets
3 or above
Equity Multiplier (divided by) Total Equity

GOVERNANCE AND OWNERSHIP

Your board and owners play an extremely important role in the transition to becoming
a financial intermediary. They need to have the same vision and be well informed
on issues and progress related to the savings mobilization program in order to avoid
and/or minimize future problems. The board members and owners need to be ready to
take responsibility for their actions and decision-making. They need to be qualified to
understand and make the complex decisions that financial intermediaries face and be
ready to accept necessary changes.

MFIs created by NGOs sometimes appoint members of the NGOs’

boards to sit on the boards of the regulated deposit-taking institutions.
Such appointees may be people with considerable dedication and
longstanding commitment to helping the poor and advancing microcredit.
However, their backgrounds are often in the social services or other
non-financial professions, and they are frequently not competent to
oversee complex financial intermediaries serving a wide range of
clients. Establishing appropriate governance can be challenging, and the
problems may be exacerbated by conflicts of interest.

Source: Mobilizing Savings from the Public: Basic Principles and practices, Marguerite S. Robinson

23
 MANAGEMENT STRUCTURE
You need to ensure that sufficient high-level management capacity is in place from the
beginning, as your institution grows and gears up to become larger and more complex.
The organizational structure will likely need to change in some ways. Skilled, competent
and financially knowledgeable management is necessary to handle complex issues related
to financial intermediation, changes in systems and operations.

OPERATIONS
You need to have sound and standardized operations with established credit policies
and procedures, including the following: written manuals; well-run systems; and
knowledgeable, experienced, highly motivated and disciplined staff.

The in-depth analysis of these factors will give you a clear idea about your institution’s
key strengths and challenges.

Summary of the Institutional Readiness Analysis

By this stage, if you are to begin the mobilization of savings, you should have established
that your institution has: good portfolio quality; adequate profitability; high staff
productivity; appropriate capital available; standardized and efficient processes for micro-
lending, and adequate internal control systems to start the pilot phase.

In summary, you should be able to demonstrate that:

• Your ownership is qualified and accountable,

• You have sound and effective governance and management, and

• You have a history of strong financial and operational performance.

Assessing the Opportunity

At the end of the above analysis you should be able to weigh the relative strengths in
favor of mobilizing voluntary savings by reviewing the internal motivation for savings
(i.e., an inexpensive and reliable source of funds), strong competitive advantage, unique
opportunities for introducing savings due to changes in macroeconomic factors.

Documenting the conclusions of your opportunity assessment will also

constitute part of your institution’s feasibility report for savings. You should
bring together all the above- mentioned elements of the feasibility report and
present that report to your management team and board.

24
 Now is the time to make the decision as to whether or not to move forward.
Your Chief Executive Officer/ Managing Director and key management
staff need to take part in a strategic workshop, reviewing the high-level
findings on market demand, competition, market trends and institutional
readiness. The team needs to focus on the impact assessment and discuss in detail how
savings will be mobilized with a particular focus on the required organizational changes.
This process is likely to take between one and three days, depending on how knowledgeable
and unified your management team is.

Preparing for the Savings Product Team

If your conclusion leads you to go ahead with introducing savings, you will now need to
focus your attention on change management in order to:

• Assess how the introduction of savings will impact your organization,

• Identify the specific capability gaps that exist in your institution,
• Design a change management strategy to plug those gaps,
• Document specific steps required in your organizational redesign, including
building up a savings product team, and
• Include a plan to convey management’s vision and direction for savings to the
whole organization.

At this stage you should:

a. Feel confident that your organization is ready to introduce savings, or
b. Know what processes you have to put in place to build your institution’s capabilities
so that you are ready to introduce savings.
Your short-term requirements will include:
1. Filling key management positions with experienced, competent, and knowledgeable
staff with strong financial management expertise and in-depth knowledge of
savings,
2. Identifying a full-time, competent, and knowledgeable management-level staff
member to lead and manage the mobilization of savings on a day-to-day basis,
3. Creating a cross-functional team for the introduction of savings, and
4. Developing a collaborative approach toward savings with the managers of key
departments such as finance, credit management, MIS, and HR all involved in the
process at various stages.

25
 Creating the Savings Product Team
At this stage, it is time to identify from within the organization, or recruit, the savings
project manager (product champion). As the management team, you should either have
an idea of who in your organization could fill this position, or, if you have no one, begin
recruiting procedures to find a suitable person. The time commitment required for this
step should NOT be underestimated. Many MFIs slip up when introducing savings by
not having sufficient resources focused on product implementation.

The Project Manager will be responsible for:

a. Promoting the introduction of savings to external and internal audiences,

b. Providing strategic direction for planning and managing the mobilization of savings,

c. Reporting on progress to the senior management team and the board, and

d. Managing the project’s budget and deadlines.

You will need to create a team for the various phases of product development, including
the pilot. The following table will give you an idea of the team’s qualifications, roles and
responsibilities:

Table 5: Core Team Characteristics

SUGGESTED
TEAM ROLES AND
MINIMUM TIME QUALIFICATIONS
MEMBERS RESPONSIBILITIES
COMMITMENT
• Excellent managerial
• Work closely with the team
Approximately capabilities
leader and market research
60% – 70% time • Experience in product
expert designing the plan
Project commitment during development
• Organize workshops for creating
Manager product development • Analytical mindset
the prototype product
phase and full-time • Capable of gathering
• Create the product manual
afterwards information and working
• Train staff
with a team
• Familiar with the activities • Develop systems for capturing
of the MFI information during savings
MIS
25% time • Experience in MIS implementation and on an
personnel
development for research ongoing basis
and operations • Develop training modules
• Prepare budget for savings
• Familiar with the activities mobilization
Financial
of MFIs • Impose financial control
Management 25% time
• Experienced financial • Prepare regular Income
personnel
manager and analyst Statements for the project
• Regular variance analysis

26
 SUGGESTED
TEAM ROLES AND
MINIMUM TIME QUALIFICATIONS
MEMBERS RESPONSIBILITIES
COMMITMENT
• Experience in market
research
• Strong communication
Research phase skills
Market
– 100% time • Team player
Research • Plan, design and lead the research
commitment. Post- • Familiar with the activities
Expert
research – 25%. of MFIs
• Experienced in conducting
and analyzing qualitative
focus groups
• Experience in marketing at • Develop and implement the
a financial institution marketing plan for the savings
Marketing
25% time • Experience in customer pilot and rollout
Manager
service, branding and • Train staff in marketing and
promotions promotion
• Familiar with the activities
• Identify potential team.
Human of MFIs
25% time • Coordinate and ensure quality
Resources • Experience in managing an
training
HR department
Field Level
• Has ability to lead the branch
Staff (Branch
• At least 2 to 3 years • Willing to take on new challenges
Manager 25% time
experience • Dynamic, organized and
and Loan
systematic
Officer)
• Capture processes and lessons
learned from the mobilization of
• Experience in capturing
Knowledge savings
50% time knowledge
Developer • Document results in a medium
• Analytical mindset
that can be used by your
institution and the industry

Members of the savings team will be expected to complete tasks related to their regular
jobs as well as working on the savings initiative. They will need to spend considerable
time away from their normal duties while they are working on product development
initiatives. The project manager, for example, needs to give at least 60% to 70% of his
or her time during the pilot phase, and other staff may need to spend four to five days
per month on developing the new product. Supervisors of all staff, especially those
involved in the savings initiative, are expected to grant reasonable requests from the
project manager, who will, where possible, inform the supervisors of such requests in
advance.

During the pilot, the team will:

1. Plan, prepare, conduct, and evaluate the product test,

2. Complete the design of the product based on the results of the testing process,

27
 3. Develop and regularly monitor formal quantitative and qualitative objectives,

4. Identify, develop, and manage the process and indicators to be followed in determining
the success or failure of the product test, and

5. Discuss the pilot test in all departmental meetings, so that other department staff will
be aware of the team, its activities, and the progress of the test and have an opportunity
to inform the team of other relevant activities that might impact the product.

The team should meet regularly, as deemed necessary, to complete product development
within set deadlines.

The project manager will try to use team members in an efficient manner in order to
minimize, wherever possible, any staffing disruptions within the organization. The
project manager is responsible for:

1. Calling meetings of the team or its sub-committees,

2. Allocating responsibilities to the team,

3. Quality control over team outputs,

4. Reporting regularly to the senior management team on the progress of the product
test,

5. Managing the team’s budget,

6. Producing bi-monthly progress reports and quarterly assessment reports within one
week of the end of each meeting,

7. Report to the management committee during their regular meetings while the product
is under development, and

8. Preparation and presentation of the team’s recommendation report to the management

committee, board of directors, technical assistance partners.

For further details of the full roles and responsibilities assigned to each team member
during the pilot please see, Appendix 4, Specific Activities of Team Members. More
details and guidance on team compositions can also be obtained from WWB or from your
external consultant.

At this stage, to be ready to progress rapidly with savings mobilization, your management
team may choose to start considering HOW savings will be introduced. This will include
addressing the need for new delivery channels, such as specific branches, to be set up.
Starting to build the systems, risk management, and training procedures to carry you
through the implementation will also be beneficial.

28
Creating the Action Plan
Creating an action plan is your first opportunity to test the team you have created to
mobilize savings. The action planning exercise should:

a. Be led by your new project manager,

b. Involve all the members of the cross-functional team you have identified,

c. Adopt a collaborative approach to include managers of key departments, and

d. Include your senior management.

Your action plan will follow the basic phases outlined in the introduction to
this document, but in greater detail. It will assign an individual to be responsible
for each phase and a target date by which each step should be completed. Both
your new savings team and your management team should be involved in
drawing up this plan and determining HR and financial resource requirements. The plan
is an important tool for monitoring adherence to target dates.

Preparing the Budget

At this stage, you now have your team and action plan in place. You have established
that you have the capital to undertake the mobilization of savings. Therefore, you should
logically start to put together a budget for the program. Your finance department will
handle this, and other individuals or organizations with experience in introducing savings
can provide advice regarding the likely costs of each stage.

CHECKLIST
During Phase 1, your institution’s management should be working hard to use
the data you already have to understand your market, competition and
customers. Now you should have developed a detailed action plan that you
will start to implement in preparation for Phase 2A.

The following checklist will help you determine whether you are ready to proceed with
Phase 2A of mobilizing savings:

STEP KEY QUESTION YES/NO

Have you undertaken high-level analysis of the market and political situation in
1
which you operate?
Have you collected basic information about your competitors and analyzed the
2
current and future threat they may represent?
Have you assessed your institutional readiness in terms of strategy, organization, and
3
operations?

29
 STEP KEY QUESTION YES/NO
Have you clearly understood the cultural, philosophical, organizational, and
4
operational implications of introducing voluntary savings?
Have you clearly established whether you have an opportunity in your market with
5 your competitors and clients to introduce voluntary savings, and have you sought
external advice on this point?
Have you identified a full-time, competent, and knowledgeable manager to manage
6
savings through its introduction and then on an ongoing basis?
Have you carried out a change management process to establish a team for
7 the mobilization of savings based on the time and resources you believe will be
required?
Have you put together your action plan with the savings manager and team,
enabling you to follow through each phase of the process, detailing how and with
8
whose support each phase will be conducted? Start with Phase 1 in detail before
proceeding.
Have you used all the suggested tools to work through the process and reach your
9
conclusions?

If any or some answers to the questions above are NO, you need to carefully re-evaluate
them and make informed decisions.

30
Phase 2A: Product and Process

Phase 2A: Product and Process Design

Design
Phase Overview
During Phase 2A, you need to ensure that your institution:

• Undertakes in-depth research into the savings market and your main
competitors,

• Defines client, institutional, and environmental requirements,

• Segments your customer base,

• Designs specifications—including norms, regulations, and policies—for each

product,

• Identifies a pilot branch and the operational and organizational requirements for
setting up the pilot,

• Develops the required systems and process adjustments to run the pilot,

• Creates an implementation plan for the pilot, and

• Develops training materials and a training schedule and begins the training
program for pilot staff.

This is an intensive phase with important analytical steps that lay the foundation for a
successful savings mobilization program.

The following figure shows the stages that are required at this point to define the product
and design the supporting processes.

31
 Figure 4: Product Development and Process Design
Market Product Location, People System
Research Design and Planning Adjustments

• Identify
Identify industry
industry • Generate
Generate product
product • Identify
Identify pilot
pilot • Liquidity
Liquidity
trends
trends ideas
ideas branch(leadership,
branch (leadership, management
management
proximity,
proximity,
• Identify
Identifyclient
client • Define
Define • Cash
Cash //treasury
treasury
economy,
economy,
segmentsand
segments and methodology
methodology andand management
management
performance)
performance)
theirpreferences
their preferences technologyforfor
technology
• Asset
Assetand
andliability
liability
deliveryofofeach
delivery each • Identify
Identify team
team
• Gather
Gather management
management
product
product peoplefor
people forsavings
savings
intelligence
intelligence
pilot
pilot • Internal
Internalcontrol
control
about
about • Define
Define policies,
policies,
competitors’
competitors’ proceduresand
procedures and • Designing
DesigningHR HR
policy
policy MISand
• MIS andFIS
FIS
productsand
products and regulations
regulations andtraining
and training
• Technology
Technology options
options
services
services
• Plan
Plan for
for (i.e.,ATM,
(i.e., ATM,RTS,
RTS,
implementation
implementation etc.)
etc.)

Resource Requirements and Timing

During Phase 2A you will need:

• Product design and research support – ongoing involvement from your research
team, credit manager, and savings product managers over a period of two to
three months,

• A product development team – a team led by your Savings Product Manager to

develop the prototype product over a period of two to three months.

EXTERNAL HELP RECOMMENDED

At this stage you should bring in external technical support to help conduct
the market research and facilitate the discussions to develop products and
processes based on market research. External help will also assist you in
preparing documentation and gathering information to support the decision-
making process.

TOOLS
The following tools are used at this stage:

32
 PHASE TOOL(S) DESCRIPTION
A tool developed by Michael Porter in 1979 that helps
Porter’s Five Forces institutions like yours to analyze the competitive environment
and the relative strength of threats to your market position.
Describes each savings product you plan to introduce; should
Product Description
be a high-level description of each product and should be used
Document
to introduce products to staff, donors/investors and clients.
A manual that defines the main characteristics of your savings
Product Manual
products and procedures.
A product development tool that helps to capture all the
market research findings in a systematic manner, enabling you
2A Product Development Matrix
to develop your product concept (prototype product). See
Framework
Appendix 5 for an example of how to plan the product costing
process.
An interview/group discussion mechanism that is usually
conducted with groups of people from the same market
segment. Focus groups are used to help you understand issues,
Focus Group Discussions
concerns, advantages, and disadvantages. This tool is also used
to discuss the pros and cons of proposed prototype products
and processes before launching.
Tool used to document and analyze the efficiency of your
Process Mapping
current processes from loan disbursement to recovery.

Conducting Market Research

As the first step in Phase 2A, you should conduct research to inform the design of your
product. This research will include an industry and competitor analysis and customer
research to help you understand the attractiveness of the savings market, product
offerings and clients’ savings needs. Undertaking in-depth market research builds on
the work you have already completed to identify market and regulatory conditions and
your competitors. However, in Phase 2A, you will reach more detailed and nuanced
conclusions based on a greater volume of external data.

EXTERNAL HELP RECOMMENDED

If your institution has never conducted market research, you may want to
bring in external help, experienced in conducting market research. Having
support can be especially helpful in designing, conducting and analyzing
the research, segmenting the customers and estimating demand.

