Signposts to the provision of market-led microfinance services

It examines the demand for risk management tools by the poor and gathers experience of seven institutions providing microinsurance to satisfy this demand in Uganda, Kenya, and Tanzania

This paper lists the following signposts to the provision of market-led microfinancial services that reflect MicroSave’s experience with its Action Research Partners:

Vision and mission statements: They focus on profitability by designing, developing and delivering quality customer responsive financial services. A competent board that prevents mission drift and supports a customer-focused agenda. The executive function: Focus on the customers; Ensure balance between the functions of marketing and operations; Hire and develop competent senior management; Plan the future; Be aware of the competition. Development and retaining of customer-focused staff by investing in: Training on delivering client focused services; Effective internal communication; Building staff capacity; Staff incentive schemes. Retaining customer-focus in the front-office operations through: A marketing department that maintains a customer-focus in all activities; A research department that looks into customer requirements; A strong brand; A feedback loop that welcomes suggestions from customers; A pleasant banking environment; Branch managers, who are knowledgeable about their local community. Support from back office operations in continually improving products and processes by: Pilot testing major changes; Actively managing risk; An information technology (IT) department that develops customer-friendly IT solutions; An internal audit aimed at ensuring efficient service delivery and customer satisfaction.

The paper concludes that a market-led transformation is beneficial to a financial institution in terms of increasing profitability and outreach. However, the institution needs to use great skill to take care of the resulting growth.

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