Mobilizing Savings Deposits, From A to Z
This course explores the nuts and bolts of delivering savings services: product options, delivery systems, keys to cost recovery, and management challenges.
Using cases from a wide range of institutions and countries, we will also identify the steps and changes necessary for banks that seek to move “down market” with savings and for microfinance institutions and cooperatives that want to move from being credit-led to being savings-led.
Target audience for course:
Managers, technical assistance providers, donors and policymakers who are seriously interested in developing or strengthening savings operations.
Prerequisites:
none
Objective:
To understand the nuts and bolts of initiating or strengthening savings services.
After looking at demand, we will examine the overall challenges for two types of institutions:
- institutions that already serve the micro market with credit and wish to develop or strengthen their savings operations
- mainstream financial institutions that seek to expand their savings operations to poorer or more rural markets.
We will then examine in more detail: the keys to cost recovery, products, delivery options, and management systems.
Methodology:
We will primarily use the case method, looking at how banks, cooperatives, nongovernmental organizations, and informal groups have managed the chief challenges of savings mobilization.
Outline
Day 1:
- We will begin by briefly examining why savings operations are valuable and the prerequisites that institutions should meet in order to mobilize deposits. We will then break into groups to look at the types of institutions that are most relevant to us. Each group will use one to three cases to explore the chief management challenges facing its institutional type and how different institutions have met these challenges.
- The types of institutions and possible cases are as follows:
- Mainstream regulated institutions that seek to “go down market”: Opportunity International Bank of Malawi; Atwima Kwanoma Rural Bank of Ghana; Hatton National Bank of Sri Lanka; Standard Bank of South Africa; cooperatives in Ecuador, the Philippines and West Africa.
- Large institutions that seek to strengthen their savings operations: Bank of Agriculture and Agricultural Cooperatives in Thailand, Tanzania Postal Savings Bank, Banco Caja Social in Columbia, and ASA in Bangladesh.
- Smaller institutions that seek to start or strengthen their savings operations: Moderna Credit Union, Tchuma, VYCCU Credit and Savings Cooperative, Cooperative Bank of Benguet.
- Institutions that cannot legally mobilize deposits from the public: Pro Mujer, village banking programs in Ecuador, the Philippines and West Africa, NABARD partners in India, and ASA in Bangladesh.
Day 2:
- Using a simple computer simulation, we will explore the chief savings-related factors that affect the financial viability of deposit-taking institutions.
- We will look at some keys to achieving volume and managing costs such as: average balances, incentive systems, interest rates, management information systems, pricing, promotion, reserve rates, scale, and staffing.
Day 3:
- We will turn our attention to risk management, savings products and promotion. We will briefly examine the chief risks posed by savings mobilization and the systems used to manage these risks: liquidity management, asset liability management, internal controls, and physical security measures.
- After considering the demand for savings services, we will look at specific product types, their value to clients, what they require managerially, and how much it costs to offer them.
- Finally, we will use cases to explore some of the key issues involved in promoting savings services. How much attention we devote to each of these topics will depend on the interests of the participants.
Day 4:
- We will explore the chief options available for delivering savings (and credit) services to rural and small depositors. We will work in groups based on our target market as well as our institutional type:
- Commercial and other institutions that seek to reach rural savers: This group will look at e-technology, mobile units, “Piggybacking” on another delivery channel and offering services through small satellite offices. Cases: PRODEM in Bolivia, Standard Bank in South Africa, Equity Bank in Kenya, Jamaica National Microcredit Limited, Pro Mujer in Bolivia, Hatton National Bank of Sri Lanka, Bank Rakyat of Indonesia, and Opportunity International Bank of Malawi.
- Institutions with a social mission that seek to serve less populated rural areas: This group will look at self-managed groups, small community-based cooperatives, and piggybacking on a non-financial service. Cases: Caisses Villageoises d’Epargnes et Credit in Mali, Bhumiraj Cooperative in Nepal, the Kupfuma Inshungu Program in Zimbabwe, the NABARD program in India, and
the Small Farmer Cooperatives in Nepal.
- Institutions of any type that seek to serve rural and poor markets: This groups will look at options for having single clients make deposits for others, piggybacking on a financial service, mobile collectors, and lockboxes. Cases: SafeSave, ASA in Bangladesh, Atwima Kwanoma Rural Bank of Ghana, VYCCU Cooperative in Nepal, the Kupfuma Inshungu Program in Zimbabwe, and the Rural Bank of Talisayan in the Philippines.
Day 5:
We will invite a panel of MFI or commercial bank managers to briefly present their institutions savings deposit mobilization services and operations. We will then ask them to answer our questions about how they have developed these services, the chief operational and market challenges that they have faced, how they have addressed these challenges, the keys to their recovering costs, what services they offer, and their markets.
Finally, we will explore in greater depth issues identified through the week that are of particular relevance to participants.