The following steps form the basic framework for the research process:

1. Establish parameters for research—What are your objectives? What is the best
research methodology for achieving these objectives? How long can you afford to
spend gathering data? What is your research budget?

33
 2. Design the research—Define the competitors and customers you want to interview.
For competitors, define your primary competitors, identifying an individual with
whom to speak in each organization and planning your discussion. For customers,
define the target customer to be researched, develop recruitment guidelines and
develop your discussion guidelines.

3. Undertake the research using experienced market researchers to ensure quality data
collection.

4. Analyze the results and develop recommendations for the savings team and
management.

In total, the market research phase can take one to two months to complete. If you are
using external support to help you at this stage, you must take time to help them come up
to speed with your institution, its requirements and the required outcomes.

INDUSTRY ANALYSIS
The focus of your first research will be to understand your savings market, related
regulatory policies and procedures and industry trends. This should also include an
analysis of the forces of demand and supply in savings; the government’s and donor
perspectives; new investors; new entrants, and the extent of substitute products. The
result of this data analysis will provide information about opportunities, constraints and
competitive positioning that you will need when you begin to mobilize savings. (See
figure 5.)

METHODOLOGY
Use a combination of both secondary and primary research in order to obtain and analyze
data. Information will be analyzed through different techniques including one-on-one
interviews with industry experts and key providers of financial services as well as with
staff members, focus groups and assessment tools.

COMPETITOR ANALYSIS
The objective of this research is to gather qualitative data from your key competitors,
such as:

• Product offerings and attributes,

• Processes to deliver products, e.g., the process to open account,

• Targeted customer profiles,

• Marketing materials and strategies to attract customers,

34
 • Product and company positioning,

• Interior set-up,

• Opening times,

• Physical evidence (brochures, promotional materials, advertising),

• Customer service, and

• Future strategies.

METHODOLOGY
Identify which competitors to interview to give you the broadest perspective on the
savings market. You should determine which staff person at your competition would be
the most helpful. Ideally, you should interview someone in senior management with an
understanding of the entire savings program, but they should not be too senior, or they
might be unfamiliar with the basic products. You will need to develop discussion guides
to ensure that you capture all the data set out in the above objectives.

Conducting face-to-face, in-depth interviews with a member of management of your

competitor will provide you with the most information. However, this type of interview
may prove difficult to obtain. Instead, you may need to send an independent consultant
and/or obtain as much of the information as you can from secondary sources.

In addition to interviews with the competition, you may want to “mystery-shop” and
experience the competitor’s products and services as an actual customer would. This
method allows you to directly evaluate the process, procedures and service of the
competition’s savings products.

Once you have gathered all of the data on the competition from the face-to-
face interviews, secondary research, and/or mystery shopping, Porter’s
Five Forces (see Figure 5 next page) may be a useful way to analyze the
information you have collected. This tool is used to analyze overall market
conditions, including supply and demand.

35
 Figure 5: The Five Competitive Forces That Determine Industry Competition

Threat of New Entrants

HIGH / MEDIUM / LOW?

 Accessibility of lending methodologies
 Ease of creating an NGO
 Start-up donor funding available
 Attractive industry draws new players
 Attractive industry draws banks or cooperatives

Bargaining Power Rivalry among Bargaining Power

of Suppliers Existing Competitors of Buyers

HIGH / MEDIUM / LOW? HIGH / MEDIUM / LOW? HIGH / MEDIUM / LOW?

 Importance of donors in local industry  Degree of market penetration by other providers  Existence of viable alternate providers
 Ease of getting access to capital from donors  Stage of industry growth  Number of potential customers relative to
 Ease of getting capital from commercial sources  Number of other MF providers providers
 Current health of financial system and liquidity  Level of skills and development of other providers  Level of knowledge of customers
conditions  Presence of non-traditional providers, such as banks,  Level of awareness of other providers
 Our credit rating cooperatives  Price sensitivity of customers
 Existence of loan guarantees and other  Difficulty of switching from one MFI to
mechanisms to faciliate linkages with formal another
financial sector  Customer loyalty to your institution

Threat of Substitute
Products or Services

HIGH / MEDIUM / LOW?

 ROSCAs or other informal savings mechanisms
 Merchant credit
 Credit cards
 Moneylenders
 Savings
 Microinsurance

Source: Michael E. Porter, The Competitive Advantage of Nations

CUSTOMER RESEARCH
The third key piece of information you will need to collect at this stage is data that
enables you to better understand your current and potential customers. You will want to
conduct research to understand:

1. The nature of current and potential customer demand for savings,

a. Savings habits analyzed by segment,

b. Lifecycle events that drive or affect savings habits, and

c. What customers need and want from a savings product, broken down into all of
the product and service delivery attributes.

2. Perceived advantages and disadvantages of competitor and substitute products;

a. Use of current savings mechanisms, i.e., banks, cooperatives, committees,

analyzed by customer segment, and

36
 b. Satisfaction with current savings mechanisms broken down into all of the product
and service delivery attributes – security, convenience, accessibility/liquidity,
interest rates, customer service, incentives (lotteries) etc. – and the trade-offs
that savers make between these attributes.

3. Attitudes toward your microfinance institution:

a. Customers’ current perceptions of your institution,

b. Customers’ interest/concern in saving with your institution, and

c. Customers’ response to your marketing materials.

Figure 6: Savings Services and Clients’ Expectations

What Do Clients Look for in a Savings Product?

Convenience
Open 24
hours

Easy and Quick Access

Safety & Security

Access to Other
Financial Customer
Return
Services Service

METHODOLOGY
Both quantitative and qualitative research will help you understand savings customers.
We recommend using qualitative research methods to save money and develop a deeper
understanding.

The main tool for customer research will be to conduct focus groups. You should plan
for eight to twelve client focus groups of six to eight persons. Each focus group should
be recruited based on set criteria that you believe distinguish the population. For savings

37
 research, these criteria could be savings habits and demand based on income level, current
vs. potential clients, and male vs. female clients.
You will need to develop a discussion guide for the focus groups to ensure that the
groups generate the customer data you require to reach the above objectives. Generally
speaking:

• Focus groups should be conducted by a qualified facilitator experienced in focus

group moderation techniques and
• You may also want to use MicroSave’s Participatory Rural Appraisal (PRA)
tools in your focus groups, such as the Financial Sector Trend Analysis, Product
Attribute Ranking, Relative Preference Ranking, and Life Cycle Profile, which
were designed uniquely for product development for microfinance institutions.

Contact WWB’s Strategy and Customer Insight Team for more information
on how to conduct this research.

Segmenting Your Customers

When you recruited individuals to take part in your focus groups, you made initial
assumptions about what criteria distinguish or segment your customers. Once your
market research is complete, you will be able to confirm or disprove your initial recruiting
hypotheses and identify your key customer segments and their specific needs.

METHODOLOGY
As you determine your customer segments, you should consider the following factors:

• Income level—one of the main determinants of your clients’ capacity to save is

their level of disposable income. The first criterion used to divide the population
should therefore be household net income.
• Institutional savings—the demands of an individual for savings versus those
of an institution will differ considerably. Each institution will have different
demands based on the nature of its business. For example, for-profit companies,
services, or industries versus non-profit schools, churches or mosques.
• Age—the savings behavior of seniors and middle-aged people is different from
that of young savers. For example, older savers are more likely to want to invest
than young people.
• Occupation—salaried individuals with regular incomes are more likely to have
regular savings than small business owners.

38
 • Borrowing relationship with the institution—you need to understand the
differences between your current customers’ (microentrepreneurs) savings
habits and needs and the savings habits of your potential customers (i.e., salaried
employees, bigger businesses, higher income individuals, etc.).

Global experience indicates that the types of savings mechanisms

customers use vary by income level.

• Lower income segments rely much more heavily on informal

mechanisms (i.e., saving with friends, ROSCAs, Money Guards, Tontines,
daily collectors, etc.).
• Lower income segments focus more on access than on interest rates
(i.e., return).
• Higher income segments tend to rely on formal savings institutions and
look for high returns.

Below is an example of a client segmentation for savings products based on income. The
objective of this table is to show how different segments differ in terms of their needs and
preferences. It would be useful to prepare a similar table based on the market research
findings of your own institution.

Table 6: Results of Focus Groups: Savings Needs

SEGMENT SAVINGS PURPOSE
OCCUPATION AGE GENDER NEEDS
NAME POTENTIAL OF SAVING
Look for higher
return because they
High net worth
consider savings
individuals, business, Tends to
an investment.
private sector salaried High. Roughly be middle Investments,
High- Demand high-quality
people or retired about 20% age or Mostly men down payment,
income *(A) service, prefer
people with real estate - 30% of income older emergencies
personalized service,
income, entrepreneurs people
prefer Internet
of large businesses
banking, and expect
undivided attention
Salaried employees Business
Quick, simple, less
working in mid-level opportunities,
bureaucratic services.
positions, technical Medium. Saves Mostly Mostly men emergencies,
Moderate- Don’t worry much
skills, small businesses, 10% - 15% of middle- and some access to loans,
income (B) about interest,
receive remittance income aged women school fees,
options for obtaining
from close family build house,
loans, etc.
members, etc. buy land, etc.
Micro business and Low.
Save in kind,
income- generation, Saves about $1
withdraw frequently,
Low-income working in the lower – 5 on a daily Middle- Mostly
Emergency want quick access,
(C) position, receives basis aged women
and like to deal in
remittances from close
cash
family members, etc.

* Note: Income levels will differ country to country and thus should be determined in each respective country

There is no formula to determine how many segments you should have, but each segment
must be meaningfully different and “actionable”.

39
 Figure 7: Main Savings Mechanism by Market Segment
Segment Monthly Net Income

Commercial
Paper
A RD$

C.D.s
Banks Current A/C

Banks Savings A/C

B RD$98,010

ROSCAs (SANEs)

Assoc.
Co-op
RD$21,866
C
Savings at

Money Lenders
home

construction
materials
House

Savings in

RD$6,305
Kind

Informal Formal

Source: Client Research

MARKET SIZE
Sizing your market means estimating the number of people who would want savings
services and who have the possibility of qualifying for the services, as well as the
estimated total value of savings in the area you will serve. An estimate of the size of
the market tells you a lot about your potential for growth in a given geographic area,
and thus helps you make strategic choices. The best way to define your market for
savings products depends on what type of product you plan to offer and to which market
segment. For example, experience shows that most economically active poor people
want passbook savings accounts that ensure access to their savings, while higher income
individuals and institutions like to invest in fixed deposits (Certificates of Deposit) that
offer a higher return.

40
EXISTING CLIENTS
You should be able to state the size of your current market and estimate the likely savers
among your existing clients. This can be calculated by reviewing your existing database
and looking at the average disposable income of your clients as well as their levels of
savings in compulsory savings accounts (if available). If your database does not have this
information, you can still estimate your internal demand by gathering information from
your loan officers (LOS) and field-level staff. Moreover, during customer research you can
obtain valuable information about savings amounts, frequency and savings types and the
withdrawal behavior of different segments of your clients. This will not give you a perfect
demand picture, but it will give you an indication of the internal demand for savings from
your existing clients. Be sure to use up-to-date and relevant statistics that combine facts
with data on savings propensity to come up with an estimated savings figure.

To research the demand for savings, researchers at Bank Rakyat Indonesia used
census data to estimate demand. They assumed that 2% of the gross monthly
household income and 0.5% of household assets would be available as savings
in the BRI service branches from the wealthiest 40% of the population. This was,
deliberately, a very conservative estimate, but it turned out to amount to a very
large potential for savings for the first year.

This estimate was validated by obtaining another estimate by interviewing

villagers. In each village, villagers were asked about household income levels in
that village (but not by individual households). Researchers asked focus groups to
divide the households of the village into several categories ranging from best-off to
very poor, with two to four categories in between.

Next, the interviewers asked how much money each of the top three groups
might save if they wanted to do so. The researchers selected the top three
categories because they were interested in estimating what larger savers could
save. These larger accounts would finance most of the loan portfolio and enable
the bank to provide services to lower-income groups. The interviewers thought
that in the cultural context of rural Indonesia if larger savers in the village
opened accounts, smaller savers would follow, which did occur to a large extent.
The responses of the villagers led to an estimate that was remarkably close to
the estimate made from the census and other secondary data. This demand
research indicated a very large savings potential. Perhaps, most importantly, bank
staff who participated in the research and witnessed the tremendous demand for
savings became very enthusiastic about the savings initiative.

The actual savings mobilized in the first year in the district studied was
substantially higher than the estimates, which were purposely conservative.

Source: Marguerite S. Robinson, 2004

41
 POTENTIAL CLIENTS
To understand the size of the external savings market, you first need to estimate the size
of the economically active population and divide this population into segments according
to income levels. The two segments with the highest incomes are your potential savers.
When you know the number of people in each of these segments, add those figures
together and subtract the number of people served by other banks, competitors, and the
clients you are currently serving (if you are already offering savings). The remaining
number is the untapped market for savings.

These are important estimates and they are crucial to the decision making process for
introducing savings. Market share information from the industry and competitor research
can be compared with the potential market estimate to draw some reasonable conclusions
about the potential of the savings opportunities in your market.

The output of your customer segmentation will describe the segments you
have identified, their unique needs, demands and their use of competitor
products. Based on this data, you will be able to identify and recommend
priority segments for your institution’s savings products.

Assessing Demand
Now that you have segmented your clients, you will need to return to the results of the
research to understand the nature of the demand in each segment for various savings
products.

At this stage you are trying to understand:

• The savings habits of each segment,

• Estimates of how much each segment saves each month, and

• Preferred savings products for each segment.

You will also want to consider:

• The potential future size of the segments, and

• How the market size and characteristics might change over time.

42
 METHODOLOGY
To do this analysis, you will need the data from the customer focus groups and
supplementary secondary research on savings habits in your country. If no secondary
research is available, you can apply the rule of thumb that households tend to save 10
percent of their disposable income. We have applied this conservative estimated ratio
with WWB network members who are mobilizing savings and found it to be a good
estimate.

FondoMicro, an organization in the Dominican Republic that monitors the microfinance

industry, estimated that there were 359,304 micro and small enterprises in the Dominican
Republic in 2001. Combining this fact with data on savings propensity revealed during
the focus groups suggests that the total yearly savings of micro and small enterprises is
approximately RD$6.5 billion or USD 275 million.

Table 7: Market Segmentation and Size—Average Savings Amount Stated by

Micro and Small Enterprises (MSE) Based on ADOPEM Client Interviews
MONTHLY AVERAGE TOTAL
# OF % BOR- TOTAL SAVING CA-
NET SAVINGS SAVINGS
SEGMENT BORROW- ROW- # OF MSE* PACITY FROM MSE
INCOME RD$ PER PER MONTH
ERS ERS PER MONTH
RD$ MONTH RD$ AND US$

RD$ 750 RD$21,333,750 RD$198,526,371

D 0 – 10,000 28,445 74% 264,702
US$32 US$903,972 US$8,412,134
RD$ 3,400 RD$33,806,200 RD$314,591,771
10,001
C 9,943 26% 92,527
– 50,000
US$144 US$1,432,466 US$13,330,160
RD$13,700 RD$3,055,100 RD$28,429,972
50,001-
B 223 1% 2,075
300,000
US$581 US$129,453 US$1,204,660
A >300,000 n/a n/a n/a n/a n/a n/a
RD$58,195,050 RD$541.5 million
Total 38,611 359,304
US$ 2,465,892 US$23 million

Total Yearly Savings: RD$6.5 billion ~ US$275 million (RD$23.6 = US$1)

* Source: FondoMicro

Another way to estimate the market size is to apply the rule that households tend to save
10 percent of their disposable income. By this calculation, the total yearly savings of
micro and small enterprises is approximately RD$3.4 billion or USD 144 million.

