Microsavings – a Long-Term Investment

Microsavings serve as long-term investments to generate funds for loans, obtain new clients, and increase profits. By designing an effective microdeposit product and mobilization campaign, banks are able to increase deposit levels while answering the need for a low-cost and secure savings facility for rural communities. However, this requires choosing a target market and aligning product attributes with the needs of the target market.

Examples of these savings mobilization campaigns conducted by MABS participating banks include children’s savings programs and public concerts to boost deposits. Children’s savings programs such as the Kiddie Savers Club of Cantilan Bank provide basic financial literacy and school supplies in exchange for developing a savings habit with the bank. They encourage children and their parents to save small amounts focused on addressing future educational needs as well as instilling a savings discipline in children.

A young Kiddie Savers Club client shows her savings box in this photo taken in April 2012 in Cantilan, Surigao. MABS-4 helped banks reach out to youth to teach them to save.

In addition, several MABS’ participating banks also engaged in a variety of promotional activities — from concerts to raffle promotions. In a study in 2011, MABS documented which aspects of the promotional activities led to the largest increase in the number and amount of deposits and assisted several rural banks in better defining their savings mobilization strategies. MABS was able to share with rural banks that savings mobilization provides a solid strategy for developing a rural bank’s ability not only to raise low-cost funds but also to sustain customer loyalty and improve a bank’s long-term profitability.

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One thought on “Microsavings – a Long-Term Investment

  1. Pingback: Full Report | INNOVATING MICROFINANCE IN THE PHILIPPINES

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