How can a microfinance institution put client protection into practice? Start the process by listening to clients and staff. The experience of ASKI from the Philippines showcases a culture of listening that is helping the organisation deepen staff members’ understanding of, and increasing responsibility to clients’ welfare. With the use of a simple Servqual tool developed by MicroSave, ASKI has not only strengthened its capacity to listen. It has also increased its ability to process and feed relevant information to management for decision making and action to benefit its clients.
Blog
Design Considerations for Credit Scorecard for MSME Financing
Globally, Micro, Small and Medium enterprises (MSMEs) have been playing a crucial role in promoting economic development. MSMEs contribute to the local economy by creation of employment opportunities for millions and in the process inject much-needed capital and liquidity in the local economy. However, one of the major challenges faced by MSMEs is the lack of access to finance. As per a recent McKinsey1 study, 15-40% of SMEs cite finance as the most important obstacle to growth. On the other hand, financial institutions are wary of financing MSMEs and cite a variety of reasons including lack of reliable financial information, poor financial record keeping and absence of credit history. High transaction costs in servicing MSMEs as well as a perceived high-risk profile further add to the distrust. Through this paper, we suggest a fresh approach to MSME finance by introducing a simple but effective credit scorecard. We base our approach on practical examples from MicroSave’s work in expanding access to finance for MSMEs and hope that this approach will help financial institutions to look at MSMEs as a strategic segment.
White Labelled Mobile Financial Services
White labelling is quite common in the financial services sector. Smaller banks sometimes outsource their credit card operations to larger banks. The larger bank issues and processes the credit cards as white label cards, typically for a fee, allowing the smaller bank to brand the cards as their own without having to invest in the necessary infrastructure. There are also white labelled ATMs where a third party sets up an independent ATM network which can facilitate cash withdrawals on behalf of multiple partner banks. Taking a leaf out of African countries, Canada and Europe, Reserve Bank of India recently permitted non-banking companies to set up and run ATMs for commercial banks. In mobile financial services sector, white labelling is becoming increasingly popular. In this video, MSC’s Senior Analyst, Shivshankar V., outlines the benefits of white labelling mobile financial services and provides quick reminder to financial service providers on things to remember while white labelling mobile financial services.
Pitfalls of SME Lending
Microfinance banks and MFIs generally venture in to SME financing without understanding the model and common pitfalls, which might result in losing the portfolio. In this episode, MSC’s Specialist, Venkata N. A., discusses the common pitfalls of SME financing. In his words “SME financing is completely different from Joint Liability Group model of lending. It has different HR requirements, different organisational structure, different MIS requirements etc.” The common pitfalls are lack of financial statements, lack of industry benchmarks, lack of credit history, lack of skilled appraisers and one size fits all dilemmas. It is very important for any institution to understand the pitfalls of SME financing and also to conduct institutional assessment before venturing in to it.
Index based Insurance as a Tool for Disaster Management – A study in South and South East Asia
Speaking at the conference, Sunil highlighted how index insurance can be an effective tool for disaster management for the poor. He further discussed the progress and experiences of weather index insurance in 5 Asian countries – India, Pakistan, Sri Lanka, The Philippines and Indonesia. The presentation also touched on the challenges faced by index insurance and emphasised the potential for scaling it up.
The index insurance study is conducted by MicroSave in collaboration with Climate and Development Knowledge Network, UK (CDKN) in South and South East Asia. The CDKN is managed by an alliance of organisations led by PricewaterhouseCoopers LLP along with Fundación Futuro Latinoamericano, INTRAC, LEAD International, the Overseas Development Institute and South North. “
Microinsurance Booklet
Microinsurance is the silent offspring of insurance and microfinance. However the complexity, technicality and diversity of microinsurance make it a unique sector. For close to a decade, MicroSave has been conducting industry assessment, market research, process design and optimisation including pilot-testing, brand/marketing and insurance literacy campaign design in addition to providing training in the fieldof microinsurance.
The Optimising Performance and Efficiency Series (OPE Series) brings together key insights and ideas on specific topics, with the clear objective of providing microinsurance practitioners with practical and actionable advice. The present volume of OPE series compiles the learning of MicroSave on strategising for microinsurance and optimising product and delivery channel for delivery of microinsurance.