43
 Table 8: Market Segmentation and Size—Average Savings Amount Stated by
Micro and Small Enterprises (MSE) 10% of Disposable Income
AVERAGE TOTAL
DISPOSABLE # OF % BOR- TOTAL SAVING
SAVINGS SAVINGS
SEGMENT INCOME BORROW- ROW- # OF MSE* CAPACITY FROM
RD$ PER PER MONTH
RD$ ERS ERS MSE PER MONTH
MONTH RD$ AND US$

RD$504 RD$15,563 RD$144,829,315

D 0 – 10,000 30,875 80% 287,315
US$21 US$659,468 US$6,136,835
RD$
RD$ 3,400 RD$11,915,431 RD$110,881,928
10,001 1,585
C 19% 69,970
– 50,000
US$144 US$504,891 US$4,698,387
US$67
RD$13,900 RD$3,024,580 RD$28,145,960
50,001-
B 217 1% 2,019
300,000
US$591 US$128,160 US$1,192,625
A >300,000 n/a n/a n/a n/a n/a n/a
RD$30,503,447 RD$283.8 million
Total
38,611 359,304
US$1,292,519 US$12 million

Total Yearly Savings: RD$3.4 billion ~ US$144 million (RD$23.6 = US$1)

* Source: FondoMicro
Source: WWB Strategy and Customer Insight Team

At the end of this market research period you should analyze the results and produce a
brief report to be presented by the savings product manager to senior management and
the board. This report will follow the same format as your feasibility report but will
provide an in-depth analysis of the market, competitors, and customers.

Deciding What Products to Offer

Based on the customer research and competitor research you have done, you now have
the information you need to determine what savings products your institution should offer
to which segments. Research has shown that clients’ main considerations for choosing
particular savings institutions and products are reliability, safety and security, followed
by product features that offer convenience, access and return. However, what clients
mean by these attributes differs from segment to segment.

44
Figure 8: Savings Product Development Framework

S avings P roduc t Development

F ramework

2
2 33
Determine
Determine Understand
Unders tand
SSegment
egment Existing & PPotential
E xis ting & otential
P rofile and
Profile and Need
Need C ompetition
Competition
44
Product
Product
Choice
Choice
• How do clients in • Which are the top three
each segment competitors for each
currently satisfy their segment? 5
1 savings needs (i.e., • Which customers are Internal
Internal
savings mechanism?) they serving? Product P roduc t
Determine SSavings
Determine avings Product AAwith
with Product
• Who meets their • How are they serving Advantage PPolicies
olic ies &&
Objec tives by
Objectives by demands now, and to customers, and how Advantage YY
SSegment
egment PProcesses
roc es s es
what extent? well?
• What kind of savings • What are the most And, or . . .
popular product (s) for • What will be the
• What are the main product(s) meets their
demands (i.e., liquid, each of these delivery mechanism?
objectives of savings for
fixed, etc.) segments? Product
ProductBBwith
with • What are the roles
each segment (i.e.,
• How do clients rank • How do they position Advantage
Advantage ZZ and responsibilities
meeting emergencies,
different product themselves in the of staff?
investment, etc.) market (i.e. return,
attributes (i.e., • What capabilities do
• How do they differ from security, access, customer service, we need to reach and
each other by segment? return, customer innovative, link serve our chosen
service, etc.) products etc.? customers?

Principles of • Adapt to the purpose for which clients save (i.e. mixed products)
Product • Treat each segment as separate market
Development • Trade-off between convenience (i.e. liquidity, quick access etc.) and return
• Setting the right interest rate (market-driven, positive return – CD etc.
etc, and cost-based)

Therefore, your institution will need to create different savings products targeted at
different segments. A balance must be reached whereby you offer a combination of a few
appropriate products which each saver can customize for his/her own use. Remember,
creating too many products makes branch management too complex and expensive,
especially during the initial phase of product development. (See also Appendix 6, Product
Development Matrix Framework.)

Experience shows that when they begin to mobilize savings products, MFIs should
offer a few carefully designed products that users can customize. During product
development the following points should be considered:

• Offering too many products becomes unmanageable as it takes lots of time

and energy for staff and management to learn about the basics of delivering
savings,
• Offering many products is costly and expensive, especially in the beginning, and
• Product delivery is a much more complex and time-consuming process than
product development.

45
 The main types of products you could offer are:

• Passbook savings accounts—These accounts are primarily used by micro and

small savers. Usually a low interest rate is offered with this type of account.
However, tiered interest is popular, especially among larger account holders
whose interest is raised for increased account balances. Generally, this type of
account has high transaction costs due to low balance and frequent withdrawals.

• Programmed savings—These accounts are particularly popular among small

savers. Under this product, clients set their own savings goals or specific target
dates for withdrawals. This type of account offers higher interest compared to
passbook savings but lower than Certificates of Deposit (CDs). These accounts
have low transaction costs because withdrawals take place only once at the end
of the maturity date.

• Fixed deposit accounts—These accounts are popular among net savers who
want to invest their surplus to maximize higher return. These savers typically
have relatively high opening account balances. The interest rate is fixed at the
opening of the account for a specific maturity date. This type of account has low
administrative costs. It also provides stable funds to invest in longer term loans
or other investments.

The figure below summarizes the pros and cons of the main types of products you may
choose to adopt, based on WWB’s experience with clients in the field. In particular, it
looks at the two types of costs associated with products:

1. Financial costs, and

2. Operational costs

46
Figure 9: Characteristics of the Main Types of Savings Products Available to Your
Institution
Two Types of Cost: Financial Cost and Operational Cost

Many transactions, thus costly to bank

Deposit
Passbook
Withdrawals

Fewer transactions compared to passbook

thus less costly to bank

Planned Deposit
Savings
Withdrawals

Only two transactions during the contract

period, thus very low cost for bank

Deposit
CD
Withdrawals

Source: Saiful Islam

Experience shows that roughly 80 percent of savings clients typically hold 20

percent of savings balances, while 20 percent of clients hold 80 percent of
savings balances. This means that you will have many small savings accounts
which may be costly and will most likely result in losses for the institution.
Since transaction costs are almost the same for big accounts as they are for small
accounts, a combination of different products used by mixed segments helps make
savings profitable for your institution.

Designing Your Products

Once you have identified which types of products you will be offering, you are ready to
develop your prototype savings products.

The features of your savings products will be partially determined by the customer research
data that showed the target clients’ needs and preferences and partially influenced by
the institution’s cost structure and legal and regulatory context. The basic principles of
product development that you may want to follow are:

• Adapting products to the purpose for which clients save (i.e., mixed products),

• Treating each segment as a separate market and developing products tailored to

that specific market,

• Finding a trade-off between convenience (liquidity, quick access) and return,

47
 • Setting the right interest rate (market-driven, cost-based and positive return,
especially investment products such as Fixed Deposit etc.), and

• Developing mixed sources of savings to make the average size account profitable
and to create a stable product set.

The key is to learn from clients what they want and then incorporate this
information into both the product and its promotion. For example in Indonesia,
BRI’s most liquid savings account (called SIMPEDES), which features both interest
and lotteries, was an instant success because extensive research had been done
on what features customers wanted in a liquid instrument and why they wanted
them. The information was then used both in the design of the instrument and
in advertising messages. Moreover, BRI conducted market research to determine
what kinds of lottery prizes were popular and what kinds of publicity were
effective. The results were excellent. By December 1996, SIMPEDES and its
urban counterpart SIMASKOT accounted for 76% of total deposits in BRI’s Unit
Desa System.

Source: CGAP Focus Note No.8: Introducing Savings in Microcredit Institutions. When and How, April 1997

Your output at this stage should be a presentation to senior management on

which products to offer to which segments, as well as recommendations on the
design of each product. At this stage your team will be led by the project
manager but will still include top, middle and field-level staff, all of whom are
proactively participating in the process. You must work to achieve the best possible
balance between field experience, strategic thinking and deep financial understanding.

Preparing Product and Process Documentation

Once you have defined your products, you are ready to produce your product
documentation, specifically a product and process description and a product manual for
your pilot.

You should create a high-level Product and Process Description for each
savings product you plan to introduce. These will be used to introduce the
products to staff, funders and clients.

48
The product descriptions should include the following elements:

Table 9: Required Content for Prototype PRODUCT Description Documents

PROTOTYPE PRODUCT DESCRIPTION DOCUMENTS
COMPLETED
SECTION CONTENT
– YES OR NO?
Product Provides a brief summary of the basic attributes, features and
Description purpose of the product by segment.
Identifies the target market for whom the product is specifically
Target Population intended, e.g. segments classified by income, gender, geographical
location etc.
States what client needs this product and addresses its perceived
Value Proposition benefits. Also indicates how this product is different and unique
from other similar products in the market.
Indicates the interest rate, expressed as a percentage, which will be
Interest Rate applied to savings accounts and which you will calculate based on a
ratio of operating costs and required returns from savings.
Indicates the minimum amount that clients need to deposit for
Minimum
opening an account. You should make it affordable to the primary
Opening Deposit
segment for which the product is targeted. In addition, check
or Installment
regulatory requirements, if any.
Indicates the amount and frequency a client can withdraw from the
Withdrawal Policy bank/MFI in a day, week, month, etc. and any costs that would be
incurred for these withdrawals.
Indicates the minimum amount that must be kept in the account at
Minimum Balance
any given time. Make it affordable for the target market. In addition,
Requirements
check regulatory requirements, if any.
Describes the relationship between savings accounts and loan
Relationship to
accounts. In an ideal case, savings and loans should be independent
Loans
of each other. However, this can be an option for the client.
Requirements (ID Describes the proof of identification during account openings and
Cards) banking transactions such as withdrawals.
Back Office Describes how the front office is interlinked with back office
Operations operations such as MIS, accounts, internal control, etc.
Describes the privacy policy of the account holder (i.e., sharing
information only with the people authorized by the account holder,
Privacy
use of password and or pin for accessing information or transactions,
etc.).

49
 Table 10: Required Content for Prototype PROCESS Description Documents
PROTOTYPE PRODUCT DESCRIPTION DOCUMENTS
COMPLETED
SECTION CONTENT
– YES OR NO?
Delivery States the delivery method for this product. Provides a high-level
Methodology description of the steps involved.
Opening an
Describes the process for opening savings accounts.
Account
Administrative
Describes rules and regulations for opening savings accounts.
Procedures
Necessary forms include savings application forms, deposit slips,
Necessary Forms
signature cards.
Withdrawal (i.e.,
at window from Describes processes for different withdrawal modes such as using
teller, ATM, debit tellers, ATMs, debit cards, etc.
card, etc.)
Closing Accounts Describes the process and procedures for account closings.

Based on your Protopype Product and Process Descriptions you will develop a Product
Manual that outlines the policies and procedures linked to mobilizing savings. This
manual is for use in pilot branches and for training staff.

If you are working with WWB, your team will be able to provide you with templates
that outline the steps for creating a product description and product manual. Details of
these are given in the WWB Operations Manual for Savings, which is available from the
Microfinance Products and Services Team at WWB. You should also produce a product
documentation follow-up checklist, which will allow you to keep track of how far you
have come in the process of finalizing your product. A version of this is also available
from the Microfinance Products and Services Team.

This documentation should be vetted with your legal counsel at this stage to ensure that
you are legally able to offer these products to the public.

Developing Systems and Adjusting Processes to Run the

Pilot
Your next steps are to design, develop, and establish all the systems necessary to support
a pilot. These will include, as appropriate, organizational, operational, and management
information systems.

50
ORGANIZATIONAL CAPACITY
Preparing your organization to support a pilot involves taking the following steps:

• Making the necessary adjustments to the organizational structure to accommodate

savings at the head office and pilot site,

• Recruiting, redeploying, or promoting staff, and

• Identifying gaps between the skills required for offering savings and actual
skills.

OPERATIONAL ADJUSTMENTS
The first step in this phase is to hold workshops to design the processes for
each of the areas related to your products. These workshops should include
your savings product team and senior management and should produce a set
of process maps for all key processes affected by the introduction of savings:

• Savings product procedures,

• Customer service,

• Accounting,

• Financial Management,

• Risk management,

• Internal control, and

• Monitoring and evaluation.

The central idea behind undertaking process mapping is to redesign current processes to
allow the interaction with a new product. A process map should be developed for:

• Opening accounts,

• Depositing cash and checks,

• Withdrawals, and

• Closing accounts.

51
 The following is an example of a process map for opening a passbook savings account:

Figure 10: Process Map for Opening a Passbook Savings Account

Understands
Understandsclients’
clients
’ Verifies
Verifies
clients’
clients’
Customer Service Welcomes
Welcomesclients
clients needs
needs
andandoffers
offers documents
documents that
that
are
are
Representative cordially
cordially product(s),
product(s),describes
describes used
used
for for
opening
opening
product
product
features
features savings
savingsaccount
account

Helps clients complete Opens

Opensthe
the
savings
savings
Writes
Writesclients’
clients’ID
IDdata
data
savings
savingsA/C
A/Copening
opening option
option
of MIS
of MIS
andand
after
after
having
having
beenbeen
form
form
and
andspecimen
specimen assigns
assigns
account
account
authorized
authorizedby BM
by BM
signature
signature
cardcard number number

Helps prepare the Files account opening

deposit slip. Takes form, photocopy of ID
Say good-bye to the
client to the teller with and other documents
client
all required documents and specimen
to make initial deposit signature card

Complete savings
Fill out the initial
account opening form
Client and specimen
deposit slip and make
the initial deposit
signature card

Source: ADOPEM, Dominican Republic

These processes are documented in the Operational Manual for Savings, which, as
described above, is available from WWB’s Microfinance Products and Services.

RISK MANAGEMENT AND INTERNAL CONTROL

Introducing voluntary savings involves managing deposits from the public. Therefore,
MFIs must ensure the safety and security of these funds. To do this, institutions must
strengthen their internal control and risk management systems, a process that requires
analysis of the following:

1. Treasury and cash management,

2. Asset and liability management,

3. Interest rate gap management between lending and savings,

4. Operational risks (i.e., fraud, etc.), and

5. Risk analysis indicators.

For further information on Risk Management, see the Tool for Developing a Financial
Risk Management Policy developed by the Financial Products and Services Team at
WWB.

52
At this stage, you should again seek legal advice to verify the compliance of policies,
procedures and processes with local regulations. In particular, you should:

a. Verify program policy compliance,

b. Verify legal and regulatory compliance, and

c. Verify and document liability exposure.

MANAGEMENT INFORMATION SYSTEMS

The introduction or adaptation of Management Information Systems is also a key element
of mobilizing savings during a pilot. Standard, integrated software suitable for an MFI
mobilizing savings will include;

• General ledger (core accounting functions) application,

• Loan tracking (loan/credit portfolio) application,

• Teller application – if the MFI wants to have banking halls in its business, and

• Savings application.

