Expanding Microsavings Market Expansion Training September 2011
WHY CULTIVATE MICRODEPOSITS?
Long Term View: Deposits increase with growth  in depositor income over time <ul><li>People’s income increase as they adva...
Marketing Perspective: Wide deposit base expands business opportunities for the bank <ul><li>Sometime in the future, a dep...
Financial Impact: For a bank whose deposits fall short of loan portfolio,  more deposits translates to more income Shortfa...
DESIGNING A PRODUCT
The target market will determine the selection of product attributes <ul><li>Product Attributes: </li></ul><ul><li>Minimum...
Choosing the market for deposit products is  necessary steps to create products Households Enterprises Children Employees ...
An effective deposit product matches the needs of target market <ul><li>Utility company needs: </li></ul><ul><li>A local w...
MARKETING MICRODEPOSITS
Savings Booster Example: Raffle Promotion to Mobilize Savings <ul><li>Every P1,000 deposit balance entitles to one raffle ...
Result 1 for Bank A: Deposit increased with the raffle promotion <ul><li>Total deposit increased by 25% during the promoti...
Result 2 for Bank A: Promotion accelerated deposit accumulation  during and after the promotion period Notes: (1) Voluntar...
Result 3 for Bank A: Promotion increased average balance over the long run <ul><li>Deposit per account increased by at lea...
Result 1 for Bank B: Deposits grew rapidly during promotion period 161 163 169 188 Notes: Deposits refer to all voluntary ...
Result 2 for Bank B: Raffle Promotion reversed the  declining number of deposits trend Notes: (1)  Deposits refer to volun...
Result 3 for Bank B: Depositors boost their account balances since promotion Notes: (1) Deposits refer to voluntary deposi...
Savings Booster Product: Savings Account for Young Depositors <ul><li>Short-term Benefits: </li></ul><ul><li>Serves as bra...
Microsavings Booster: Public concert with celebrities <ul><li>Choice of celebrities will depend on the taste of the local ...
Summary <ul><li>Microsavings serve as long term investments to generate funds for loans, obtain new clients and increase p...
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Savings Mobilization Expansion

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Savings Mobilization Expansion

