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Microfinance Research & Development Unit

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Published

RDU works to: …

RDU works to:
- Identify strategies to improve existing operations and products
- Assess feasibility for new products through market research and consumer insight
- Design and pilot new products and processes
- Explore and manage “finance-plus” initiatives and partnerships

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  • 1. Research & Development Unit of BRAC Microfinance Identifying needs, nurturing solutions February, 2014 www.brac.net 1
  • 2. Inauguration • Launched in 2010 with four objectives:  Identify strategies to improve existing operations and products  Assess feasibility for new products through market research and consumer insight  Design and pilot new products and processes  Explore and manage “finance-plus” initiatives and partnerships • In 2013, partnered with BRAC’s Social Innovation Lab in to enabled greater impact and scope of projects www.brac.net 2
  • 3. Two Aspects of this Unit • Research creative work undertaken on a systematic basis for the development of the program’s knowledge and use it to devise new applications • Development determination of techniques for the production of new products, services or processes www.brac.net 3
  • 4. Research www.brac.net 4
  • 5. Current research projects • • • • Branch resilience to disasters Financial diaries Feasibility of housing loan Development of matrices for analyzing scalability and success/impact of Microfinance pilot projects www.brac.net 5
  • 6. Performance implications of location decisions given different types of disasters  Ongoing research project initiated in October 2013 with Cambridge Judge Business School  Aims to determine how natural and man-made disasters influence location decisions and affect the performance of BRAC Microfinance field offices.  Some of the research questions include: – – – – Do organizations learn from political disasters? Do organizations learn from natural disasters? If so, for how long following a disaster do these effects persist? Do organizations learn differently from minor disasters than they do from major disasters? – What are the performance implications of location decisions given these types of disasters? www.brac.net
  • 7. Financial Diaries  Ongoing study initiated in October 2013  Research methodology that involves collecting high-frequency data of household transactions over a certain period  Purpose – serve both as a consumer research tool on microfinance borrowers and – an impact assessment tool for MF’s multiple endeavors.  The respondents consist of microfinance clients, both BRAC and non-BRAC, and non-borrowers www.brac.net
  • 8. Feasibility of housing loan  Scoping study in collaboration with the University of Notre Dame  This exercise is aimed at finding commercially viable housing financing models used by MFIs around the world that can be replicated in the context of Bangladesh.  This could have an effect for urban floating populations  Rural housing products would also be thought about  These housing models could either lead to ownership or provide affordable housing for low income households.  This study will also look at partnership models and case studies to understand how partnerships can produce a better housing finance product. www.brac.net 8
  • 9. Standardized system for analyzing success/impact of Microfinance pilot projects  Ongoing research project initiated in October 2013 with Brown University  Purpose  Develop standardized matrices to analyze success/impact and scalability of pilot projects  Could be done  By analyzing common indicators of success and failures  Constructing a literature review on performance and assessment standards and also  Analyzing how development organizations have designed and evaluated the performance of similar programs and assess best practices. www.brac.net 9
  • 10. Development www.brac.net 10
  • 11. Overview of Current Pilots, by theme  Technology focused  Monthly savings collection through mobile technology-bKash  Skills+ opportunities  Youth Employment through Skills (YES)  Product development, integration and partnership     Medical treatment loan Loan product for people with disabilities Preventive health care services for Microfinance clients Integrated project for Adolescents and Youth www.brac.net 11
  • 12. Monthly Savings Collection through Mobile Money Who: existing microfinance clients What: monthly savings deposits made by mobile money, instead of a trip to the branch office Why: convenient way of payment, increase the savings behavior, familiarization of technology Key indicators: in some branches, 25% of clients making deposits via mobile money What’s next: improving client uptake of the service through increased financial education and awareness raising www.brac.net 12
  • 13. Youth Employment through Skills (YES) Who: children of microfinance clients, ages (18-30) What: technical training, training loan facility, stipend and job placement support in several industries including leather, tailoring and garments; Why: to combat youth unemployment and poverty, and to generate oppotunity for the children of BRAC Microfinance clients. Key indicators: 121 people trained and 100 of them placed for employment till Feb 2014 What’s next: scaling up to more areas partnering with Ayesha Abed Foundation for job placement www.brac.net 13
  • 14. Medical Treatment Loan for Microfinance Clients Who: MF clients in need of health care What: To assist MF clients, in partnership with HNPP, to absorb and manage the catastrophic costs of health care Why: Poor health and health events are a significant cause of loan defaulting and create vulnerability for economic decline. In lieu of formal loan options, families often delay treatment, sell assets, and/or take loans at exorbitant rates from informal money lenders Key indicators: 59 loans have been disbursed and the total amount is USD 9,128 till Jan 2014 What’s next: Scaling to 28 Upazillas,150 branches and 200,000 households this year. www.brac.net 14