When you are selecting a software system, the following considerations would be
helpful:

• Existing size of the MFI and the proposed size in terms of number of branches,
number of clients, and number of products offered,

• Business strategy of the organization,

• Information Communication and Technology (ICT) strategy for the organization

at least for 3 years, and

• Budget and sourcing of funds for investment in the computerization project, and
training.

The savings system you choose or that you are running should broadly meet with the
following requirements:

53
 Table 11: Key Characteristics and Abilities of Your MIS Needed to Support Savings
SAVINGS SYSTEM PROCESSES THAT YOUR MIS SHOULD SUPPORT
Be flexible enough to support different types Include End of Month (EOM) and End of Year
1 14
of products. (EOY) processing.
Allow for the classification of different types Be flexible enough to allow the design and
2 15
of clients. definition of various interest rates.
Allow the user to open a new savings
3 16 Provide the facility for interest capitalization.
account within a short time.
Allow for the processing of fees and charges so
Automatically assign a number for each new
4 17 that automatic debits to accounts are processed
savings account opened.
without manual interventions.
Allow passbook printing (note – this is often a
Allow end-users (MFI employees, i.e., tellers,
very problematic process which requires special
5 savings officers, etc.) to print forms such as 18
printers. This feature is only desirable if it is
account opening forms and statutory forms.
manageable and feasible).
Bring up client information easily and Run interest accrual and update accounts with
6 19
capture signature and photograph. interest payable / interest receivable.
Be capable of supporting the main teller
Allow different business rules to be applied
7 20 functionalities such as issuing cash withdrawals,
to different savings accounts.
verifying photographs etc.
Allow flexibility in defining withdrawal norms,
Include the facility to track audit trails on each
8 thus freeing your institution to develop new 21
transaction, modification, addition or deletion.
products.
Allow the transfer of funds from clients’
9 savings accounts to their loan accounts and 22 Offer online interfaces for user enquiries.
vice versa, based on business rules.
Produce reports that ensure compliance and, in
Have the facility to classify accounts as
10 23 addition, serve the purposes of equity investors,
inactive, active, suspended, etc.
donors, management, operations and clients.
Include generic qualities for good microfinance
11 Allow the closure of accounts. 24
software and hardware.
Include End of Day (EOD) processing – run
12
every day after close of business.

In addition, you should consider the following:

• Developing user training modules,

• Monitoring compliance,

• Creating a system for data migration,

• Using MIS for after-sales support,

• Justifying the cost of such a system, and

• Dry run of your MIS system.

54
Figure11: Use of Technology for Enhancing Distribution Channels

Source: HP website

The Remote Transaction System (RTS) allows microfinance institutions to extend

financial services to low-income customers living in rural areas by increasing access to
convenient locations for secure and affordable financial transactions. The ‘technology-
enabled’ distribution channel leverages existing third-party infrastructure (MFI back
office servers and databases) to conduct rural cash transactions.
You will need to document all of these processes in a product operational
procedures follow-up checklist. This document simply outlines all the
processes that you need to go through in order to introduce savings and allows
you to monitor whether you have made all the agreed updates to your
operational processes.

Designing a Marketing Strategy

Microfinance institutions have found that savings products require a much greater
emphasis on marketing than do credit products. This is primarily because customers will
readily accept money from an institution as a loan, but are slower to save their money in
an institution until they feel comfortable and secure with that institution.

While marketing is a critical component of a successful savings product, the pilot phase
does not actually need extensive marketing because you are targeting a very small number
of potential customers. At this stage, your focus should remain on operations, ensuring
that the products and processes are correct with limited emphasis on marketing. In the
product rollout phase, when your operations are running smoothly, your focus will shift
to effectively marketing the savings product.

55
 Remember: processes first, publicity second! You should publicize your
new savings program locally and quietly at first. Otherwise, you may be
swamped with large numbers of savers before you are ready for them.

For the Pilot Phase, consider these two marketing areas:

1. What marketing is needed to make the pilot successful, and

2. What can we learn from our marketing efforts during the pilot that will make our
marketing during the product rollout successful?

MARKETING STRATEGY FOR THE PILOT

By now, you have already designed your savings products and determined which products
target which segment. You need to determine “what to say:” the appropriate message for
each segment and “how to say it:” the appropriate medium to deliver the message.

Table 12: Designing a Marketing Message for Your Savings Product

MESSAGE –
PRODUCT NAME TARGET SEGMENT BARRIERS CONTENT AND
TONE
Based on research, Specify what the
outline any concerns/ main message and
Consider naming your
hesitations the customer tone should be for all
product based on Define the target
might have with using communication elements
the product benefit segment in as much
your institution, e.g. for this product. The
for example XacBank, detail as possible
they don’t perceive message should address
Mongolia, calls their – gender, age, savings
your MFI as a savings- the barriers the segment
programmed savings habits, attitudes toward
secure institution, or faces and will likely focus
for children, “Future the institution, etc.
they already have a on the benefits the client
Millionaires.”
borrowing relationship receives from saving
with another MFI. with your institution.

With your message in place (what to say), you will now need to determine the most
effective way to communicate the message to the target segment (how to say it).

Your pilot is focused on a small geographic area and specific target segments. Any
marketing efforts must be confined to that same geographic area and target segment. This
is likely to mean that radio, TV, and newspapers should not be considered at this time as
they are “mass market” strategies, and you will want to consider more relationship-based
marketing tactics.

56
You will have to determine exactly which tactics make sense for your pilot. Below are a
few ideas that may be useful:

• Your loan officers and their direct, one-on-one promotion efforts will probably
make up the bulk of your marketing efforts during the pilot program. Because
of this, you must train the field staff in how to present the savings product to a
prospective client. You may want to develop a script to train loan officers. Each
loan officer should talk about the savings product in a consistent way and focus
on the benefits of saving with your institution,
• Contact current clients through a letter announcing the savings product,
• Loan officers may want to contact their most loyal clients in person or on the phone,
• Develop a flyer or brochure that loan officers can distribute to prospective clients,
• Develop a poster to be displayed in the pilot branch announcing the new product,
• Identify organizations that your segments would be members of, such as
neighborhood organizations, trade groups, and market vendors’ associations.
Organize meetings with the organizations to introduce the savings product,
• Inaugurate a formal opening of your savings products and get media coverage
at the local level, limited to the pilot area of operations (i.e., local TV, radio,
newspapers, etc.),
• Offer incentives for opening savings accounts (i.e., small gifts such as a pen,
pocket calendar, paper clips, etc.), and
• Attract potential customers to the pilot branch (e.g., put big balloons on the front
door, give leaflets to people walking on the road near the pilot branch, etc.).

MARKETING ACTIVITIES: THE PILOT AS A LEARNING OPPORTUNITY

Your marketing efforts during the pilot phase are a great opportunity to learn which
marketing tactics are most effective and which message is most compelling. Set your
marketing learning objectives before you start any marketing efforts and determine how
you will measure those objectives. You are likely to need to develop a system to track
which marketing efforts are most effective. For example, ask every client who inquires
about the savings product how they heard about it, and the branch manager tracks and
reports the results each week.

You should bring together your operations and marketing design work by documenting
your product marketing and procedures, a process that is as key as creating the product
manual. In highly competitive product markets, promotions and customer service often
set one MFI apart from another. These two strategies should be aligned.

57
 Designing the Implementation of Your Pilot
With the results of your market research, product development, and initial product
prototyping, you are now ready to revisit your action plan, make the necessary adjustments,
and create a plan to carry out a pilot for savings.

This plan should detail how you intend to carry out the pilot and should include details
on key areas, such as:

• Define expected outputs/ results/ objectives,

• Final products and processes defined and documented,

• Training and recruitment requirements,

• Structural and branch layout changes,

• Marketing requirements,

• Monitoring and evaluation of pilot performance against targets.

The launching of Phase 2B, your pilot, should never take place until you have carefully
thought through the financial implications of your savings pilot. A pilot will require
funding to cover the costs of setting up new facilities, recruiting and training new staff,
and marketing and promotions. (See Appendix 7.) Your institution needs to be able to
source this funding and also to calculate to a degree of certainty that you are making a
wise investment and that the returns on savings will outweigh the costs of introducing
them. If you have not done this at this stage, you should conduct such an analysis
IMMEDIATELY.

Table 13: Defining the Expected Output

GROWTH OPERATIONAL EFFICIENCY

a. Increase in monetary value of savings a. Number of transactions per teller.
accounts. b. Number of new accounts opened by front desk officer.
b. Increase in number of savings c. Average number of savers per LO and/or savings officer.
accounts. d. Volume of saving per LO and/or Savings Officer.
c. Structure of savings by average e. Number of high volume accounts.
balance (i.e., Average savings balance f. Percentage of clients who opened their A/C but never
by range USD 10 – 100, USD 101- deposited any amount afterwards.
200, USD 201-500, USD 500 – up) g. Percentage of clients who deposit regularly.

58
 PROFITABILITY CUSTOMER SERVICES EFFICIENCY
a. Total savings-related expenses a. Service time taken to open an account.
vs. savings volume generated in b. Waiting time during opening of a new account.
comparison to cost of commercial c. Service time during deposit and withdrawals.
fund (opportunity cost). d. Waiting time during deposit and withdrawals.
b. Time required to reach break even. e. Time required for clients to obtain information from the
bank (balance inquiry, product availability, and eligibility, wrong
posting etc.).
f. Client satisfaction review:
1. Product features and policies,
2. Staff behavior,
3. Staff knowledge, and
4. Staff attention provided while serving clients.
g. Percentage of accounts closed.
h. Actual accounts opened vs. number of sales attempts (for
high-end customers).

SELECTION CRITERIA FOR IDENTIFYING YOUR PILOT BRANCH

An extremely important question prior to the planning and start of your pilot is
to select which of your branches will host the pilot. Suggested criteria for
selection are:

• Good performance indicators (i.e., portfolio quality, cost-effective, profitability),

• Smooth operations (no serious conflicts among staff, or between staff and clients,
no increasing trend in Portfolio at Risk, etc.),

• Has been in operation for at least two years,

• Adequate physical space at branch for additional staff and clients with staff
training facilities,

• Easy commute by the savings team,

• Should not be central/principle branch,

• Good, organized branch manager with good leadership and management skills,

• Good communications with head office,

• The region should have a positive economic condition,

• Population in pilot location should be representative of the average population

profile of the country, and

• Above-average population density and mixed market economy.

59
 You must also begin to put in place any physical modifications to the branch where you
will pilot the service. Building and reconstruction changes can take time, and you want
to be well prepared for the start of the pilot, given that you have identified customers’
impressions of the branch as a vital aspect of their attitude towards your savings
products.

Prior to beginning Phase 2B, you should also identify the staff who will run savings at
the pilot branch and begin the process of transferring any staff not currently working on
site. An additional crucial element will be to develop your savings training modules and
identify who will carry out your training.

Key to conducting training is the development of training materials with

which pilot training will be conducted. These should be based on the process
maps you have already produced and should be developed by the savings
product team who have a good understanding of how the pilot site will work
and what processes the training will support. You may want to allocate one individual to
lead the development of training materials who will also be responsible for the delivery
of training.

Training Pilot Staff

Experience indicates that most MFIs have traditionally functioned as micro-credit
organizations, which offer credit and, in some cases, compulsory savings. As a result,
the institution and its staff have very limited or no knowledge about voluntary savings
and key issues related to the savings product. Therefore, when deciding to mobilize
voluntary savings, an MFI commits to making fundamental changes to its operating styles
and procedures. Offering voluntary savings means making the transition from being a
micro lending institution to a financial intermediary. This has great implications for your
intuition’s relationships with your clients. For instance, when an “LO” gives a loan to a
client, s/he needs to believe the client. And when a client is putting his/her savings in an
institution, s/he needs to trust the institution to keep those savings.

Every effort must be made to gain clients’ confidence.

This requirement to build trust means that every effort must be made to gain clients’
confidence. The general rule for developing successful products is to have the right
product (what clients want), offered by highly trained staff with high-quality service.
Experience shows that approximately 20 percent of success depends on the features of
the product and 80 percent on customer service and building a solid client relationship.
Training your staff correctly and on an ongoing basis will therefore be critical to offering
a seamless service delivery.

60
Staff training should be managed by your institution’s human resources manager, working
in close coordination with the product manager to devise and run the training modules/
courses. The HR Manager will identify resources from within the organization or, if
needed, from outside, to develop and deliver training modules and courses. The HR
Manager will be responsible for developing a set of training course guidelines, ensuring
the quality of training and monitoring its effectiveness. Once the trainers are identified,
they should be responsible for developing their own modules based on guidelines and a
course outline developed by the HR Manager.

PARTICIPANTS
Training should be carried out for both management and pilot branch staff.

COURSE LAYOUT
The training is to be delivered to staff in modules as follows:

MODULE ONE: INSTITUTIONAL CULTURE SHIFT

This module attempts to change the mindset of the organization from a provider of credit
only to one that recognizes the transformational impact of attracting voluntary savings.
It will also address the issue of building a good corporate image and a stable, secure
institution. Course contents will include:

Topic I

• Brief financial structure of the country,

• Relevant laws and regulations that govern savings mobilization,

• Roles, responsibilities and liabilities of institutions under such laws,

• Ownership structure,

• A decentralized organizational structure, and

• Organizational values and ethics.

Topic II

• Why, where and how people save,

• Savings behavior based on segments,

61
 • Saving by low-income people,

• Introduction to the best practice savings institution,

• Demand and supply of savings in your country, and

• Market niche for your MFI based on the gap between demand and supply.

MODULE TWO: SAVINGS PRODUCT, POLICIES AND PROCEDURES

Savings product, policies and procedures and their standard application by all staff
in accordance with the manuals. This module focuses on training staff to build their
knowledge about the new savings products and related processes.

Topic III

• Product development process,

• Group exercise and case study on product development based on “8 Ps” (Product
features, price, promotion, place, positioning, physical evidence, people and
processes), and

• Savings product features.

Topic IV
• Policies, procedures, and processes for delivering your product,

• Basic concepts of interest rate calculation, frequency, etc.,

• Charges and fees, and

• Use of forms and registers.

Topic V: Case Studies (i.e., practical knowledge through exercises)

• Prompt, complete, and accurate recording of transactions,

• Case studies, and

• Problem solving,

62
Topic VI
• Management information systems (MIS),

• Case study,

• Practical case study sessions, and

• Optimal use of MIS to inform management decisions.

At this stage, a key element of the product training will be role-plays that walk staff
through the processes of opening accounts, handling forms, etc. You should then discuss
the new systems that will be required and be able to conduct a walk-through of the new
systems. This will lead to training in customer service, which is detailed further below.

MODULE THREE: CUSTOMER SERVICE

Customer Service is central to the process design required to introduce savings and
transform the culture of your institution. It will be important to develop quality service.
Customer Service is an integral part of operations. As the institution makes the transition
to taking public deposits, it should embrace strategies that build clients’ confidence.

Topic VII

• Know your clients,

• Attitude: “You get what we offer” vs. “We will do everything possible to satisfy
your needs within our limits.” And, what happens when a client comes in or
calls? Are you expecting them vs. did they interrupt your “real” job?

• Attention to the client during service,

• First impressions—clean offices, reception area, well marked signs, organized,

good seating arrangements, lighting, light entertainment during queue (i.e.,
magazines or TV), etc.,

• Proactive attitude,

• Effective conversation with clients,

• Consistency in communication,

• Privacy—for those depositing/drawing large sums of money,

• On-the-spot responses to queries, and

• Security—are clients safe with their money?