  1. 1. Expanding Microsavings Market Expansion Training September 2011
  2. 2. WHY CULTIVATE MICRODEPOSITS?
  3. 3. Long Term View: Deposits increase with growth in depositor income over time <ul><li>People’s income increase as they advance in the life cycle </li></ul><ul><li>Investing in micro-depositors will present long term benefits to the bank </li></ul>
  4. 4. Marketing Perspective: Wide deposit base expands business opportunities for the bank <ul><li>Sometime in the future, a depositor will need financial services </li></ul><ul><li>A deposit account presents an opportunity to build a lasting relationship with clients </li></ul><ul><li>Trust and good relationship make it easier to offer other products and services to depositors </li></ul>
  5. 5. Financial Impact: For a bank whose deposits fall short of loan portfolio, more deposits translates to more income Shortfall funded with Bills Payable at 9% Savings Account only pays 1% Potential savings
  6. 6. DESIGNING A PRODUCT
  7. 7. The target market will determine the selection of product attributes <ul><li>Product Attributes: </li></ul><ul><li>Minimum balance </li></ul><ul><li>Interest </li></ul><ul><li>Holding period </li></ul><ul><li>Reporting platform (i.e. Passbook, ATM, statement) </li></ul><ul><li>Technology platform (e.g. Over-the-counter, check book, ATM machine, online, telephone, mobile banking) </li></ul><ul><li>Fees and waivers </li></ul><ul><li>Bundled products (e.g. Insurance) </li></ul><ul><li>Service (e.g. Pick-up for large accounts) </li></ul>
  8. 8. Choosing the market for deposit products is necessary steps to create products Households Enterprises Children Employees Utility companies Fishermen Farmers Out-of-town Workers Teachers
  9. 9. An effective deposit product matches the needs of target market <ul><li>Utility company needs: </li></ul><ul><li>A local water company needs to collect monthly bills payment from 50,000 household subscribers in a province. </li></ul><ul><li>Collectors cannot keep up with the volume of transactions. </li></ul><ul><li>Subscribers’ needs: </li></ul><ul><li>Households wants flexibility in the timing of payments prior to the bill due date. </li></ul><ul><li>Utility company is too far from households to travel every month </li></ul><ul><li>Deposit Product for Utility company: </li></ul><ul><li>Bundled deposit account and service where bank collects bills on behalf of utility company and credits the collection into deposit account </li></ul><ul><li>Deposit product features: </li></ul><ul><li>Account earning savings account rate </li></ul><ul><li>Link with GCash for payer convenience </li></ul><ul><li>Deposit holding period of 15 days to defray the cost of collection </li></ul><ul><li>Handling fee of P2 per collection </li></ul><ul><li>Monthly statement with special details of collections </li></ul><ul><li>Check book for company to debit funds from account </li></ul>
  10. 10. MARKETING MICRODEPOSITS
  11. 11. Savings Booster Example: Raffle Promotion to Mobilize Savings <ul><li>Every P1,000 deposit balance entitles to one raffle entry! </li></ul><ul><li>Prizes displayed prominently at all branches </li></ul>
  12. 12. Result 1 for Bank A: Deposit increased with the raffle promotion <ul><li>Total deposit increased by 25% during the promotion period </li></ul><ul><li>Deposits further increased in months after the promotion by at least 27% from pre-promotion period </li></ul><ul><li>Deposits accelerated during the promotion period, but growth scaled back within 6 months after the promotions before recovering in succeeding months </li></ul>Notes: (1) Voluntary deposits refer to deposits excluding contractual deposits. (2) Voluntary deposits presented here refer to average of monthly balances.
  13. 13. Result 2 for Bank A: Promotion accelerated deposit accumulation during and after the promotion period Notes: (1) Voluntary deposits refer to deposits excluding contractual deposits. (2) Growth rate is based on average of monthly year-on-year growth rates for the period. <ul><li>Deposit accounts increased by at least 6% during the promotion period </li></ul><ul><li>Post-promotion deposit accounts were higher by at least 26% from the pre-promotion period </li></ul>
  14. 14. Result 3 for Bank A: Promotion increased average balance over the long run <ul><li>Deposit per account increased by at least 11% during the promotion </li></ul><ul><li>Deposit per account declined slightly within 6 months after the promotion period but quickly surpassed the pre-promotion level within 12 and 18 months </li></ul>Notes: (1) Voluntary deposit refers to all deposits excluding contractual savings. (2) Growth rate is based on average of monthly year-on-year growth rates for the period.
  15. 15. Result 1 for Bank B: Deposits grew rapidly during promotion period 161 163 169 188 Notes: Deposits refer to all voluntary deposits only. Growth rate is based on average of monthly year-on-year growth rates for the study duration. 205 <ul><li>Deposit balance grows consistently through the promotion period and post-promotion period </li></ul><ul><li>Deposits accelerate during raffle period </li></ul>
  16. 16. Result 2 for Bank B: Raffle Promotion reversed the declining number of deposits trend Notes: (1) Deposits refer to voluntary deposits only. (2) Growth rate is based on average of monthly year-on-year growth rates for the study duration. <ul><li>Promotion impact on number of accounts are more visible during the promotion period </li></ul><ul><li>Deposit growth trend turns to positive during the promotion period. </li></ul>
  17. 17. Result 3 for Bank B: Depositors boost their account balances since promotion Notes: (1) Deposits refer to voluntary deposits only. (2) Growth rate is based on average of monthly year-on-year growth rates for the study duration. <ul><li>Average deposit increases during the promotion period and remains higher in post-promotion period compared with the pre-promotion period levels. </li></ul><ul><li>The negative growth of average deposits right after promotion supports the positive impact of a promotion. </li></ul>
  18. 18. Savings Booster Product: Savings Account for Young Depositors <ul><li>Short-term Benefits: </li></ul><ul><li>Serves as brand marketing campaign for the bank </li></ul><ul><li>Cost-effective Corporate Social Responsibility (CSR) campaigns </li></ul><ul><li>Long-term Benefits: </li></ul><ul><li>Established position as the preferred loan and fee-based clients for the bank </li></ul><ul><li>Goodwill created by the CSR program </li></ul><ul><li>Targets guardian and minor depositors </li></ul><ul><li>Establish relationship with potential clients at very young age </li></ul><ul><li>Activities and freebies make the product more meaningful to depositors </li></ul>
  19. 19. Microsavings Booster: Public concert with celebrities <ul><li>Choice of celebrities will depend on the taste of the local market </li></ul><ul><li>Performers from local market may be equally effective </li></ul><ul><li>Effective in attracting new micro-deposit accounts </li></ul><ul><li>Bank may ask for a minimum deposit to serve as entry ticket </li></ul>
  20. 20. Summary <ul><li>Microsavings serve as long term investments to generate funds for loans, obtain new clients and increase profits </li></ul><ul><li>Designing an effective microdeposit product requires choosing a target market and aligning product attributes with the needs of the target market </li></ul><ul><li>Raffle promotions, Kiddie Savers Programs, and public concerts can boost deposits substantially for the bank </li></ul>

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