  • 15. Loan Product for Disabled People Who: People with any form of disability What: Loan product for disabled people to help find new livelihoods and to boost their confidence. Partnership project with Centre for Rehabilitation of the Paralyzed and ADD International, Bangladesh Why: In response to the common exclusion of disabled people from microfinance, especially with their needs in mind as part of social responsibility Key Indicators: in some branches, loan range is from USD 38 to USD 1,026, loan duration is 12 months What’s next: scaling up with more areas all over Bangladesh www.brac.net 15
  • 16. Linking health care services with microfinance activities Who: An important regular institutionalized provision in health care services for Microfinance clients What: Identification and screening of health problems, provide information, education and advice on health measures, refer those who are identified with the signs and symptoms of diseases to appropriate health facilities. Why: provide need-based health care services to live a socially and economically productive life and actively participate in the development activities of the country along with BRAC. Key indicators: check up performed 14,864 till Dec 2013 What’s next: scaling up with more areas all over Bangladesh www.brac.net 16
  • 17. Financial products for adolescents and youth Who: Focused on the youth population of the country What: Knowledge, skills and rights based services that includes education, health, human rights, and microfinance components. Why: Would enable the better management and utilisation of the youth population of this country. Key Indicators: More than half of the adolescent club members from two branches have taken up savings services offered to them until December 2013. What’s next: Scaling up the current savings services to more areas, and find opportunities to offer credit to the youth. www.brac.net 17
  • 18. Special projects • GIS mapping • Reviewing and improving current loan appraisal process www.brac.net 18
  • 19. Mapping through Geographic Information System (GIS) What: Mapping the over 2,000 microfinance programme’s branch offices nationwide Why: enhanced ability to assess coverage and performance, make programmatic decisions, and facilitate coordination What’s next: in partnership with the Social Innovation Lab and ICT department, expanding the scope to include all BRAC offices and other types of facilities, such as health clinics, enterprise locations, and training centers; developing a userfriendly platform for wide use across the organization www.brac.net 19
  • 20. Reviewing and improving current loan appraisal process What: Redesigned and enhanced the loan appraisal process and tools Why: To make the process more efficient, transparent and client focused. What’s next: Introduce new thinking in the appraisal methods and collect essential data more effectively. www.brac.net 20
  • 21. Looking back: some past achievements of the R&D unit • Introduction to monthly instalment collection process • Region restructuring process • Research on skills www.brac.net 21
  • 22. Introduction of monthly installment collection  Initiative began in 2010 with a view to making the microfinance operations more efficient and cost effective.  Monthly collection as opposed to weekly collection would drastically reduce the number of installments over the same period. As a result this was perceived as a way to save the agents time so they can reach more borrowers.  The borrowers in turn would also be able to use the loan for a full month before they need to begin paying back the loan.  Performance:  Currently there are around 950 branches operating on the monthly schedule. These branches mainly serve urban, semi-urban areas where most clients are salaried employees, small business owners and would be better served on a monthly schedule.  Performance: According to 2014 statistics, currently an agent working on the monthly model supports 364 borrowers on average, as opposed to 266 for agents working on a weekly schedule. www.brac.net 22
  • 23. Region restructuring process  Initiative began in 2012 for the Dabi microfinance program.  This was an effort to tackle the overlap of the operational areas between different branches. This would improve branch efficiency and help better manage the operational areas.  Methodology:  Rural branches were demarcated using Mouza, the smallest geographical unit. The principle followed dictated that one Mouza would only be served by a single branch.  Urban branches due to the density of the population and geographical proximity to each other were more difficult to demarcate using Mouza. As a result they were demarcated using Union Wards and also landmark roads that were used to define the boundaries.  As of now operations in the whole country has gone through the region restructuring process. www.brac.net 23
  • 24. Research on skills  Study conducted in 2012  To obtain evidence based understanding of the demand for vocational training and expectation of jobs amongst adolescents and youth children (aged 15-24 years) of the Microfinance borrowers  Findings  The study finds a clear demand for vocational training, particularly in computer operating, tailoring, driving and mechanic work.  Willingness of the clients to partially finance their children’s vocational training and  Also the cost of travelling of their children to travel away from home for the purpose of receiving vocational training.  Based on the findings, a successful skills project was initiated and its currently running in different districts of Bangladesh www.brac.net 24
  • 25. Thank You! For more information please visit http://microfinance.brac.net/ Have an idea for a new product or service? Let us know! www.brac.net 25