63
 MODULE FOUR: RISK MANAGEMENT AND INTERNAL CONTROLS
This module covers the nature of risks that banks and MFIs face, especially those that are
involved in financial intermediation. It attempts to provide tools and techniques to help
you identify risks, measure them, and control and monitor them.

Topic VIII

• Financial risk management,

• Liquidity management,

• Asset liability management,

• Internal control for keeping the institution safe, and

• Money laundering and its impact.

MODULE FIVE: MARKETING

This module will focus on understanding the importance of marketing new products. The
course focuses on how and why marketing strategies for your target market are designed,
how these marketing strategies should be used during the pilot, and how to implement
them at headquarters and the pilot branch. Staff must be trained in what they should know
about competitors and their products in order to effectively market their own products
and understand the comparative advantages the client derives from banking with your
institution vs. other MFIs and banks. Effective, consistent and persuasive marketing is a
key element for successful savings product delivery.

Topic IX

• Marketing strategies,

• Policies and procedures,

• Products offered by the competitors, their market niche, strengths and weaknesses,
etc.,

• Your bank’s/MFI’s comparative advantages, and

• Effective selling techniques based on segments’ preferences and gender: case

studies and group exercises.

64
MODULE SIX: MONITORING AND EVALUATION

Topic X
• Key indicators to measure success,

• Introduction to best practice savings institution benchmarks: their performance

against your institution’s performance, and

• Introduction of monitoring tools and techniques.

Once the pilot is underway, you must monitor the staff’s use of procedures to ensure
consistency with their training. Based on the monitoring, refresher courses and on-the-
job coaching might be required.

MEASURING THE EFFECTIVENESS OF TRAINING

During and at the end of each module, an assessment will be carried out. The modules
will contain built-in quizzes, questions and tests. Other means of assessing training will
include:

• On-the-job assessment by immediate supervisor, both short- and medium-term,

• Self-assessment by trainees at the course venue and at work, and

• Regular staff knowledge tests.

Developing a customer service mindset within your institution should be

done using workshops and training sessions. Training will play a critical
role in inculcating these fundamental changes, especially in the customer
service area. Training should be given using the new product features,
policies, procedures and systems.

CHECKLIST
As an output of Phase 2A, you should have the following in place:

• A savings product manual,

• Completed process maps for offering savings products,

• Processes designed for front office as well as back office functions (i.e., teller
accounting, MIS, cash management, internal audit, etc.),

65
 • Marketing strategies for each of the targeted market segments near your pilot
branches,

• MIS adjusted to manage savings,

• Staff plans and HR allocation,

• A location identified and site prepared for the pilot,

• Financial/business analyses of the costs and expected outcomes of the pilot,

• A monitoring and evaluation system for the pilot, and

• Training materials developed for all pilot staff.

Before the pilot starts, you should revisit your action plan and ascertain that all required
steps within phases 1 and 2A have been undertaken and that you have met the required
criteria to begin the pilot.

The following checklist will help you decide whether you are ready to proceed to the
pilot:

STEP KEY QUESTION YES/NO

Have you conducted customer research to understand who will be your target
1
market and what you anticipate will be their product needs?
Have management and external support documented and agreed on all products,
2
processes and marketing plans?
Has the pilot branch been identified, required changes put in place, and
3
organizational changes instituted?
Are all processes and products agreed upon, and have process manuals been
4
completed?
5 Have accounting, MIS, internal control and other systems been successfully tested?
Are you satisfied with the feedback on the prototype products and processes
6 indicated by the feedback forms, and has this feedback been built into the final
products and processes for your pilot?
7 Has detailed planning of the pilot taken place to senior management’s satisfaction?

If any or some answers to the questions above are NO, you need to carefully re-evaluate
them and take the necessary steps to ensure that all processes are in place.

66
Phase 2B: Pilot Test

Phase 2B: Pilot Test

Phase Overview
Undertaking a pilot is mandatory in order to ensure a successful introduction of savings
across multiple branches.

During Phase 2B, your aim is to make certain.

• Rigorously tests the savings products you have developed in Phase 2A at a single
branch site,

• Monitors and evaluates the outcomes of the pilot,

• Makes adjustments to the savings product and service in accordance with lessons
learned from the pilot,

• Continues to train staff,

• (IF the pilot is successful and you are a small-scale institution) develops an
implementation plan for savings rollout, or

• (IF the pilot is successful, but your institution is larger, and your planned rollout
is broader) develops a plan for additional pilots which will allow you to more
successfully and smoothly implement the rollout, or

• (IF the pilot is not successful) your institution should not proceed with the
implementation of savings until you have resolved all the issues.

Resource Requirements and Timing

During Phase 2B, you will need the support of your savings project manager, credit
manager, and area managers as well as adequate staff, resources, funds, and infrastructure
to mobilize the pilot phase.

EXTERNAL HELP RECOMMENDED

Depending on your institution’s level of experience, you may require
external technical support to help develop training materials and conduct
the training. This support, if acquired, should be available for the three- to
four-month setup period for the pilot.

67
 TOOLS
The following tools are used at this stage:

PHASE TOOL(S) DESCRIPTION

Pilot site identification A descriptive guideline, which describes some essential criteria
guidelines while identifying pilot branch locations.
A tool that helps you determine the starting and the end point,
Process map for savings defines activities in between them, persons involved, and types
2B accounts of actions and activities, and indicates the amount of time
required to perform these activities.
These are the indicators that ensure the effectiveness of your
Operational effectiveness
savings products, especially when they are measured against
indicators for savings
targets and best practice indicators.

The following shows the stages required during Phase 2B to plan and run your pilot.

Figure 12: Pilot Test Planning

Budget Staff Training, Product Manual Marketing Costing and
Implementation
Allocation Improvement (Pilot) Strategy Pricing

• Prepare • Savings • Savings policies • Marketing plan • Physical • Cost analysis

budget philosophy, and regulations infrastructure
• Resource • Cost-based
organizational is ready
• Develop • Include forms, allocation for rate setting
culture
financial processes and marketing (i.e., • Systems
• Market-
scenarios • Product procedures in advertising, working
driven
Knowledge the manual brochure,
• Define competitive
etc.)
• Knowledge • Standardized objectives to rates
about physical • Client be measured
• Real return
competitors’ components relations against
on savings
products and packaged
• Community • Duration of
services attractively (i.e., • Pricing of
relations pilot
passbook, card, product
• Internal rules
etc.)
and regulations
• Customer
service

Upon completion of these steps and during the pilot, you will need to monitor and
evaluate progress and look at ways of improving how the pilot was run. These processes
are shown in figure 13:

68
Figure 13: Monitoring, Evaluating and Adjusting Your Pilot
Monitoring Staff
StaffFeedback
feedback and
& Asses, Analyze and
Close Monitoring Client Satisfaction
Systems Observations Revise

• Close and • MIS and FIS • Conduct research • Staff feedback • Revise product
constant to understand about products and attributes based on
• Back office
monitoring by customer’s likes services clients’ feedback
operations
Savings Team and and dislikes of
• Problems and • Revise methodology
top management • Accounting products and
issues identified by based on staff
services
• Evaluate staff • Reporting staff observations,
attitudes towards • Understand clients’
• Internal control • Lessons learned
changes in the reasons for not inconvenience, etc.
and supervision
organization’s using products and
• Revise systems
philosophy services
• Compare with
pilot projection
and find out
underlying reasons

Preparing for the Pilot

In Phase 2A, you completed a plan for implementing your pilot, determined your key
success measures and began to put in place your financial, training, marketing and structural
requirements. Preparation for the pilot requires that you resolve any outstanding issues
and problems and ensure that your pilot team is trained before you begin deployment. By
this stage, the following should be nearing completion:

• Implementation of systems to support savings (i.e., accounting, MIS, internal

audit, etc.),

• Design of marketing strategies to tackle competition and build credibility,

• Modifications of the pilot branch’s physical appearance, and

• Identification of staff to run the pilot.

During the pilot phase, you should continue

to train the staff involved in order to further
improve and enhance your staff ’s capacities
in savings.

Having already trained the majority of your staff, you will now be ready to conduct your
pilot. During the pilot phase, you should continue to train the staff involved in order to
further improve and enhance your staff’s capacities in savings. Your institution should

69
 monitor the training schedule to ensure that all staff receive the training they have been
assigned. Your senior management should also be open to, and aware of, any issues that
arise out of the training or any knowledge gaps that are identified by the trainers.

Planning the Phases of Your Pilot

You are now ready to run the pilot, a process which may take anywhere from 9 to 18
months, depending on the quality and effectiveness of the product and processes designed
and on your staff’s capacity to deliver seamless service to your clients. During this time,
your staff will gain valuable experience by dealing with different issues and situations
throughout different seasons of the year.

At this stage, you may wish to think about splitting the pilot into the following phases:

1. Pre-pilot: Dry run with staff,

2. Pilot Phase 1: A pilot with about 1,000 – 2,000 savers in a local branch where the
scalability of the savings product can be tested, and

3. Pilot Phase 2: A broader pilot, including a number of branches across different

regions (important for large MFIs serving different market segments).

The process of running pilots and the rollout to all branches can, and should be, a slow,
phased process which allows for full and effective implementations at each branch.

Before opening the door to the public for the new savings product, MFIs should make
“dry run” tests of their new products and services. For instance, you can ask your staff
members to open savings accounts. This will give you an opportunity to test the product,
its rules and regulations, systems, and processes in a real life setting. Many practical
issues and problems, especially with regard to MIS and back office operations, usually
arise during this testing period. Thus, the pilot team can identify the root causes of the
issues and solve them before launching the product.

Launching the Pilot

You need to set a date for launching your pilot. A small ceremony is recommended at
the local level. You should invite your collaborators, partners, high net worth clients and
loyal clients from different segments, regulators, and some journalists to this product
inauguration. The inauguration will ensure that potential clients are aware of your
product offerings and help your company create a positive image in the community.

During the pilot and beyond, your loan portfolio must remain sound. Managers must
troubleshoot, build relations with the community, conduct research, and evaluate client
satisfaction with the savings accounts on an ongoing basis. This is not a predictable,
nine-to-five job, so you need the right person in the role of savings product manager.

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To encourage all of your staff to work holistically, management and staff incentives
should not reward savings performance specifically. What should be rewarded is high
performance in lending, savings, outreach, and profitability in each branch.

During the pilot and beyond, your loan portfolio

must remain sound.

While the pilot is running, you should prepare to analyze the pilot’s results and to conduct
a series of monitoring activities and preliminary evaluations. Doing this before the pilot
is complete, will better prepare you to move forward, either with implementation or with
conducting a second pilot when the first pilot phase is completed.

Implementing the pilot involves extremely detailed monitoring and constant high-level
supervision on all fronts. Weekly monitoring and monthly evaluations of the pilot
should take place for the first six months and should include customers of different types
and segments and recording of complaints as well as praise. This is an opportunity for
the pilot team to understand and assess the strengths and weaknesses, and issues and
concerns related to the new product and processes. Top management needs to understand
what to look for and how to look for it. They must get accurate feedback at every level.
Management will need to assess the respective transaction costs of savings and loans,
including the costs of labor, transportation, promotion and marketing and make sure that
the savings product is not being provided at the expense of the loan portfolio.

Implementing the pilot involves extremely detailed

monitoring on all fronts.

The monitoring should be done on a regular basis and should focus on different areas, as
indicated below:

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 Table 14: Timeline of Pilot Phase Monitoring
TIMELINE FOR
MONITORING KEY MONITORING FOCUS APPROACH
THE PILOT
• Systems and procedures, physical • Onsite observation and process review
Within 1st month
appearance
• Level of staff knowledge of the new • Onsite observation, staff interviews,
2nd month
products, processes and policies client surveys, etc.
• Compliance with product and process • Onsite observation, staff and client
3rd month policies interviews, client focus groups, etc
• Customer service quality
• Client satisfaction • Conduct qualitative research, e.g.,
• Organizational Effectiveness focus groups, to learn whether the
product design and service delivery
meet customer needs, customer care,
6th month customers’ views about products, etc.
• Compliment this qualitative research
with quantitative analysis of product
uses, average savings balances, savings
account growth, etc.
• Marketing and communications • Onsite observation of promotion by
effectiveness staff and analysis of marketing tactics
9th month
• Assess performance against targets against marketing objectives
and suggest adjustments
• Product costing. • Activity-based costing or allocation-
10th month
based costing of savings products
• Assess performance against targets • Observation, review and analysis of data
Final Pilot and suggest final adjustments. Assess: against targets, client and staff interviews,
Evaluation: Before • Financial viability and focus groups, etc.
Completion of • Competitive advantages, and
Pilot institutional factors
• Integration into the overall system

Reviewing all of these aspects on an ongoing basis will not only identify issues and
problems, but will also allow you to resolve them, thus helping you to improve processes
as you go through the pilot.

Management should be alert to the following situations arising during the pilot:

• High levels of client dissatisfaction,

• Excessive delays of scheduled activities without a genuine reason,

• Failure to reach at least 75% of original targets, and

• High levels of staff dissatisfaction.

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 Upon completion of the pilot, feedback should be collated. A written pilot
evaluation report should outline the key lessons learned, issues, problems, and
requirements for any future rollout or pilots. This report should be forward-
thinking and directional, focusing on the issues identified by the pilot and how
you plan to resolve these issues.

PILOT EVALUATION REPORT STRUCTURE

The pilot performance indicators should be compared with the targets set during Phase
2A, in order to indicate the issues and challenges. In addition, the report should analyze,
in detail, gaps in growth, profitability, operational efficiency and customer service
efficiency.

Figure 14: Deposit Structure: Demand Savings vs. Term Deposits

Institutions often have much higher volumes of demand savings in the initial
phases of savings mobilization. Term deposits generally grow over time.

Schematic Diagram: Term Deposits vs Demand Savings

100%
Demand savings are high in the initial stage of a
savings operation due to the types of customers Term
that initially join: Deposits
80% •Customers crossing over from the lending
operations
•Customers testing out the institution
Once there is more
60% confidence in the institution,
current customers start
moving into term deposits,
and new, wealthier,
40% customers open large
accounts

20%
Demand
Savings

0%
Start of a
Savings
Program

Source: Saiful Islam and Aristoteles Esperanza, WWB

As your savings program grows, term deposits will make up a greater percentage of your
savings portfolio. This will be an important trend that you should monitor towards the
end of the pilot.

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 The evaluation should include the following broad aspects:

Table 15: Pilot Evaluation Assessment Areas

GROWTH PRODUCTIVITY
• Number of savings accounts • Number of clients per savings executive
• Amount of savings • Savings balance per savings executive
• Growth in savings accounts • Number of accounts opened by each teller
• Growth in savings balances • Number of savings transactions by each teller
• Actual A/Cs opened vs. number of sales attempts
COST PROFITIBILITY
• Cost per unit of savings mobilized • Net margin in savings (cost of mobilizing savings
• Opportunity cost of mobilizing savings (cost of vs. return on lending)
mobilizing savings vs. cost of borrowing)

OPERATIONAL EFFECIENCY CLIENT SATISFACTION

• Average account size • New customers due to referral from existing
• Account size distribution by client category customers
• Savings balance by product • Percentage of accounts closed
• Account size distribution by product
• Percentage of clients who deposit every month/
quarter
• Percentage of clients who withdraw frequency
(Bi-monthly, monthly, quarterly, etc.)
• Percentage of clients who have opened their A/C
but never deposited any amount afterwards

DURATION OF YOUR PILOT

The purpose of conducting a pilot test is to gather information regarding your clients’
reactions to the new products and services and your institution’s capacity to provide
them. The timeframe and duration of pilots vary widely based on organizational capacity,
market opportunities and customer service. Your product development team should
intervene at strategic times during the pilot test to collect and interpret information from
a variety of sources.

