Market Expansion Training

September 12-13, 2011RBAP Building, Intramuros, Manila

Micro Deposits

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MICRO deposits MOBILIZATION

TRAINING

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What is Micro Deposits Mobilization?

What is Micro Deposits Mobilization?

The process of capturing, protecting, managing and using funds solicited from the public to finance the bank’s lending and other capital needs

It is the other half of financial intermediation, where deposits from savers are used by banks to make loans to borrowers

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• To take advantage of Circular 683 dated February 2010 that defines the general features of Microfinance Savings Deposit account as follows:

1. Minimum maintaining balance not exceeding One Hundred Pesos(P100.00)

2. Not subject to dormancy charges3. Only for individual microfinance clients whose

average daily savings account balance does not exceed Fifteen Thousand Pesos (P 15,000)

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• Micro deposits can be transacted at MBO (Microfinance Banking Office) thereby expanding the coverage of the banks.

• Banks with MBOs can increase their deposits to loans

ratio thereby decreasing reliance on borrowed funds with higher interest expense.

• MF clients can also avail micro-insurance if they are micro depositors.

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• To tap the huge micro depositors which accounts for 90 % of Rural Banks Savings Deposit Account

(Source: PDIC data on Rural Banks Deposits as of December 31,

2010 – Those with balances of P 15,000.00 and below)

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To encourage people to save

specifically micro finance clients.

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Why People Save & How They SaveWhy People Save & How They Save

A. Why do people save?B. How do people save?

A. Why do people save?B. How do people save?

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Why do people save?

Children’s education

Capital for new orexisting business

Retirement / wealth accumulation

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Why do people save? (cont.)

Emergency needs – illness, disability, death

Everyday needs – school expenses, food, utilities, – transportation, clothing, rent,

Acquire fixed assets – house renovation, appliances

Special occasions – fiestas, weddings

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How do people save?

• Non – monetary form

• Monetary form

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How do people save…cont. Non-Monetary Form Monetary Form

Jewelry Cash

Livestock Passbook savings

Inventory Time Deposits

Land Rosca (Paluwagan, bubo-ay)

House

Durable Items

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How do people save …cont.Problems with non-bank savings

Form of Savings Problems

Cash Potential for theft, overspending, demands from family

Jewelry Theft, loss, difficulty of selling in an emergency

Livestock Theft, death of animal, difficult to sell in an emergency

Inventory Spoilage, theft, storage

Land and House Not easy to sell

Durable Items Depreciation, theft

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How do people save…cont.

Advantages of Bank Savings:

• Withdrawability - easy access

• Security - deposits are insured; no problems of theft

• Returns - interest income; investment

• Access to other services - loans

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HOW TO EXPAND THRU MICRO DEPOSIT ACCOUNTS?

HOW TO EXPAND THRU MICRO DEPOSIT ACCOUNTS?

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HOW TO MIGRATE FROM REGULAR SAVINGS INTO MICRO DEPOSIT ACCOUNTS?

HOW TO MIGRATE FROM REGULAR SAVINGS INTO MICRO DEPOSIT ACCOUNTS?

A SELF-ASSESSMENT OF BANK’S MICRO DEPOSITS

MOBILIZATION PERFORMANCE THRU SWOT

ANALYSIS

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Micro Deposits MobilizationProduct Development Process

Steps and Procedures

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Product Development ProcessProduct Development Process Understanding Clients’ NeedsUnderstanding Clients’ Needs - - Product TestingProduct Testing

Problem Definition Research Plan

Conduct Research

Develop Concept

Costing & Pricing

Product Prototype

DesignPilot Test

Product Review

Modify

Launch or Rollout

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Micro Deposits Mobilization

Developing the Product Concept

Micro Deposits Mobilization

Developing the Product Concept

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Designing Savings Product(s): Brainstorming Guide 1. Why design micro deposits product? What market

opportunities for deposits can the bank try to serve?

2. What are the bank’s objectives for designing the micro deposit product?

3. What is the target market?

Developing Product Prototype WorkshopDeveloping Product Prototype Workshop

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Designing Savings Product(s): Brainstorming Guide

4. What new product will the bank introduce? What will be its “brand name”

5. What are the features of the new product?

6. And/or: Will an existing product be improved? What improvements will be introduced to an existing product?

Developing Product Prototype Workshop Developing Product Prototype Workshop

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Different Micro Deposits Products for Different Needs A. Micro deposits product link with face cards and

mobile phone banking

B. Micro deposits product link with micro insurance

C. Micro deposits product intended for the children of micro finance clients.

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Micro Deposits Mobilization

Product Pilot TestProduct Pilot Test

Ready to take off…..

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Action PlanAction Plan

• SMART CharacteristicsSpecificMeasurableAttainableRealisticTime bounded End of Presentation…Thank You!

• SMART CharacteristicsSpecificMeasurableAttainableRealisticTime bounded End of Presentation…Thank You!

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