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Designing innovative products, processes, and channels to promote microfinance

Posted on by Parul Tandon

The microfinance industry has traditionally seen poor people’s needs for financial services only as “credit for enterprise”. However, due to their various life cycle needs, low income clients need a range of “financial services” and not just the traditional mono-product of working capital loan.

In response to this emerging need of the sector, growing numbers of financial institutions are developing and delivering a range of financial services customised to cater to client needs.

This paper examines some of the products designed (many in collaboration with MicroSave) as a respond to these needs, as well as some of the innovative delivery processes currently under testing. It also reviews the MicroSave approach to product design. It concludes with comments on NABARD’s Kisan Credit Card and implications of the changing face of microfinance for the “massification” of financial services for the low income market in India.

Financial Performance

Posted on by Parul Tandon

Grameen Bank’s audited accounts for 2003 show a six-fold increase in net profits over 2002 – from 60 to 358 million taka (US$6 million). 2003 was the first full year of ‘Grameen II’, so this surge in profit looks like a good return on the decision to launch Grameen II. So where did these profits come from? This Briefing Note attempts to answer that question and the implications for Grameen’s future performance.

Market Research for Microfinance: Beyond Product Development 

Posted on by Parul Tandon

MicroSave’s Market Research for MicroFinance Tools have been widely used for product development and refinement. However, increasingly the tools have been used to address diverse institutional needs. This note outlines five of the new uses to which the tools have been put. These include – image analysis, customer service, feedback loop analysis, product marketing and financial education. The note suggests that the diverse ways in which the Market Research for MicroFinance toolkit has been used reflects the flexibility and potential of the tools and the creativity of their users.

Microleasing: An Alternative Way of Financing Productive Assets

Posted on by Parul Tandon

Many entrepreneurs in developing countries find it difficult to expand their businesses because of limited investment capital. This note looks at Microleasing and outlines how leasing helps clients and financial institutions overcome the above difficulties. This note briefly discusses the constraints to microleasing in developing countries in view of the legal and regulatory environment, weak economic conditions, institutional factors and client related factors. It shares the experience from two African Leasing Schemes – FINCA Tanzania, East Africa and GIE Hari Goumo in Timbuktu, Mali. It explores the challenges which MFIs engaged in microleasing schemes may face. Talking about the lessons and opportunities in Microleasing the present note states that microleasing initiatives require strategies to manage operating risks and thereby lists some of the possible strategies.

The New Loan Arrangements

Posted on by Parul Tandon

Changes to loan arrangements attracted attention when Grameen II was announced in 2002. The ‘flexi’ loan – a system for quickly rescheduling loans in repayment arrears – aroused concern: Grameen’s loan portfolio was known to have been weakened by floods and other problems in the 1990s, so some worried that wholesale rescheduling of loans would make things worse rather than better. However, this did not happen. This note describes the new loan arrangements and how staff and borrowers have reacted to them. (The analysis of the bank’s financial performance is in another Note in this series, No. 4.)

Strategic marketing for microfinance institutions

Posted on by Parul Tandon

Outlines a framework comprising three primary strategies focusing on: Corporate Brand and Identity, Competitive environments; which is particularly important in Product Strategy, development, costing/pricing and sales/promotion; and Product Delivery which encompasses product and Customer Service Strategy, which focuses on how and where products are delivered and customer experience. These strategies and the supporting activities are informed by careful research based on generates four standard information packages – Market Analysis, Competitor Analysis, Customer Analysis and PEST Analysis.