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Figure 15: Pilot Test Evaluation

Evaluation
Evaluating of pilot
Your testand
Pilot Test andDetermining
determineTime
time
of for
Yourroll out
Rollout

Decide whether to
continue with a full
product launch, based on:
:
• The financial viability of the
Confidence

product
Cost

• Competitive considerations,
and
• Institutional factors

Time

Source: The MBP Guide to New Product Development

Dealing With Issues and Problems During the Pilot

During your pilot phase, you are bound to encounter some issues and problems, but you
should see them as learning opportunities rather than insurmountable challenges. The
top ten issues and problems typically faced by institutions introducing savings include:

1. Inadequate staff knowledge on products and processes,

2. Insufficient time allocation by top management to monitor pilot,

3. Inadequate support systems for mobilizing savings (i.e., MIS, internal controls,
etc.),

4. Negative attitudes of staff toward savings products (i.e., don’t believe poor clients
can save, the project is head quarter’s brainchild),

5. Lack of preparedness of branch layout,

6. Inadequate time allocation by branch staff, especially LOs, for promoting new
savings products,

7. Inappropriate incentive system for pilot staff,

8. Poor communication mechanisms regarding the status of the pilot and rollout
process,

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 9. Unrealistic delivery mechanisms and processes, and

10. Allocating insufficient time for the pilot.

Second Pilot Phase

Upon completion of the first pilot, your institution’s staff will need to determine their
level of comfort with the results and their willingness to immediately continue to roll out
the product rather than undertaking a second pilot phase. The general rule at this stage is
that if your pilot has been successful, your institution is small, and your intended rollout
is fairly narrow, you should proceed immediately to the rollout stage. If, in contrast, the
first pilot has been successful, but your institution is larger, and your planned rollout
broader, you should undertake a second pilot to ensure that the rollout will succeed.

Identifying Key Lessons From Your Pilot

Based on your pilot results, your institution will develop conclusions on:

• Product Portfolio and Pricing – whether you have developed the correct set of
savings products and applied the correct pricing based on:

– Uptake per product,

– Customer feedback, and
– Staff feedback.

• Organizational Effectiveness – whether the right organizational structure was

set up for mobilizing voluntary savings, based on:

– Experienced and knowledgeable management and staff,

– Support and time allocated by management for the pilot, and
– Strategic direction given by management.

• Operational Effectiveness – whether all changes and adjustments to the systems

have been functioning well and are integrated at the institutional level.

• Marketing and Promotions – whether you used the correct marketing strategies,
messages, and materials, based on:

– Uptake of all services,

– Branch logs of customers’ responses to different mediums, and
– Customer feedback.

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You should have the following output at this stage:

• Pilot site justification document,

• Process map for savings,

• Training materials for all staff involved in the pilot,

• Feedback from the pilot in the form of client feedback forms and staff feedback,

• Product pricing, cost analysis and financial results, and

• A pilot results report.

Before Phase 3 starts, you should revisit your action plan to ensure that you have
completed all the required steps in Phase 2B and that you have met the criteria required
to move to Phase 3.

CHECKLIST
The following checklist will help you to highlight whether you are ready to
proceed to rollout:

STEP KEY QUESTION YES/NO

1 Were all staff trained to carry out the pilot?
2 Did the pilot run according to plan, and was it completed within the set deadlines?
3 Did you successfully resolve all the issues and problems arising from the pilot?
Were the results of the pilot monitored on a regular basis while it took place?
4
Were these results combined with an evaluation when the pilot was complete?
Have you decided whether you need to conduct a second pilot? If you decided
5
that you need a second pilot, has this been completed?
Have the key lessons from the pilot been documented and conclusions drawn
6
about your product portfolio, pricing, marketing and promotions?
Have you completed a savings product viability analysis to ensure that your
7
products are correctly priced?
Were your project manager, senior management and board satisfied that the pilot
8
met its targets?
9 Do your external advisors agree that the pilot was successful?

77
78
Phase 3: Implementation and Rollout
Phase 3: Implementation and

Phase 3: Implementation and Rollout

Rollout
Phase Overview
During Phase 3, you will build on the work your have done during your pilot phase(s)
to:

• Develop an expansion strategy for savings across your branches,

• Roll out savings across your branches,

• Create short-, medium- and long-term strategies for savings at your institution,

• Plan and budget for the rollout, and

• Manage the growth of savings and ensure that costs are kept low and that capacity
building takes place.

Figure 16: Ensuring Market Penetration – Rollout and Implementation

Planning and
Expansion Strategy Expansion / Branching Managing Growth
Budget

• Growing the savings • Open branches to • Vision for future • Ensure quality of
base by: cover the widest and long-term service when
(a) attracting new clients possible geographical development growing
(b) Persuading savers to area (i.e., first level
• Long-term • Keep costs low
put more money into service window,
development
savings mobile savings, etc.) • Capacity-building
strategies broken
(c) Selling additional
• Understand different down into short-
savings products, etc.
market needs to term strategic
• Promotion based on provide appropriate actions
image services (i.e. ATM,
• Marketing planning
extended hour banking
• Promotion based on
services, evening • Profitability
quality of services
banking, etc.) planning
• Promotion based on
rates of return

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 Resource Requirements and Timing
During Phase 3, you will need the ongoing support of your executive director, savings
product manager, credit manager, and area managers. In addition, the processes in your
institution that are required to support the product/service rollout will need to undergo
a complete adjustment. This includes ensuring that your financial and human resource
capabilities and infrastructure are all able to handle the product rollout.

TOOLS
The following tools are used at this stage:

PHASE TOOL(S) DESCRIPTION

Budget and financial planning (Microfin or Financial projects for the rollout
3
others)

Developing a Rollout and Implementation Plan

You need to develop a savings strategy based

on your vision for savings mobilization.

Once you have completed your pilot successfully, the next step is rolling out
the product systematically in other branches. However, rolling out savings
products is a demanding process. You will need to develop systems to
incorporate the new product into your institutional activities in order to expand the new
product line successfully. Therefore, you need to develop a savings strategy based on
your vision for savings mobilization.

During this phase you should focus on the following areas:

• Develop a strategy for expanding savings,

• Develop capacity building and incentive systems,

• Refine cost projection and finalize product terms and conditions, and

• Develop marketing and promotion strategies.

The introduction of savings requires systematic implementation of new products in

branches other than the branch/branches where your pilot(s) took place.

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Therefore, specific decisions need to be made in order to:

1. Develop a Strategy for the Rollout: Based on the market, competition and clients’
demand analysis combined with pilot experience, you should be able to determine
the size of your savings market. At this time you should be able to prepare a savings
mobilization projection. It is crucial that you develop a plan to expand incrementally
and manage expansion (i.e., expand in a few branches at a time instead of all the
branches at one time).

2. Develop a Strategy to Grow Your Savings Base: Based on the results of the pilot,
you need to decide whether this is best done by:

• Increasing your total number of savers by attracting new clients,

• Persuading existing savers to put in more savings, and/or

• Selling additional savings products to existing and new savers.

Your decision on which strategy or strategies to adopt needs to be informed by your

original understanding of market factors, such as the total size of the market, your clients’
propensity for saving and the number of products your branches and infrastructure can
support.

3. Develop Marketing Strategies: Combining your institution’s marketing experience

and the results of the pilot, you should devise a marketing strategy to grow your
savings base as stated above. Your marketing strategy for the savings products
should be a part of your overall marketing plan and should be aligned with your
institution’s brand.

As previously mentioned, marketing is a critical part of launching a successful savings

product, especially as you move into the rollout phase. Prior to the full product rollout,
you will want to work with the marketing manager at your organization to develop a
marketing plan. If you have never developed a marketing plan, you can request the
Marketing Plan Template from WWB to guide you in this process.

You should consider four main areas when developing your Marketing Plan:

a. Background and Marketing Insight

To design a marketing strategy, you should start by articulating the key information from
the data you have already gathered.

• SWOT Analysis – Articulate the strengths, weaknesses, opportunities and threats

for your savings product(s).

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 • Segmentation – Use the information from your segmentation analysis to remind
yourself who your target market is for each product and what customer needs the
product meets.

b. Marketing Strategy

• Mission and Vision - Restate your organization’s mission and vision.

• Brand - If you have a clearly established brand, restate your organization’s brand
position, core values, and beliefs, and

• Marketing Objectives – Determine what you want your marketing strategy to

accomplish. Your marketing objectives should include both business objectives and
learning objectives (e.g., a projected number of desired savers by the end of the pilot
and learning how many prospective clients you need to reach through marketing
materials before you acquire your first saver).

c. Communications Strategy

i. Product Positioning – Define the positioning of each product and service. This
will create a fixed image of the product being presented for both internal and
external audiences and provide a messaging platform for all communications.
The positioning of each product should support the overall brand positioning. To
write a statement, answer the following:

• Who is the target segment?

• What is the product or service being offered?

• What differentiates this product or service from others in the market?

• What is the benefit to the segment?

You should be able to fill in this statement for each product “For [target market],
[product/service name] is the [product/service description] that offers [benefit] for
clients because it has [reason why].”

ii. Customer Communications – Messaging and Tactics: Use the matrix below to
establish your customer communications plan for each product.

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Table 16: Matrix Communication Plan
PRODUCT PRODUCT PRODUCT
A B C
Segment – Define the target segment in as much detail as
possible: gender, age, attitudes, etc.
Needs – Based on the research, outline the customers’ need
for this financial product.
Barriers – Based on the research, outline any concerns/
hesitations the customer might have about using your
institution.
Messaging – Specify what the main message and tone should
be for all communications for this product.
Tactics – Choose the most effective communication to reach
this segment and achieve your goal3.
Goal – Outline your specific goals for the tactic (e.g., to
increase your customers’ average savings balance.)

iii. Customer Incentives – Define any incentives for prospective, current and repeat
clients that will encourage the behavior you want.

PROSPECTIVE CLIENTS CURRENT CLIENTS REPEAT USE

What incentives would you offer What incentives would you offer
What incentives would you offer
to your current clients to try this clients who continue to use this
prospective clients to try this new
new product? (For example, no new product? (For example, a
product? (For example, entry into
account opening fee). better interest rate on higher
a raffle).
balances).

iv. Branch Staff Communications – Every credit officer involved in the savings
product must understand and be able to implement the marketing strategy. One
of the most important things the front line staff do is describe the new products
to clients. Credit officers and the branch manager must be trained on the key
messages that should be communicated for each savings product.

d. Evaluation

Define how you will measure the success of your marketing plan using the business
and learning objectives you developed.

4. Develop Branch Policies – with the decisions you have made in Phases 1 and 2 and
the results of the pilot, you are ready to draft a specific rollout plan to your branches.
At this stage, remember:

a. You should try to open branches in a way that covers the widest possible
geographical area. Tools such as first-level service windows and mobile savings,
can help you do this while keeping operating costs down.

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 b. You should try to understand the different market needs at each location and
define:

i. Which products you offer at each location and

ii. The service(s) offered to meet these market needs. Factors to modify include
the presence of an ATM, extended banking hours, etc.

Your decisions at this stage will enable you to:

• Identify in which of your branches you will introduce savings, and

• Devise a timetable for the rollout of the product.

Points to consider when choosing branches include:

• High performance indicators,

• Moderate growth of the local economy,

• Moderate competition,

• Reasonably good management, and

• Distance from the head office.

5. Staff training for rollout – You will need to prepare an action plan and train all staff
for the rollout in different phases of the rollout. Classroom training and exposure
visits to the pilot are very effective activities for training staff. You may also choose
to bring staff from the pilot branch/branches, during classroom training, to share their
experiences. Staff members must have a clear understanding of the terms of each
instrument and the purposes they can serve. They must locate new savers, inform
clients about products on an ongoing basis and advise them on which accounts might
best meet their needs.

Design an appropriate incentive system – Incentives are financial and non-financial

rewards that motivate staff to achieve a product’s goals. When you are developing your
incentive program, consider the following points:

• Your incentive system should be aligned with the product objectives,

• You should clearly communicate the incentive programs, requirements, time-

frame and expectations,

• You should ensure that measures of success are quantifiable, and

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 • You should ensure that targets rewarded under the incentive system are
achievable.

6. Introducing Standard Processes – Systematic implementation of new products

requires that standardized processes be introduced prior to, and during, the savings
rollout. Prerequisites to correctly roll out savings include strong financial and HR
capabilities and the correct Management Information Systems. These processes
should be documented in a process manual that can be distributed to each branch
taking part in the rollout.

7. Plan and Budget – In conjunction with making specific decisions about your rollout
plan, you also need to finalize ideas developed in Phase 1 about how savings fits into
your mission, vision, and objectives.

This step should be conducted in workshop form with:

a. The project manager,

b. Senior management, and

c. Heads of departments.

Based upon the actual results of the pilot and on feedback from your customers and staff,
this team should draw up:

a. A savings vision for the future,

b. A long-term development strategy,

c. Short-term strategic actions for savings,

d. An ongoing marketing plan to cover all branches, and

e. A profitability plan to finalize the numbers of savers, operating costs, etc., required to
make savings a profitable product.

Profitability planning is vital, and you should be drawing up strategies specifically

to:

i. Reduce the average cost of a savings account,

ii. Increase the average savings balance per account, and

iii. Promote growth without compromising high performance.

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 8. Managing Growth – your final step before the rollout is to put in place the means
of monitoring and evaluating your rollout and implementation. The three objectives
at this stage are to:

a. Establish measures to ensure quality of service when growing,

b. Ensure that costs are kept low, and

c. Co-ordinate capacity building.

Your key measures of success at this stage will be to have:

a. Well-established product attributes and processes that are ready for rollout,

b. The operational capacity in place to support the rollout – including financial and
HR capacity, and

c. Finalized product cost and pricing.

External help at this stage can aid you in assessing how well you have planned for
the rollout and how ready you are to progress to the next stage. It will also help you
coordinate the dates and resources for your rollout, provide support for all activities
and prepare trainers and training materials. The total anticipated time required for this
preparatory period is eight weeks.

CHECKLIST
As an output of this stage you should have the following:

• A documented expansion and rollout strategy that outlines the short-, medium-,
and long-term strategies for savings at your institution,

• A plan and budget for the rollout,

• A completed profitability planning exercise,

• Product costing materials,

• A monitoring and evaluation plan for the rollout, and

• Training materials for all staff involved in the rollout.

Before Phase 4 starts, you must revisit your action plan to ensure that you completed all
the required steps in Phase 3 and met all the required criteria.

The following checklist will help to highlight whether you are ready to proceed to the
rollout:

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STEP KEY QUESTION YES/NO
1 Have you met the agreed upon expansion strategy and rollout plan?
2 Was your promotions and marketing strategy successful?
3 Have the product designs met your clients’ expectations?
4 Has the organization met the timetable set for the rollout?
5 Was all staff trained to carry out the rollout?
6 Have standardized processes been drawn up for all branches adopting savings?
Have you finalized your plan and budget for rolling out savings and undertaken
7
profitability planning?
8 Now you’re ready for the rollout; good luck!

