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Using  S M S  Technology To  Encourage  Savings And  Loan
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Using S M S Technology To Encourage Savings And Loan

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

  • 2. 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

  • 3. 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

  • 4. 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
”

  • 5. 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

  • 6. 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

  • 7. 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

  • 8. 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

  • 9. 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

  • 10. 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

  • 11. 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

  • 12. 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)

  • 13. 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

  • 14. 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;

  • 15. 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)

  • 16. 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