The Benefits and Strategies of Successful Savings Mobilization: Experiences from RBAP-MABS Participating Rural Banks (Part 1 of 2)

Even among microfinance practitioners, the term “microfinance” has often narrowly referred to “microcredit”.  Microcredit has often been the main focus on microfinance efforts to help move the low-income sector out of poverty. New evidence and case studies, however, show the impact of savings including how households use it to expand their livelihood activities, grow small businesses and how it serves to cushion the impact of emergencies.

On the supply side, the global financial crisis in 2008 exposed the risks of relying heavily on funding from investment banks and companies. These developments were among the main reasons for cultivating microdeposits cited by MABS Research and Monitoring Coordinator Ferdinand Sia during the session on microsavings mobilization during the 2011 USAID-supported Rural Bankers Association of the Philippines – Microenterprise Access to Banking Services (RBAP-MABS) Program Regional Roundtable Conference. Aside from illustrating the impact of the deposit portfolio to the overall financial strength of the banks, Mr. Sia also explained the long-term benefits of supporting deposit mobilization efforts, especially among children and for economically active clients, as the trend is for an individual’s income, and with it, savings level, to increase as they advance during their various life cycles. From a marketing perspective, a wide deposit base gives a bank an opportunity to build a lasting relationship with clients and an entry point for offering other products and services.

Use of Raffles

Mr. Sia also presented actual strategies employed by RBAP-MABS participating banks to boost deposit levels including micro-deposits. One successful strategy deployed by several rural banks is the offering of raffle promotions. Clients get a chance to win prizes (usually household appliances, vehicles, or double-your-balance incentives) either by opening a deposit account or by depositing amounts in specified increments. Deposit balances and number of accounts were compared eighteen months before the promotion, during the promotion, and six months after the promotion. Results showed that deposit accounts increased during the promotion (4%), and that the deposit account growth rate was at 11% six months after the promotion. This can partly be attributed to the Filipino’s strong cultural penchant for lotteries and games of luck and chance.   Similar strategies have been successful utilized by Bank Rakyat in Indonesia for the past two decades.

While some unscrupulous bankers have in the past taken advantage of raffle schemes to promote various risky financial ventures, Mr. Sia pointed out that it is easy for bankers to differentiate their raffle promotion in such a way as to demonstrate that it the bank is strong and that the raffle is legitimate. First he recommended that the bank secure all necessary permits to conduct the promotion from the Department of Trade and Industry (DTI) and publicly share this information with their clients.  Secondly, he recommended that the bank should prominently display the prizes in branches and lastly, that prizes are handed out in public with a representative of the DTI.

Kiddie Savers

Another strategy banks are using to promote savings services is to children depositors. For banks there are several immediate as well as long-term benefits. These include cross-selling services to the parents of child savers, better brand marketing, improved customer loyalty, and investing in the borrowers and savers of tomorrow as children learn to save and trust the bank over several years.

Promotional Events with Celebrities

A third strategy is inviting celebrities (movie stars or popular singers) to grace the launch of a savings promotion. One bank gave clients tickets to the event upon opening a deposit account and found this strategy to be very effective in attracting new depositors.

for the past two decades.