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88
Phase 4: Monitoring and Evaluation
Phase 4: Monitoring and

Phase 4: Monitoring and Evaluation

Evaluation
Phase Overview
Mobilizing savings is a time-consuming and costly process, but the advantages of being
able to offer savings are significant. In the fourth phase of mobilizing savings, you
monitor and evaluate your work to date, conduct any required maintenance and begin
knowledge transfer. This will mean:

• Documenting the outcomes of the rollout,

• Finalizing the savings implementation process,

• Conducting variance analysis of planned versus achieved results,

• Undertaking process re-design based on this analysis, and

• Identifying your next steps.

Tools used to measure success include quantitative analysis of financial and performance
measures and qualitative data from focus groups, client surveys, in-depth interviews, and
discussions with staff.

Resource Requirements
Phase 4 requires the ongoing involvement of your savings product manager, credit
manager, and area manager, all of whom are responsible for ensuring that sufficient
information is produced to enable ongoing monitoring of the project through a systematic
process that ensures timely adjustments and continuous feedback.

The role of the savings manager will now be to grow the savings base, keep clients
actively saving and identify new product opportunities.

You may want to use external support for this phase to help you with short-term
monitoring of progress and then ad hoc support to evaluate savings and provide feedback
and advice.

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 Measuring Success Against Objectives
At this stage, you will produce a rollout and implementation report that outlines the
actual results for your products and your institution as compared to those you planned.
Therefore, you should look at progress against all the objectives you set for your products
and your institution during the Phase 3 implementation stage, including:

• Percentage of savings to total portfolio ($/local currency),

• Average savings balance by account size,

• Account balance distribution in terms of savings value,

• Staff productivity (savings mobilized per branch staff member per month), and

• Growth from number of new clients vs. migration of existing clients.

Monitoring Progress Against Your Action Plan

During this stage, you will be able to monitor the results from the pilot, rollout and
implementation against your action plan. This exercise should be conducted by the project
manager and heads of department and is designed to reveal any strategic, operational, or
organizational gaps. This team should make an assessment of any steps that have not
been completed or work that is still underway, determine why these issues have arisen,
and decide how best to resolve them.

Monitoring Internal Impact

You will need to monitor the impact of mobilizing savings within your organization to
ensure that your staff still supports the process and that your customer service vision is
being sustained. Maintain an open dialogue with the staff to get feedback. Front-line
staff, in particular, will be well equipped to provide information on whether savings
is proving successful and what changes need to be made to the product. Staff should
be able to approach their managers with feedback at any time and at every level, from
branch to head office. A structured, monthly report will pass on this feedback to the
project manager.

In addition, savings should periodically be discussed in team meetings and a timetable

of savings “check-ins” should be run by the savings product manager and some of the
savings team in different locations in order to get direct feedback. These check-ins should
be designed to motivate and excite the staff and to collect information.

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Monitoring External Impact
Monitoring the impact of savings outside your organization is equally important in order to
ensure that you have the right product and service. Ideally, you should conduct customer
satisfaction research with your client base every year to monitor how your institution
and products are perceived. A complete review may be too costly for a microfinance
organization, but some type of customer satisfaction research should be done to ensure
that your products are responsive to your customers. Qualitative research, such as focus
groups, is generally affordable and can provide meaningful data.

You should also remember to obtain feedback from key stakeholders, such as board
members, policymakers, and strategic partners, for example, by making savings a topic
of discussion in pre-arranged meetings (e.g., board meetings). This is a good way to
solicit suggestions for improvement and maintain the commitment of individuals whose
buy-in is particularly important to the success of savings.

Your combined output from all four monitoring sections should be a report and
presentation to the savings product team and senior management.

Identifying Needed Changes

Having combined feedback from internal and external sources with your assessment
of progress against your objectives and your action plan, you now need to analyze the
results and draw conclusions on any changes that may be required. These changes should
be based on your organization, operations and financial set-up, and should be specific
recommendations either to the project team as a whole or to specific branches.

This process should take place systematically, perhaps on a monthly basis,

when you begin the implementation, or twice yearly, once the project is
more developed. You should collate all internal and external feedback to
discuss in a workshop with your savings product manager, relevant members
of the savings product team and your institution’s senior management.

The outcome of the meeting should be a short report that highlights the key
conclusions and the steps that will be taken to resolve any problems or issues.
This document should be available to all staff in your institution with the aim
of indicating the team’s willingness to accept feedback and improve savings
products and services.

CHECKLIST
As an output of this stage, you should have the following:

• A report outlining actual product and institutional results during the rollout as

91
 compared to planned results and analyzing the impact of these variances,

• An impact assessment document for internal and external impacts,

• Documentation of changes required, including process re-design, and

• Documentation of next steps.

Before the end of Phase 4, you should revisit your action plan and ascertain that the
required steps in the phase have been taken, and you should meet the criteria required in
order to continue to mobilize savings across all your branches.

The following checklist will help you highlight whether you have successfully conducted
your rollout:

STEP KEY QUESTION YES/NO

1 Have you documented the outcomes of the rollout?
2 Have you analyzed the actual versus planned results?
3 Have you identified and agreed upon issues and problems?
4 Have you re-designed problematic processes?
5 Have you identified your next steps?

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Conclusion

Conclusion
Key Points and Lessons
Key points to remember when your institution mobilizes savings are:

• Before you start, make sure the right preconditions exist in terms of the
macroeconomic and political environment, such as a supportive legal framework.
Make sure your institution is sound, with sufficient management capacity and
client confidence in your institution,

• Create a solid team to mobilize savings,

• Seek external help for phases where your institution lacks the required
capabilities,

• Your team and senior management should plan carefully for the mobilization of
savings,

• Introduce savings gradually and follow the proper sequencing,

• Conduct at least one successful pilot before you roll out savings,

• Monitor and evaluate savings on an ongoing basis and deal with problems as
they arise.

Following these guidelines will help you to ensure that your savings implementation
is successful, your products are profitable, your staff is motivated, and your clients are
satisfied. At this stage, you should have fully mobilized savings and experienced all
of these benefits!

Case Examples
The following cases will inspire you by indicating how savings can be implemented well
and what the benefits are. As the Bank Rakyat and ADEMI examples show, success does
not always come immediately and you may need to keep striving to make savings work
for your institution.

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 Table 17: How Bank Rakyat Indonesia Met the Needs of Potential Rural Savers
– The Changes That Brought Success4
SHORT TERM LONG TERM
DEVELOPMENT OF • Unlimited Withdrawals • Provision of more convenient services
FINANCIAL • Frequent deposit collections developed to meet the different needs
INSTRUMENTS • Interest recorded monthly of rural savers
• Deposit certificates • Development of better check clearing
• Adequate access to loans systems
• Improved system for long distance • Payment of government projects and
transfers of funds other funds into BRI Units
• Time deposit accounts available in BRI • Payment of civil servants’ salaries
units
REALLOCATION OF • Classification of BRI units into those • Preparation of long-term plan for
BRI UNIT STAFF open: re-organization (based on quantitative
RESOURCES – 6 days a week research on banking needs in different
– 2-3 days a week areas)
– 1 day a week • Development of mobile teams which
– Closed make regular visits to most villages
• Formation of mobile teams
• Redistribution of existing staff
• Implementation of incentive systems
for BRI staff
MARKET RESEARCH, • Development of teams for market • Quantitative research into needs and
ADVERTISING AND research location of different kinds of potential
TRAINING OF • Training of banking promoters savers
PROMOTERS
• Classification and identification of • Developing BRI units (both in fact and
potential savers in perceptions of the villagers) as a
• Advertising campaign geared to rural banking system with integrated
different needs of rural savers (based functions of lending and savings
on results of market research)
• Branch lotteries and special incentives
for savers

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Figure 17: How ADEMI (Dominican Republic) Turned Around Their Savings
Program5
Value of Passbook Savings
Current Number of Savers: >30,000
100

MM
Pesos
55
50

16

0
Q4 2001 Q1 2003

Value of Certificates of Deposit

Current Number of CDs: >780
500
MM 427
Pesos

262
250

0
Q4 2001 Q1 2003

Source: Adapted from WWB’s Product Development Matrix presentation.

Highlights of the Program

• Although ADEMI has offered savings since 1995, they only began to truly focus
on savings mobilization in 2002.

• They do not promote through lotteries. With a network of 29 branches, they felt
they could not afford to compete in the lotteries segment.

• They recently conducted a campaign to attract savers which included:

– Incentives for all staff members to attract savers, with specific targets for

95
 every staff member including messengers.
– Changing the culture from a lending institution to a financial intermediary
through staff training.
– Use of radio for promotion.
– Offering automatic bill payment in order to attract higher income savers.

Final Thoughts
If you have come this far in the savings how-to-guide, you have successfully completed
the introduction of savings in your institution. You will have faced challenges and issues,
but if you have persevered and followed the process carefully and slowly you should
have a strong, successful savings practice in a number of branches.

What you may now face is growing competition as the number of institutions offering
savings in your area increases. Following all the best practice examples in this document,
maintaining excellent processes, and striving to deliver quality customer service will
ensure that you not only compete but move toward being the market leader in savings.
This guide has covered the steps required to introduce a basic voluntary savings product.
You can use this as a solid foundation to innovate and design new savings products to
meet your clients’ growing needs (See Appendix 8: Product Sequencing).

Your institution should continue to develop and improve its savings offerings. You
will be able to use much of the data and many of the processes you used to mobilize
savings to garner the opinions of your customers, revamp products and marketing, and
continuously ensure that you keep your operating costs as low as possible, while meeting
your customers’ demands.

Good luck!

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Appendices

Appendices
Appendix 1: Savings Product Assessment Tool

SAVINGS PRODUCT ENGAGEMENT ASSESSMENT TOOLS (DRAFT)

MFI’s Name: ________________________________________________

Country: ____________________________________________________

Assessment By: ______________________________________________

CHARACTERISTICS AND PREDICTIVE INDICATORS FOR BRIEF DESCRIPTION

YES
ASSESSING NM’S (NETWORK MEMBER’S) ABSORPTIVE OF FACTS TO
OR NO
CAPACITY TO INTRODUCE SAVINGS PRODUCT SERVICE SUPPORT SCORING
COUNTRY CONTEXT AND MARKET ENVIRONMENT
1. Is mobilizing voluntary savings legally allowed for the NM under
the current legal structure?
2. Is the NM operating in a country with a stable macro economy,
a reasonable level of political stability and suitable demographic
conditions (i.e., sufficient population density for financial services
to be provided sustainably)?
3. Does the institution have a good reputation in the country, and
is it considered trustworthy?
4. Does the market where the NM intends to introduce voluntary
savings have overwhelming competition?
VISION AND MISSION
5. Are the objectives of mobilizing savings consistent with the
organizational mission and vision?
6. Do the board and top management consider mobilizing savings
from higher income market segments (i.e., well-off segments) to
be mission drift?
GOVERNANCE AND LEADERSHIP
7. Have the board and management reviewed the alternatives,
pros and cons, challenges and issues of mobilizing savings (i.e.,
MFI to financial intermediary) before embarking on mobilizing
voluntary savings from the public?
8. Are the board and management aware of the institutional
commitment (i.e., HR, investment, risk, etc.) for mobilizing
voluntary savings?
9. Does the management have the political will to recruit new
management and staff with higher skill sets if necessary?
10. Is the executive director committed to supporting the
savings initiative in terms of allocating resources, including the
organization’s management and staff?

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 CHARACTERISTICS AND PREDICTIVE INDICATORS FOR BRIEF DESCRIPTION
YES
ASSESSING NM’S (NETWORK MEMBER’S) ABSORPTIVE OF FACTS TO
OR NO
CAPACITY TO INTRODUCE SAVINGS PRODUCT SERVICE SUPPORT SCORING
NM (NETWORK MEMBER) RELATIONSHIP WITH WWB & LINKAGES
11. Has the NM been participating in WWB services and processes
(i.e., CDCA6, Operational Effectiveness, Organizational
Effectiveness, etc.)?
12. Has the NM been actively seeking and receiving technical
assistance and organizational inputs, involving more than one
external source, over the last three years?
13. Is there an awareness of industry and international standards of
best practice savings institutions at all levels in the organization?
OPERATIONAL EFFICIENCY
14. Does the NM have standard lending policies and standard
operating procedures that are followed across all branches?
15. Has the cost per unit of money lent met WWB standards and
consistently gone down in the last three years?
16. Have loan officers’ productivity maximized and consistently
gone up over the last three years?
PORTFOLIO QUALITY
17. Is the NM portfolio quality within WWB standards (repayment
rate 95% > & PAR 5% at 30 days)?
18. Is the write-off ratio within a reasonable range?
REVENUE AND INCOME
19. Does the NM operate at a positive return and maintain an
improving trend in operational self-sufficiency (OSS) and
financial self-sufficiency (FSS)?
HUMAN RESOURCES
20. Does the NM have high-level, skilled, knowledgeable, capable,
and full-time management level staff for managing savings
activities?
21. Is management willing to hire and invest in the HR required for
initiating savings?
22. Is the NM’s management style participatory and the
organizational climate dynamic and motivated?
MANAGEMENT INFORMATION SYSTEM (MIS)
23. Is the NM able to produce relevant and timely reports for use
by middle management, senior management, the board, and the
external public?
24. Does the NM have a responsive (i.e., regularly upgraded
hardware and software) MIS strategy?

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 CHARACTERISTICS AND PREDICTIVE INDICATORS FOR BRIEF DESCRIPTION
YES
ASSESSING NM’S (NETWORK MEMBER’S) ABSORPTIVE OF FACTS TO
OR NO
CAPACITY TO INTRODUCE SAVINGS PRODUCT SERVICE SUPPORT SCORING
FINANCE AND FUNDING
25. Does the affiliate have a stable funding base and a diversified
funding source?
26. Is the NM increasingly able to leverage its equity to finance its
portfolio growth?
27. Does the NM have working financial projections, plans in place
and funds available for supporting savings initiatives?
28. Is the NM’s financial management (i.e., treasury, investments,
liquidity, etc.) effectively managed?
INTERNAL CONTROL
29. Is the NM externally audited on at least a yearly basis?
30. Does the NM have an internal control system and/or perform
regular internal audits?

Note: Some questions can be used as guidelines for conducting interviews with WWB
Relationship Managers and relevant staff (who have experience working with the NM)
to understand the macroeconomic conditions, WWB relationship, recent work and staff
capacity.

