RBAP-MABS facilitates Savings Mobilization Workshop at Katipunan Bank

By Meliza H. Agabin, RBAP-MABS Deputy Chief of Party

Katipunan BankMobilizing savings, the other half of financial intermediation, can sometimes be something that a bank may not consciously and actively market. This happens especially when large credit lines from government banks or wholesale facilities become more attractive due to the ease of access and the perceived lower administrative costs. Without being mindful of it, a bank can easily fall into a trap of dependency on external funding sources and lead to a concentration of risk due to a small number of large credit lines. In order to avoid falling deeper into this trap, Katipunan Bank requested the United States Agency for International Development-supported Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) program to facilitate a workshop with senior and middle level management of the bank.

Several factors prompted Katipunan Bank to take analyze their deposit mobilization efforts. Katipunan Bank President, Mrs. Bienvenida T. Alano, shared the bank’s experience with having to scale down lending when a major creditor suddenly cut the bank’s credit line during the 2008 financial crisis. The consequent negative impact on the bank’s overall growth and performance was a hard lesson learned. According to Mrs. Alano she also began to realize that:

  1. deposits are a more stable source of funds for lending;
  2. savings accounts are actually cheaper than borrowed funds; and
  3. deposit services are even more important to lower income clients than loans or credit

Led by the bank president, the bank officers went through a number of exercises on October 19, 2011 at Katipunan Bank’s head office in Dipolog. The workshop aimed to gather the officers’ reflections on the importance of savings for the bank and their target market. They also analyzed the bank’s savings performance over the past few years, reviewed the bank’s savings products and services, analyzed competitors products, and compared how their products fit within the overall marketplace. MABS shared tools that the bank can use to further analyze market demand, supply, pricing, and planning.

At the end of the workshop, Katipunan Bank initiated plans to reach more savings accounts, especially micro deposits, raise the share of savings deposits as a percentage of total bank deposits, enhance existing products or design new ones, and undertake more active promotional campaigns to inform the public about the bank’s deposit products and services.

Katipunan Bank, an RBAP-MABS participating bank, has been expanding geographically to increase its outreach.The bank presently has 13 branches and 20 micro bank offices and appears well positioned to reach more small depositors. With the bank’s leadership and support from the other officers, the bank is committed to achieving higher overall deposit levels in 2012.