Blog

The Overlap between Customer Service and Social Performance Management

Posted on by Parul Tandon

MicroSave has worked with a variety of banks and MFIs across Africa and Asia to implement customer service programmes that have made significant impact on the organisations’ social performance. MicroSave’s customers focus interventions involve the following activities:
– Understanding client needs to develop tailored products and services
– Studying client drop outs to prevent the same in the future
– Collecting client feedback to design suitable client protection strategies
– Client reach- out strategies for better beneficiary-targeting
– Studying staff motivation for better service to the clients
– Crafting client -delight strategies to offer them services far in excess of their expectations.
– Aligning systems and processes towards the objective of client delight articulated clearly in the Mission statement.

Through SPM diagnostics, MicroSave helps MFIs to prioritise and choose concrete steps to take in the implementation of proposed SPM improvements. It helps in providing expert technical assistance to ensure implementation of the recommended measures.

Integrating Social Performance Management into Governance of MFIs

Posted on by Parul Tandon

MicroSave has worked with Imp-Act to integrate a social lens into its Governance training. MicroSave SPM diagnostics have increasingly been focussing on the role of governance structures in managing the growing financial and social risks since in view of the global financial crises and the oft repeated criticism of MFIs being primarily commerce-driven ventures. Structural/functional features which skew the balance in favour of commerce have emerged from such studies:

– Board composition of an MFI, particularly of an MFI transforming from a non-profit to a for-profit endeavour may be focused on having experience and expertise in financial rather in social aspects
– MIS not incorporating social performance assessment indicators
– Lack of periodic reviews of ‘achievement of mission’ which clearly states organisational purposes
– Lack of involvement and motivation of staff, including appropriate performance reviews and incentives towards social performance

MicroSave’s SPM recommends stakeholder involvement – especially clients’ or representatives of clients’ in strategic decisions, through periodic client consultative group meetings; informal feedback from field staff or other forums and regular client and employee feedback (grievance systems, market research, client committees and customer satisfaction surveys, etc.). It also recommends effective designing of motivation packages for staff as well as putting in place client protection measures for preventing over-indebtedness, fraud, abusive collections, client privacy along with other aspects.

Integrating Social Performance Management into Strategic Business Planning of MFIs

Posted on by Parul Tandon

MicroSave has run Strategic Business Planning (SBP) in over 100 MFIs across Asia and Africa including several of the leading NBFCs in India and the top tier MFIs in the Philippines. The SBP enables MFIs to improve synergies between excellence in market-led financial services and social performance.

The approach of MicroSave has been of viewing SBP and social performance management (SPM) as integrated rather than stand alone processes. Hence, while the SBP lays out the goals, key objectives, measures/targets and activities of an organisation (KOGMA), SPM consists of (re)designing key operational policies, processes and systems to reflect an MFI’s social aspirations. Stated synergy is value-adding.

Aforesaid integration involves the following distinct steps:
– Periodic assessment of the mission, values and vision of an organisation in order to evaluate the extent of achievement of the mission and to lay down strategies to prevent possible ‘mission drift’ away from social orientation.
– Competition analysis and institutional analysis to better understand the ‘environment’ and devise policies/strategies for competitive edge.
– Evolving strategies to better serve social ends
– Evaluation of strategies in the context of financial projections and budgets
– Work planning and system analysis with a social perspective
– Creating measures and targets for goal achievement
Implementing and monitoring KOGMA (Key Objectives, Goals, Measures, Activities)/ Goals Analysis, for organisational alignment from top to bottom in terms of the stated parameters, through the process of cascading.

Breaking the Barriers: Market Expansion through Individual Lending

Posted on by Parul Tandon

Introducing Individual Lending (IL) is often an important step towards delivering market-led microcredit. However in most cases, microfinance institutions (MFIs) introduce IL product as a reactive strategy. This Note discusses the benefits of IL, the target clientele and challenges MFIs need to consider in developing the product.

The features of IL product are distinct vis-a-vis group lending product in terms of loan size, loan repayment, collateral requirement, and loan sanctioning process. This Note explains the reasons for which mature clients do not continue with group lending and also explains how IL is offered by MFIs to retain these customers. The Note proposes that the IL can help MFIs to foray into new market segments for expansion and increase portfolio size and profitability.

The Note with the help of case studies explains the way IL can help MFIs in diversification of portfolio at risk and cross-selling of other financial products. The Note further explains the challenges faced while targeting the group clients for IL and also discusses the challenges faced while getting fund support from the banks.

The Note proposes IL to MFIs for not only growing and improving profitability, but also to reduce portfolio concentration risk.

Trends of Microinsurance in India

Posted on by MSC

Microfinance in India has largely been driven by credit products of microfinance institutions (MFIs), and microinsurance has remained a secondary choice for financial inclusion. However, recently, many important developments have taken place in the Indian microinsurance sector. Though India has experimented a lot with microinsurance, the sector is still driven by supply-led interventions.

Moreover, the insurance providers, still, seek government subsidies and donor funding in order to achieve financial viability in preference to designing market-led, sustainable schemes. A strategic perspective towards microinsurance together with innovations in technology and assessment of client demand, probably holds the key to the future of microinsurance in India.

Product features of Micro and Small Enterprises Lending (2/2)

Posted on by Parul Tandon

This Briefing Note discusses the 7 of the 8Ps of Marketing – Price, Positioning, Process, Promotion, People, Place and Physical evidence.

The Note describes that the total cost of Individual Lending (IL) product not only includes interest and fees paid by the client but also a host of other costs such as foregone wages, travel costs and time amongst others. Therefore the MFIs must strive to keep the indirect cost to minimum through efficient processes. The Note discusses the importance of MFIs positioning in the market and suggests that the MFIs should put best effort to occupy a distinct competitive position in the customer’s mind. The Note suggests that the MFIs should prepare a comprehensive procedure manuals detailing the “who, what, when, where, why and how” of all processes with adequate internal control provisions to mitigate risks. Further, these manuals should be regularly updated and readily available for staff’s use. The Note comments on the requirement of staff incentive schemes to mitigate the fraud risk.

The Note further explains in detail the importance of properly managed/maintained branches, clear and concise communication and 100% door step service through detailed sections on three other important Ps of marketing which are Physical evidence, Promotion and Place.