Appendix 2: Action Plan Template

PERSON(S) TARGET COMPLETION
PHASE AND ACTIVITIES
RESPONSIBLE DATE
PHASE 1: PLANNING
Preparatory phase
High-level planning
Budget
Prepare Terms of Reference (TOR)
PHASE 2A: MARKET RESEARCH, PRODUCT & PROCESS DESIGN
Conduct Market Research
Data Analysis
Report Writing and Submission
Summarize Findings
Market Segmentation/ The “8 Ps”: Product features,
price, promotion, place, positioning, physical evidence,
people, and processes
Concept and prototype development
Refine the prototype
Finalize the prototype product

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 PERSON(S) TARGET COMPLETION
PHASE AND ACTIVITIES
RESPONSIBLE DATE
Determine and Finalize Pilot Objectives
Finalize Evaluation Indicators
Prepare Pilot Data Collection and Analysis Forms and
Procedures
Prepare Product Operational Procedures and Follow-Up
Checklist
Prepare Product Documentation and Follow-Up
Checklist
Select and Plan for MIS that Suits Savings Modules
(purchase or modification)
Conduct Financial Projections
Product and Marketing Documentation
Prepare Product Policy
Prepare Product Forms, Contracts and Other
Documentation
Prepare Marketing Materials (+ FAQs)
Vet Documentation by Legal Counsel
Test Product with Software
Document Product Marketing and Client Selection
Methods
Prepare Operating Procedures Documentation
Prepare Product Internal Control Procedures
Compliance and Risk Documentation
Verify Program Policy Compliance
Verify Legal and Regulatory Compliance
Verify Funding Agreement Compliance
Verify and Document Liability Exposure
Prepare Risk Analysis and Danger Indicators
PHASE 2B: PILOT/TEST
Evaluate Readiness of the Pilot Branch
Train Officers and Supervisors
Train Software Operators
Train Internal Auditors and Branch Managers
Inform Other Branches About The Test
Start Product Marketing and Distribution
Collect and Analyze Test Data
Obtain “Before and After” Photos of the Branches
Front Office Operations
Launch the Product in the Chosen Branch
Prepare Launch Report for Management

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 PERSON(S) TARGET COMPLETION
PHASE AND ACTIVITIES
RESPONSIBLE DATE
Pilot Monitoring and Evaluation – Ongoing
Record Client Perceptions of Pilot
Collate Client Feedback
Conduct Evaluation Research
Revise Product Financial Projections Based on Results
Pilot Evaluation – Final Evaluation
Record Final Client Perceptions of Pilot
Collate Final Client Feedback
Conduct Evaluation of Results
Revise Product Financial Projections

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 Appendix 3: Competitor Analysis
CHARGE/BANK Competitor A Competitor B etc Notes

SAVINGS ACCOUNTS
Minimum balance 50,000 500,000 (a) up to 4 pages, 500 per extra page
Penalty below min 5,000 15,000 (b) For VISA up to 10 pages, 1,000 per extra page
(c) Drawings more than 5 to 9 times, 10,000 for drawings more than 9 times a
Ledger fees
Nil month
Account management fee 1,000 4,000 (d) Double ledger fees
Statement Free (e) Minimum interest charge
Interim statement 2,000(a) 2,000 (f) min 10,000 max 30,000
Duplicate statement 2,000 6,000 (g) min 10,000 max 150,000
Additional statement 500 1,500 (h) min 100,000
Customised statement 20,000(b) (i) min 45,000 max 175,000
Drawings/Withdrawals 5,000(c) 3,000 2,000(s)(t) (j) min 45,000 max 200,000
Witdrawal without passbook 2,000 (k) min $10
Cash deposit charge (t) (l) min 8,000/half year
Savings card/Passbook 2,000 2,000 (m) If closed within 12 months of opening
Passbook/ card replacement 5,000 5,000 (n) min 10,000, max 100,000
Closing account 10,000 20,000 5,000 (o) min 10,000
Cheque book/per leaf (p) min 1,000 and thereafter in multiples of 1,000, max 10,000
CURRENT ACCOUNTS (PERSONAL) (r) Up to $500, $30 ($500-0.04m), $50 (More than $0.04m)

Minimum balance
50,000 NIL (t) 0.3% min 5,000 deposit/withdrawal up ctry using Kla branches and vice versa
Penalty below min (d) (u) up to 10 transactions, 600 for more than 10 transactions
Ledger fees per entry 500 2,000 600 (v) min 15,000
Minimum ledger fee per month 5,000 4,000 (w) charge for advising is $30
Account management/service fee 6,000 (x) BoU presence, 0.5%, min 30,000, max 100,000 no BoU presence
Statement Free Free Free (y) min 75,000
Interim statement 2,000(a) 2,000 (z) min 50,000
Duplicate statement 3,000 6,000 2,000 (aa) min$50 max $100
Additional statement 500 1,500 2,000 (ab) per withdrawal in excess of 3 withdrawala per month
Customised statement 20,000(b) (ac) 25,000 for account less than 12 months old
Overdrawn penalty 10% abv plr 15,000(e) (ad) min 15,000, max 100,000
Closing account 15,000 20,000 10,000 (ae) above 5m
Drafts-customer 15,000 1%(f) 10,000 (af)per qtr min 50,000 max 200,000
Drafts-non customer 25,000 50,000 20,000 (ag) per qtr min 25,000
Draft cancellation charge 10,000 10,000 10,000 (ah) min 6,000, max 25,000
Bank of Uganda cheque 50,000 (ai) min 10,000 plus telex, postage, etc
Cheque book/per leaf 400 Free 300-400 (aj) above 50m
Counter cheque leaf 5,000 10,000 4,000 (ak) less than $200, $20 if more than $200
Deposit book 1,500 (al) min 75,000, max 100,000
Cheques collection 1% 0.4%(o) (am) min 25,000, max 100,000
Upcountry cheques collection 1% 1%(g) 0.4%(o) (an) Salary loan only
Returned cheque-Insufficient funds 75,000 100,000 40,000 (ao) min 2,000
Returned cheque-Effects not cleared 40,000 40,000 (ap) Free for 1million and below
Returned cheque-technical 40,000 20,000 10,000 (aq) 0.3% min 5,000 at away branches except Kampala
Returned cheque by other banks 10,000 Free 10,000 (ar) Free for 500,000 and below
Post dated cheques 40,000 10,000 (as) min 800 max 1,100
Cheque held overnight 20,000 (at) min $20
Cash Withdrawal at Counter Nil 2,000(s)(t) (au) min $100

Cash payment to 3rd party (av) SCB cheques free, non-SCB min 30,000, max 120,000 in represented towns,
0.5%, min 50,000, max 120,000 in unrepresented towns
Cash deposit charge (t) (aw) Per bag of coins deposited
Cheques written (ax) min 150,000
Bulk cash deposit (ay) min $35, max $120
Bulk cash withdrawal (az) $10 for TT transmission costs on FCY accounts
EFT charge/TT 5,000 2,000 (ba) min $50
Retreival old cheque etc 5,000 5,000 5,000 N/A: Service not available
Stop Payment orders 20,000 10,000 10,000
Standing orders (within bank) 20,000 7,500 10,000
Standing orders (to other banks) 10,000
Standing orders (set up charge) 10,000 Free
Standing orders unpaid 20,000 100,000
Certificate of balance 10,000 10,000
Audit confirmation 30,000 75,000
Letter of introduction 10,000 20,000
Salary handling 2,000 2,000 1,200
School fees 2,000 2,000
LOAN RELATED CHARGES
Advance application fee 50,000 5,000
Advance commitment fee 2%(h) 2%
Arrangement fee 2%
Advance processing/admin fee
Monitoring fee 0.5%-2%
Insurance fee 1%
Stationery
Legal fee
Renewal facility fees 2% 2%(h)
Restructuring facility fees
Discharge security documents 50,000
FOREIGN EXCHANGE
Out foreign transfers-customers 0.25%+20,000 1%(i) 25,500
Out foreign transfers-non customers 0.50%+20,000 1%(j) 30,000
In foreign transfers-customers $10 $10 10,000
In foreign transfers-non customers $10 $25 1%
Sale of Travellers Cheques 1%(k) 0.50%
LC Opening/Advising commission(cash
covered) 0.50% 0.50% $200
LC Opening/Advising commission(no cash
covered) 1.50% 1.50%
LC Acceptance commission 2%
LC Payment/settlement commission £18 $100
LC Amendments 50,000 50,000 $50
ATM TRANSACTIONS
Issue of ATM Card 2,000 Free 2,000
Uncollected Cards Destroyed 10,000
Replacement ATM Card (faulty) Free Free
Replacement ATM Card(Lost) 10,000 5,000 10,000
ATM Withdrawals Free 400 200
ATM Deposits Free
Account Management fee 1,000

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Appendix 4: Specific Activities of Team Members
PILOT TEST TEAM
TITLE SPECIFIC ACTIVITY
SKILL AREAS
1. Product Champion DCEO/ Credit • Manages the team.
Risk Manager • Mobilizes and deploys resources on time.
• Ensures that actions are consistent with institutional
strategy and goals.
• Assigns tasks to team members. Represents the team
at top management level and communicates to them
about progress and challenges.
• Responsible for reporting and outputs.
• Defines broad objectives and determines key measures
of success.
• Monitors progress and control.
• Motivates the team towards achievement.
2. Team Leader/ Savings Marketing • Coordinates all activities of the team.
Coordinator Officer • Ensures that all information is effectively communicated
to the savings team.
• Develops budget and asks management for resources.
• Organizes meetings and working sessions with the team.
• Implements processes and action plan.
• Works closely with the pilot branch.
• Regularly monitors pilot progress and takes immediate
necessary actions to rectify and address issues.
3. Finance/Accounting Finance Manager • Prepares costing and financial projections; evaluates
return on the new product.
4. Information Technology/ MIS Manager • Develops internal systems to administer and track
MIS the new offering. Coordinates the selection and
installation of IT, the purchasing of related fixed assets,
the development of an installation systems manual and
coordinates the customization of the software.
5. Marketing Research/ Marketing • Prepares marketing plan for the test, tests training
Customer care Officer for product marketing, coordinates development of
marketing materials and documents, tracks marketing
effectiveness, collects and summarizes data, prepares
monthly and quarterly reports to the team and others.
• Ensures that products are developed from point of view
of the market, rather than from internal perspectives.
• Brings investigative skills, marketing information and
dynamic perspective to the product development
process.
• Ensures implementation and monitoring of professional
customer service.

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 PILOT TEST TEAM
TITLE SPECIFIC ACTIVITY
SKILL AREAS
6. Training /HR Human • Writes curriculum/test for test product training, trains
Resource front and back office staff in product knowledge,
Manager marketing and customer service skills. Prepares FAQs
for staff to enhance product knowledge and ensure
consistency of information (working closely with
marketing).
• Responsible for assessing training needs and designing
training for the new pilot test and implementation.
7. Operations/ Branch manager • Plans and implements the new product within
Management the operations/systems of developing policies and
documenting procedures and oversees the operations
of the pilot.
8. Operations/ Frontline Financial • Provide frontline customer information to the team,
Services Officers distribute and collect customer information and advise
the team of clients’ reactions.
• Sales team must have a thorough understanding of the
product and how to sell it most effectively.
9. Audit/Controls/ Risk • Assists in formalization of procedures, authorizes
management procedures and conducts full product audit (and follow-
up if necessary) during test.
• Analyses compliance with national laws and regulations
and internal controls.
• Evaluates risks involved in the new product.

Appendix 5: Planning the Product Costing Process

1. Plan the costing exercise.
2. Select a costing team.
3. Determine the products for costing.
4. Select the period for data and representative test sites/sample.
5. Gather and organize costing data from MIS into preferred format.
6. Select most commonly used cost drivers.
7. Develop questionnaire/timesheet for staff interviews or survey.
8. Develop activities dictionary based on questionnaire and process map.
9. Circulate timesheet to capture actual data among staff.
10. Gather data on time spent by staff on activities through interviews, timesheet,
observation, etc.
11. Verify and analyze collected information.
12. Enter data in the software.
13. Data analysis and reporting.

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Appendix 6: Product Development Matrix Framework
PRODUCT X: PRODUCT Y:
PRODUCT PASSBOOK CERTIFICATES
ACCOUNTS OF DEPOSIT
Segment/ Target Market
Savings Objectives
Product Attributes Interest rate
Minimum opening balance
Minimum balance required
Withdrawal policies
Requirements
Privacy
Service Attributes Easy to deposit and withdraw
Convenience
Quick service
Customer service
Saver Incentives Lottery
Presents
SAN
Other savings accounts
Remittances
Access to other financial services
Preferred customer status
Security
Goodwill Review pricing and credit rationing
policies for loans

105
 Appendix 7: Product Sequencing
Institutions introducing savings should stagger the introduction of
new products over time and seek to maximize revenues of existing
products before expanding the line

Expanding
Expanding Beyond
Beyond
Product
Product Introduction
Introduction Product
ProductDiversification
Diversification Savings
Savings

Rules of • Start with Passbooks and CDs • Introduce Programmed Savings • Remittances and other services
Thumb • Build institutional experience • Offer products based on • Offer products based on
demand demand

• 1 Passbook • Housing Account • Remittances

Calpía
Calpía • 1 Fixed-Term Account • Christmas Account • Checking Account
(El
(El Salvador)
Salvador) • Retirement Account
• Education Account

• 2 Fixed-Term Accounts • 1 Passbook • Remittances

MiBanco
MiBanco • Group Project Account • Debit cards
(Peru)
(Peru)

Rural
RuralCredit
Credit • Christmas Account
Union
UnionProgram
Program • 5 Passbooks
• Progressive Account N/A
Case Study
Case Study • 2 Fixed-Term Accounts
• Salary Account
(Nicaragua)
(Nicaragua)

San
San Francisco
Francisco
Credit • 3 Passbooks N/A N/A
CreditUnion
Union
(Ecuador) • 2 Fixed-Term Accounts
(Ecuador)

* RCUP was a program started by WOCCU; three credit unions were presented in this case study
Source: A. Esperanza, WWB, WOCCU Striking the Balance in Microfinance, pg. 195, 230

106
Appendix 8: Savings Product Viability Analysis Based on
Opportunity Cost – Example from Uganda
VARIABLES AMOUNT
Average Investable Balance (simple average) 29,297,210
Reserve Ratio 30%
Transfer Rate (alternative funding, if available) 20% 5,859,442
U-Trust’s interest payable for borrowing
Income from account opening fees & withdrawal fees 6,463,514
Less: annual interest rate paid to the account 3% 878,916
Less: cost of reserve (i.e., the difference between what Central Bank 2% 585,944
offers vs. what you give to your clients)
Net Yield (Positive) 10,858,096
Less: Cost per unit of savings mobilized, or total cost 6% 7,744,962
Other fixed costs/sustaining activities (approx.) 2% 585,944
Accounts viability 7% 2,527,190

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108
Selected Bibliography
Selected Bibliography

Selected Bibliography
Further Reading

The Poor and Their Money, Stuart Rutherford, Oxford University Press, 2001

Documents how the poor in developing countries manage their money, using examples
from the real lives of people in the informal settlements and villages of Asia, Africa, and
Latin America.

ASA Savings Manual – Chapter 4 “Savings Program”

Mobilizing Savings from the Public: Basic Principles and Practices, Marguerite Robinson,
USAID, 2004

The MBP (Microenterprise Best Practice) Guide to New Product Development, Monica
Brand, Acción International, 2001

The Competitive Advantage of Nations, Michael E. Porter, The Free Press, 1998

MicroSave Toolkit: Market Research for Microfinance, MicroSave, 2004

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 Notes
1. WWB’s data request tool will provide an outline with the kind of information you need to understand your institution
and its financial, marketing and operational situations.

2. If you have not yet agreed on a vision, mission and objectives for your institution, you need to conduct a workshop to
define all of these before you proceed with implementing savings. For more information on how to do this, contact
WWB or an external consultant specializing in branding or organizational strategy.

3. For criteria to help you determine the right tactics, see Women’s World Banking Communication Criteria. Once you
have decided on the best tactics, use the Communications Tactics Timeline to plan your marketing tactics for the year.

4. Source: Adapted from WWB’s Product Development Matrix presentation.

5. Source: Adapted from WWB’s Product Development Matrix presentation.

6. CDCA: Co-development of Change Agenda is a diagnostic that helps MFIs to develop their strategy based on industry,
customer, competitor and operational analysis and research.
Notes

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Notes

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