The Demand for Formal Financial Services by Savings Groups: Financial Behaviour, Needs, and Market Opportunities

Apr 17, 2017 | by

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Around 2006, the term bank linkages was coined to describe an emerging approach to facilitate the delivery of formal financial services to Savings Groups (SGs) and their members. SGs were considered by some practitioners as a platform towards formal financial inclusion, and various NGOs developed program models to broker relationships between SGs and financial service providers (FSPs), including banks, MFIs, cooperatives and mobile network operators (MNOs).

Over the last decade, there has been a proliferation of initiatives to expand access to formal financial services in underserved markets through SGs; multiple pathways to relationships between SGs and financial institutions have emerged; a more diverse product offering, and an emerging prioritization of savings products; and a rapid increase in the number of SGs engaging with formal financial institutions.

And by 2016, the State of Linkage Report – the first global mapping of SG bank linkages – identified 95 FSPs offering financial services to SGs across 27 countries. The increasing interest in SG bank linkages is explained by both demand and supply. Increasingly, groups want a safe place to store long-term savings and excess liquidity, especially when large sums accumulate towards the end of saving cycles; and new business models, partnerships and alternative delivery channels are improving the viability of delivering formal financial services to SGs.

Savings Groups provide basic financial services that meet most of the needs of most of their members. But the community-based model has some inherent limitations, and the financial service needs of SGs – and their members – evolve as groups mature.

The webinar examined the demand for formal financial services by SGs and their members, including an estimate of the market size, the financial behavior of SG members, the unmet needs for financial services by SGs and their members, the market opportunity for financial service providers, and the implications for the design of products and services for this market segment.

Speakers

Ian Robinson, Oxford Policy Management

Ian has spent most of the last 11 years in East Africa working on financial sector development generally, and financial inclusion in particular. He set up and ran, first, FSDT in Tanzania (2005–2010), and then Access to Finance Rwanda (2010–2012). Most recently he spent a year advising FSD Uganda on a wide range of managerial and technical issues (2016). He has invested in and supported the development of savings groups since 2007. Since it started in 2015 he has been co-lead on the demand-side team of the Savings at the Frontier programme, a partnership between MasterCard Foundation and Oxford Policy Management.

Amy Davis, Project Director, Catholic Relief Services

Amy is a microfinance specialist with over 25 years of international experience. She is currently the Project Director for the Expanding Financial Inclusion Africa contract managed by Catholic Relief Services (CRS) and funded by The MasterCard Foundation, operating in four countries—Burkina Faso, Senegal, Uganda and Zambia—designed to serve 500,000 SILC members over 4 years. Prior to returning to CRS, Amy was the COP managing the highly successful USAID Rwanda Integrated Improved Livelihoods Program – “Ejo Heza”, a complex integrated rural livelihoods program funded by USAID Feed the Future which reached 175,000 Rwandans with effectively phased integrated services focused on nutrition, agricultural production and microfinance. The majority of her work has been in the nonprofit sector, with a focus on East and West Africa, including 20 years in microfinance, including savings-led approaches, microfinance institution management, new product development, financial education and consumer protection. Amy has managed start-up operations for leading global microfinance networks, such as FINCA International and Catholic Relief Services and provided strategic planning, program management, technical assistance and fund-raising support for emerging microfinance institutions. As a consultant, she targeted strategic issues for microfinance institutions while providing key advice to NGO networks and multi-lateral institutions, such as The SEEP Network, Catholic Relief Services, FINCA International, Habitat for Humanity International, the UNDP and The World Bank. She also facilitated the SEEP Social Performance Working Group and Practitioner Learning Program. Amy is a founding member and former President of the Board of Directors of Women Advancing Microfinance (WAM) International. Amy has lived and worked in Senegal, El Salvador, Uganda, Haiti, Burkina Faso, Rwanda and now resides in Zambia.

Guy Stuart, Executive Director, Microfinance Opportunities & Fellow, Ash Center of Harvard University

Guy is Executive Director of Microfinance Opportunities and a Fellow at the Ash Center, Harvard University. Guy has extensive experience conducting research on the financial capabilities of low-income consumers. He has led Financial Diaries projects in 11 countries, collecting extensive data on the economic behavior of low-income people. Guy is also co-principal investigator of the Embedded Education Project at Harvard. Before becoming Executive Director of MFO, Guy was a Lecturer in Public Policy at the Harvard Kennedy School where he taught courses in management and microfinance for 13 years. He received his PhD from the University of Chicago in 1994.

Moderator

David Panetta, The SEEP Network

David Panetta is Program Director, Financial Inclusion through Savings Groups, at the SEEP Network; and leads the network’s initiatives to improve standards of practice, mobilize knowledge, create opportunities for learning, and strengthen partnerships and alliances among entities that promote or engage with Savings Groups. With 12 years’ experience in international development programming and research, David has worked with numerous donor agencies, consultancies, academic institutions and NGOs in over 25 countries, focused on access to finance, inclusive market systems, and knowledge management. He has led the development of Savings Group initiatives in 19 countries – working with the Aga Khan Foundation, DFID, Plan International, Mercy Corps, VSL Associates, World Vision and over one hundred local NGOs. David has a Master’s in Economics from McGill University and is fluent in English, French and Spanish.