Women’s World Banking

1. Women’s World Banking Workshop: Savings Mobilization and Financial Literacy Central Bank of Nigeria 6th Annual Microfinance Conference Jennifer McDonald February 7, 2012

2. Objectives for the Workshop Part I: Designing Products for Savings • Explore design considerations in developing savings products for the unbanked, especially women • Assess institutional readiness for implementing new products effectively • Discuss a case study of a product development process (Hasal MFB) Part II: Financial Literacy for Savings Mobilization • Develop practical techniques for implementing financial literacy in your savings program • Ensure that financial education adds value to the customer and to your business • Explore examples of ways to reinforce financial literacy in day-to-day operations

3. About Women’s World Banking

4. Global Footprint • Global microfinance network with 39 members in 27 countries • 26 million active clients, 80% women • $7 billion in outstanding loan portfolio, $3.5 billion in deposits Registered Stichting in The Netherlands Europe, Middle East & North Africa • Bosnia-Herzegovina • Egypt • Jordan • Morocco • Tunisia • Russian Federation New York: Global Office Asia • Bangladesh • India • Mongolia • Pakistan • The Philippines • Sri Lanka Central & Latin America • Bolivia • Brazil • Chile • Colombia • Dominican Republic • Mexico • Paraguay • Peru • Benin • Burundi • Ethiopia • The Gambia • Ghana • Kenya • Uganda Africa

5. 2006 2011 C&S MFIs (13) Credit-only MFIs (18) C&S MFIs (21) Credit-only MFIs (26) Product Focus In the last five years, WWB’s membership shifted from predominantly credit-only MFIs to MFIs offering both credit and savings services

6. Product Innovation Market Research, Marketing, Branding, Alternative Delivery Channel, Financial Education, Social Communication 6

7. Product Design for Savings Objectives Explore design considerations for savings products Assess institutional readiness for implementing new products Discuss a case study of a product development process

8. Savings for Unbanked Customers WWB research in different countries finds common themes: • She saves informally or at home but is interested in options that help her build her savings • Her income is unpredictable and she continually juggles limited funds to meet a range of needs • She saves for lump-sum events like school fees, weddings, celebrations or to invest in a business or home • Key factors for deciding to save at a bank are: trust, proximity, access, and friendly, inviting service And key differences: • In Colombia “saving” refers to large sums of money and many poor women say they can’t save, but everyone “keeps” money at home • In Kenya money in a bank is “dead” and women prefer to put their money to work in a business or to buy assets that generate a return like livestock • In Pakistan all women save for their life cycle needs, if you don’t save you are “doomed” • In India gold for your daughters’ marriage is the most common aspiration

9. Know Your Customer What about in Nigeria?

10. Know Your Customer • Successfully mobilizing savings is based on a • deep understanding of your customers • Who I am * How I think * What I aspire for * How I want to be served • What I want from a bank Focus Group, Kenya

11. Know Your Customer Customer Segmentation from WWB ResearchAfrican Microfinance Bank Segment 1: The Hard-Working Dreamer Loyalists with Group Loans Segment 2: The Empowered Achiever Loyalists with Individual Loans Segment 3: The Pragmatic Planner Non-Members Who Do Not Use Loans Segment 4: The Smart Shopper Non-Members Who Use Loans Core Business Segments New Segments

12. Know Your Customer Key Insights by Segment • What are my aspirations? Why do I save? • Children’s Future: “I want my children to have the best education possible.” • Business: “When I see a business opportunity, I seize it. I take risks to achieve my dreams.” • Security: “I want to buy big assets, such as high-yield cattle, a bigger shamba or a plot for rental homes, so I can earn more money and have security in my old age.” • What barriers to saving (with the bank) do I face? • Access to loans: “I use loans to grow my business and manage big expenses.” • Revolving cash: “I like to keep my money revolving. I don’t like the idea of having “dead” money.” • How do I save now? • Assets: “I save in assets because they earn me income.” Segment 2: The Empowered Achiever Loyalists with Individual Loans How can YOU sell savings to me? Product Diversity: “The path of success is still important to me: while I’ve achieved a lot, I’d still like guidance on how to continue to grow to meet my goals.” Convenience: “I have choices, and expect quick service, good interest rates, and convenient access to my money.”

13. Know Your Customer Traditional market research through focus groups is only one way Other approaches can be even more effective in putting us in our customers’ shoes • Immersion and Open Dialogue • SEWA Bank, a cooperative bank for women in India, offers innovative savings products • Product design was inspired by an Exchange Dialogue – a 3 day homestay with clients • Instead of discouraging purchase of gold, SEWA Bank understood its place as a coping strategy and to build assets • Led to products like “Chase Your Worries Away” and “Gold for your Daughters”

14. Customer Insights and Product Design • Life Cycle Framework • Who is the target customer? • At which points in her life will the product be useful to her?

15. Customer Insights and Product Design • Youth Savings • MFB aimed to broaden appeal of its children’s account from parents of babies to older children and youth • Key insight: Need to target different decision-makers at different stages • Implications: Include goal-based savings plans and educational events designed for different ages

16. Customer Insights and Product Design • Girls’ Savings • Key insights: Girls value independence and they like pink • Implications: Independence reinforced through product name “MINE”, marketing messages “The decision to save is MINE”, pink used in marketing materials and events

17. Customer Insights and Product Design • Pensions • SEWA Bank has over 50,000 women who save $1 per month in a pension • Promoted through an educational program that explains the value of compound interest • Key insight: Women value being useful in old age, and do not want to be idle • Implication: Marketing messages appeal to women’s role as care-givers, that even in old age she will be able to help others

