Trends & Innovations in Microsavings Mobilization

1. Trends & Innovations in Microsavings Mobilization Presentation to MABS National Roundtable Brigit Helms Lead Microfinance Specialist, CGAP April 26, 2005

2. Small-balance savings services: the global picture • CGAP research finds approximately 573 million savings accounts in alternative financial institutions (AFIs) around the world • AFIs include MFIs, coops, rural banks, state/ag/development banks, and postal banks • Institutions likely to serve poor clients • Contain balances totaling US $499 billion

3. Big money, in small chunks Average deposit balances by region

4. Small-balance savings in Asia • 300 million savings accounts in 256 AFIs of EAP region • Contain balances totalling US $291 billion • China Post and RCCs account for 110M and 47M of these accounts and US $46B and $231B of savings respectively • Without these, accounts in EAP AFIs total 143M and savings total only US $14B • 6 million accounts in AFIs in the Philippines • Balances total US $105 million

5. Average savings balances • EAP region (119 institutions) • $970 per account with Chinese institutions (127% of GNI pc) • $97 without (14% of GNI pc) • In line with MIX & Microcredit Summit data (13% of GNI pc) • Philippines (53 institutions) • Weighted average balance is $113.34 per account (P 6161 or 11% of GNI pc) • Philippine rural banks • Straight average balance is $242 (P 13,132 or 22% of GNI pc)

6. So, is the job done? We don’t think so… • Market penetration • How much of the demand is satisfied? • Quality • Not necessarily implied by quantity of services available • Impact • How can we be sure we’re meeting the needs of our clients?

7. Challenges of small-balance savings mobilization Small deposits cost more to mobilize – but how much more? Costing/ pricing issues Proximity to clients Critical to small-balance savings mobilization – but adds to costs Low-income clients want the same things as high-income clients – but not always in the same way Appropriate product design Effective marketing Lack of familiarity with and trust in financial institutions are crucial to overcome

8. Overcoming the challenges Broad outreach Costing/ pricing issues Piggybacking on existing infrastructure Using technology Mobile banking Proximity to clients Commitment savings features Linking savings to remittances Detailed market research Appropriate product design High-impact publicity campaigns Upgrading physical facilities Targeting particular client groups Effective marketing

9. Other factors that affect savings mobilization • Meso level • Liquidity management • Link to the payment system • Deposit insurance • Macro level • Appropriate legal and regulatory framework • Overabundance of subsidized on-lending funds

10. CGAP’s Savings Initiative Goal: gather, generate, and disseminate knowledge about small-balance savings mobilization Client-level impact research Work with institutions Case studies Analysis of constraints and opportunities at country level Savings Information and Resource Center

11. Savings Information & Resource Center (SIRC) • www.cgap.org/savings • The main dissemination tool of the CGAP Savings Initiative

12. A quick tour of SIRC resources

13. A quick tour of SIRC resources

14. A quick tour of SIRC resources

15. We welcome your participation in the Initiative! • Share success stories and good practice examples • Ask questions to peers and experts • Comment on a government policy • Suggest a topic for CGAP research Email Brigit Helms (bhelms@worldbank.org) or click the feedback links on the SIRC.