MICROFINANCE PUBLICATION ROUND-UP: MFI Client Satisfaction and Consumer Protection in Peru; Mobile Microfinance Users Predicted to Triple by 2020; Mobilizing Savings Through Agency Banking

“Voice of the Client: An analysis of client satisfaction and consumer protection across four microfinance institutions in Peru,” by J. Foelster, A. Pierantozzi, M. Pistelli; published by the Microfinance Information Exchange (MIX) in collaboration with Hivos People Unlimited; February 2016; 31 pages; available at: http://www.themix.org/sites/default/files/Voice%20of%20the%20Client%20Peru_0.pdf

The report presents the second round of results of the Voice of the Client (VoC) project, a program that uses mobile technologies to survey how satisfied people are with the products and services offered by microfinance institutions (MFIs) in Peru. The survey uses five indicators: (i) ‘’appropriate product design’’; (ii) ‘’prevention of overindebtedness’’; (iii) ‘’transparency’’; (iv) ‘’fair and respectful treatment of clients’’; and (v) ‘’mechanisms for complaint resolution.’’

The main findings are: (1) 69 percent of the respondents rated their relationship with their loan officer as good, and 28 percent rated the relationship as average; (2) among clients who did not use their loan to pay back another loan, most said they benefited from their loans; (3) Approximately 50 percent experienced issues regarding loan repayment, and these issues increased with the number of loans taken; (4) Around 27 percent of clients could not recall if they knew the interest rates they would pay before accepting their loans; (5) Roughly 60 percent were not aware of the existence of complaint mechanisms available to them.

“Mobile Financial Services: Developing Markets 2015-2020;” by L. Foye; published by Juniper Research Limited; November 2015; available for purchase at: http://www.juniperresearch.com/researchstore/commerce-money/mobile-financial-services/developing-markets-2015

Juniper Research, a UK-based firm focused on studying mobile commerce, recently published a report on mobile microfinance in developing markets, forecasting that user numbers will increase from 94 million 2015 to 283 million in 2020. The authors argue that this increase will drive a surge in financial inclusion for people in developing countries who are “under-banked.”

The report includes survey results indicating that 54 percent of the users of Safaricom’s M-Shwari, a Kenyan mobile banking service, do not have another bank account. A second example of mobile financial inclusion is Agricultural and Climate Risk Enterprise (ACRE) Africa, a Kenya-based service provider that connects farmers to crop insurance through its mobile phone platform. Furthermore, Pakistan-based Easypaisa offers free life insurance to its pre-paid mobile phone customers that maintain a monthly average balance of USD 20 or more.

“FINCA Express Tanzania: Mobilizing Savings Through Agency Banking;” by S. Graham, A. Tevosyan; published by e-MFP’s Digital Innovations for Financial Empowerment (DIFE) Action Group in collaboration with PHB Development; November 2015; 16 pages; available at: http://www.e-mfp.eu/sites/default/files/resources/2015/11/FINCA_Tanzania_Success_Story_final_web.pdf

This case study illustrates how the Foundation for International Community Assistance (FINCA) Tanzania uses agency banking to increase savings deposits, which reduces its cost of loan funds.

Paying a 2-percent annual interest rate for deposits contrasts starkly with borrowing money from institutional investors at a rate of 20 percent. This differential allows FINCA Express Tanzania to save enough to provide subsidies to agents, to keep client fees lower. The use of banking agents, such as retail or postal outlets also reduces client transaction costs such as time spent waiting in and traveling to branches. According to the report, through this system FINCA Express Tanzania reduces its funding costs by 90 percent.

By Kevin van den Brink, Research Associate

Sources and Additional Resources

[1] Juniperresearch, News, “Mobile Microfinance Liberates Many of the World’s Poor, as Users Soar From 94m to 283m by 2020”

[2] FINCA Tanzania, Report, “FINCA EXPRESS Tanzania Mobilizing Savings Through Agency Banking”

[3] MIX and Hivos, Report, “VOICE of the Client: An analysis of client satisfaction and consumer protection across four microfinance institutions in Peru”

MicroCapital Universe Profile: Safaricom

MicroCapital Universe Profile: Acre Africa

MicroCapital Universe Profile: Easypaisa

MicroCapital Universe Profile: FINCA Tanzania

MicroCapital Universe Profile: MIX

MicroCapital Universe Profile: Hivos People Unlimited

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/