18. Institutional Readiness Leadership Triad Vision Strategy Leadership Addition of a new product can imply as little as minor adjustments in processes or can have significant impact at all levels of your organization. Capabilities Triad Structure & Processes Culture Competencies

19. Institutional Readiness Organizational changes associated with adding a new product can be incremental or transformational Incremental change Transformational change • Product introductions that cause transformational change often mean that a new sales channel or business unit is necessary to offer the new product • Significant changes across both the leadership and capability triads • Product introductions that cause incremental change usually mean a new product is offered through the existing sales channel, for example the current set of loan officers • Adjustments to both triads, with more change in the capability triad than the leadership triad

20. Institutional Readiness Example of transformational change: Microfinance bank in Latin America • Background • Received banking license in 2004 • Introduced savings in 2005 • Annual deposit growth rate exceeded 100% in the period from 2005 to 2009 • However… • Almost 50% of deposits were dormant (no movement within 6 months) • Predominance of large accounts, especially time deposits – 70% of savings concentrated in 20 time deposits • The brand survey indicated that the bank is perceived by low-income clients primarily as a place to access loans

21. Institutional Readiness Changes in Leadership Triad • From focus on microenterprise growth to providing a comprehensive solution to low-income segments • Broader segmentation includes low wage earners in addition to microenterprises Vision • Performance targets expanded to include savings and deepening the relationship with the customer: • Number of products per client • Cross-selling targets • Focus on “reactivation” of dormant accounts • Allocation of resources to: • Fund specialized savings sales force • Marketing budget Strategy Leadership • Becoming the champions of the savings program • Communicating the savings message at quarterly and monthly meetings, internal newsletter

22. Institutional Readiness Changes in Capabilities Triad • Specialized savings sales force created • Training provided to all front-line staff • Marketing department created, experienced marketing manager recruited Competencies • Key processes modified (for example, deposit slips eliminated) • Strategy development on branchless banking • CRM system created to manage sales leads Structures and Processes • Customer-centric orientation • “Passion for Service” campaign launched Culture

23. Product Design Case Study: Hasusu Savings Ruskiyat Badmus, Hasal Microfinance Bank

24. Key Messages • Product based on customer understanding, building on observed savings strategies. • Developed key differentiator for product compared to alternative savings options. • Improved product through frequent product review cycles to respond to customer feedback.

25. Financial Literacy for Savings Mobilization • Objectives • Develop practical techniques for implementing financial literacy • Ensure that financial education adds value to customer and to institution • Explore ways to reinforce financial literacy in day-to-day operations

26. Financial Literacy for Savings Mobilization Key Principles in WWB Approach Customers know that saving is important, but struggle to meet goals as they juggle competing needs Financial education presents saving at a bank as a viable and beneficial option Financial education needs to be tied to business outcomes

27. Making Financial Literacy Programs Work • For the Customer: • Bring the classroom to her • Make it interactive, concrete and practical • Develop goals and savings plan • Introduce tailored account option • Link to sales team for follow-up • Reinforce financial literacy through materials used in day-to-day banking

28. Making Financial Literacy Programs Work Ideas for Reinforcing Financial Literacy in Day-to-Day Banking • Images of her goal on passbook • Customer-defined account nickname e.g. “Fola’s School Fees” • Progress bar on receipt, mobile phone or ATM • Easy savings calculators • Flip books for sales team reinforcing messages • Tools for understanding passbook (account balance, etc.) • Posters, videos in branch

29. Making Financial Literacy Programs Work For the Institution • Financial education needs to drive business or it will not be a priority • Staff need to see value • Field staff follow up on leads • Customers put education into action • Set goals for the business objectives • Open X accounts • Increase frequency of deposits • Increase # of transactions per customer • Increase # of accounts per customer • Measure and monitor • Against targets • Implementation of program e.g. follow-ups by sales team, conversion rate

30. Case Study: SEWA Bank, Project Samruddhi • Objective: Identify and test ways to embed financial education into regular interactions with field officers (“saathis”) to: • Build basic customer financial capability • Increase active customer account participation & use Insight Opportunity Help customers articulate their goals, and build a plan around their aspirations. Re-think FE training: replace long classroom sessions with concrete, practical information in the field Visual tutorial on how to read a passbook; reinforce with take-home reference and in-branch video Tools for saathis that help de-mystify areas of confusion Customers have goals, but need help prioritizing and creating a plan to achieve them Lengthy classroom training sessions are difficult for customers to attend and yield low recall of concepts Illiterate customers need help checking basic account information, like balance or interest earned Saathis cannot always easily answer questions that require calculation, like interest earned on recurring accounts

31. Re-focusing Accounts Around Goals Updated passbook covers explicitly focus recurring accounts around the five most popular customer goals, to help customers link their savings to concrete goals Rainy Day (“Chase Your Worries Away”) Gold Housing Pension Weddings Client Photo

32. Field Agent Applications New PDA applications help SEWA’s Bank Saathis deliver concrete, practical information and advice in the field. Recurring Account Calculator: offers a built-in plan by helping her choose the right account Impact of a missed deposit*: shows how missed deposit today = reduced lump sum later “Smart” prompts for saathis: help saathis keep customers on track to achieve their plans *visual graph coming!

33. Key Messages

34. Conclusion During today’s session we have… Part I: Designing Products for Savings • Explored design considerations in developing savings products for the unbanked, especially women • Assessed institutional readiness for implementing new products effectively • Discussed a case study of a product development process (Hasal MFB) Part II: Financial Literacy for Savings Mobilization • Developed practical techniques for implementing financial literacy in your savings program • Discussed how to ensure that financial education adds value to the customer and to your business • Explored examples of ways to reinforce financial literacy in day-to-day operations

35. Women’s World Banking www.womensworldbanking.org