Using S M S Technology To Encourage Savings And Loan

Using SMS Technology to Encourage  Savings and Loan Repayments  MABS Na>onal Roundtable Conference  Innova>ons for Poverty Ac>on  May 13th, 2009 

SMS reminders to save  Mo#va#on  • Small, frequent deposits make it easy for low‐income  households to accumulate savings;  • But they oOen don’t have a habit of saving;  • In a previous study, we found that a large number of  clients in a savings program forgot that they had  savings accounts   Reminders may help them to make more  frequent deposits 

SMS reminders to save  • Par>cipa>ng Bank: First Valley Bank  • Target clients: New micro‐savers  • Savings product: Gihandom “Dream” Savings  – Clients choose their own savings goal amounts  and goal dates  – Clients get “lock boxes”  to help them make daily  deposits 

SMS reminders to save  Timing of messages  • Regular (monthly) reminders  • Late reminders: sent to clients who made no deposit  for more than 30 days  Framing of messages  • Posi>vely framed: highligh>ng the beneﬁts of saving    “Frequent deposit into the Gihandom Savings account will  make your dream come true. A reminder from 1st Valley  Bank”  • Nega>vely framed: highligh>ng the downsides of  failing to save.  “If you don't frequently deposit into the  Gihandom Savings account, your dream will not come true. A  reminder from 1st Valley Bank ” 

SMS reminders to save:   Summary sta>s>cs  Opened an  Did not open an  All  account  account  Female  67.3%  80.5%  63.3%  Age  34.079  34.170  34.052  Married  64.1%  67.5%  63.1%  Saved at formal ins#tu#ons  30.2%  40.8%  27.1%  A;ended some college  44.4%  55.7%  41.1%  Has piped water in household  57.8%  73.3%  53.2%  Income for the past 7 days  1093.30  1508.08  969.36  Does not have a cellphone  55.8%  33.1%  62.5%  Number of observa#ons  10058  2314  7744 

SMS reminders to save: Results  # Clients  Total savings  Number of  450  deposit  clients  400  350  300  No SMS  P 1721.38  268  250  Regular  200  Late  reminder  150  100  50    Regular text reminders  0  No SMS  Posi>ve  Nega>ve  PosiGve  +2.9%  344  Savings Deposit  1950  NegaGve  +12.1%**  382  1900  1850    Late text reminders  1800  Regular  PosiGve  +9.2%*  421  1750  1700  Late  1650  NegaGve  +3.1%  433  1600  No SMS  Posi>ve  Nega>ve 

SMS reminders to save: Results  # Clients  Propor#on  Numb 450  er of   400  350  clients  300  250  Regular  200  No SMS  19.7%  268  Late  150  100  reminder  50  0    Regular text reminders  No SMS  Posi>ve  Nega>ve  Propor>on  Posi>ve  +1.2%  344  22.50%  Nega>ve  +7.6%**  382  22.00%  21.50%  21.00%    Late text reminders  20.50%  Regular  20.00%  Late  Posi>ve  +7.6%*  421  19.50%  19.00%  Nega>ve  +2.1%  433  18.50%  No SMS  Posi>ve  Nega>ve 

SMS reminders to save: Results  Summary  • Nega>vely framed messages are more effec>ve  for regular reminders  • Posi>vely framed messages are more effec>ve for  reminders for dormant accounts  • The impact is greater among  – Female   – Wealthy  – Clients who have saved previously at formal financial  ins>tu>ons 

SMS Reminders for Loan Payments  Mo#va#on  • Costly for the account oﬃcers to visit clients  many >mes to collect/remind them to repay  • Clients may not be good at planning and saving  to make loan payments  • Simple reminders could help them put aside  money for loan payments 

SMS Reminders for loan payments  • Par>cipa>ng Bank:   – Rural Bank of Mabitac  – Green Bank  – First Valley Bank  • Target clients: Exis>ng borrowers  • Frequency of messages: weekly 

SMS Reminders for loan payments  Framing of messages  • Posi>ve message (“to have good standingquot;)  • nega>ve message (“to avoid penaltyquot;)  Personaliza#on of messages  • Client's name   • AO's name   Timing of the text messages  • 2 days before the weekly payment  • 1 day before the weekly payment  • Day of weekly payment 

SMS Reminders for loan payments  Results on framing  Timing  Day of  1 day  2 days  payment  before  before  Number  Percent  No SMS reminder  109  31.3%  Posi>ve, client name  15  16  19  50  14.4%  Nega>ve, client name  24  17  25  66  19.0%  Posi>ve, AO name  18  20  21  59  17.0%  Nega>ve, AO name  24  19  21  64  18.4%  Note: This analysis excludes 1) data from holy week, and 2) clients who  have 100% late payments (i.e., never repaid on >me) 

SMS Reminders for loan payments  Results on framing  Propor#on of late weekly  Number of   payments  clients  No SMS reminder  17.7%  102  Posi>vely frame  13.2%  93  Nega>vely frame  17.6%  118  Summary  • Clients who receive posi>vely framed messages have lower  propor>on of late weekly payments  • The eﬀect is not sta>s>cally signiﬁcant (i.e., non‐conclusive),  and a longer observa>on may provide us more concrete  results 

SMS Reminders for loan payments  Results on personaliza>on  Propor#on of late  Number of   weekly payments  clients  No SMS reminder  17.7%  102  Account Officer’s name  12.9%*  111  Client’s name  18.8%  100  Summary  • Clients who receive messages with AO’s name have  a  lower propor>on of late weekly payments by 4.8  percentage points;  • The Effect is sta>s>cally significant; 

SMS Reminders for loan payments  Results on Timing  Propor#on of late  Number of   weekly payments  clients  No SMS reminder  17.7%  102  2 days before  17.9%  76  1 day before  14.1%  64  Day of the payment  14.8%  71  Summary  • No effect found on messages sent 2 days before payment due;  • Clients who receive reminders 1 day before, or the day of the  payment have lower rate of late payments  • The effect is not sta>s>cally significant (a longer observa>on is  needed) 

Summary  • Sending text messages is an easy way to  – remind clients to save/make loan payments  – help clients form a habit of saving/making loan payments  • But need to put some thoughts into what messages  to send  – Nega>vely framed regular messages are more eﬀec>ve in  encouraging clients to save;  – Posi>vely framed messages seem to reduce late payments  – Personalizing the messages with AO’s name reduces late  payments  – Reminding clients about the payment too far in advance (2  days before) doesn’t seem to reduce the late payments 

Using S M S Technology To Encourage Savings And Loan

by MABSIV on May 26, 2009

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Using S M S Technology To Encourage Savings And Loan — Presentation Transcript