Why FINCA?

Insights debrief

March 2012

Contents

1 The internal FINCA staff view

2 The external view from:

clients

stakeholders, investors & donors

3 Conclusions drawn

The internal view on differentiation

Based on regional workshops and interviews

Eurasia Management

FINCA’s competitors are using price and often effective

marketing techniques to capture the market

FINCA is different from most of the competition because of

its stronger orientation towards the social mission

High turnover of personnel is of concern as it means lower

efficiency and a weaker relationship with clients.

Good customer service is essential to be able to compete

with other players in the market

FINCA needs a brand identity that helps market more

effectively, but also enables staff to understand the core

values.

There is a strong desire in the region to differentiate

around the idea of a ‘Global Network’

Africa Management

The key differentiating factors in the market are price

and service

The lack of adequate middle management is of concern

as it impacts the delivery of service and limits the

growth of FINCA

There’s a push to share resources within the region, as

countries can learn from each other – ‘using the

network’

There is increasing competition in the market and there

is a desire internally to embrace technology and

improve service to help FINCA retain clients and grow

new relationships.

Latin America Management

There is a question regarding whether FINCA continues

to serve the most in need sectors of society

Competitors are very active, visible and offering price

driven deals

High turn over of FINCA staff in the region – how do we

attract and retain the best people

Strong desire to make FINCA more personal

In summary, management identified numerous potential differentiators

Being part of a global

network and therefore

potentially more secure

FINCA people and the level

of service

FINCA’s Corporate

Governance does not

tolerate corruption or bribes

The speed to market of loan

disbursements is necessary,

but not always present

The external view

Insight from 18 client focus groups in 9 markets

Client needs are similar across markets

“I would like loans for construction and home

improvements”- Guatemala

“It would be good to have 2 sorts of housing loans, one for renovation and one

for building on new land”- Tanzania

“Borrowing many sorts of loans would be

better”- Azerbaijan

Client needs are similar across markets

Access to flexible finance that

helps them achieve their life

goals – build a business, invest in

agriculture, improve their living

conditions or investing in

education for children.

Rewards for good credit

behaviour and loyalty to FINCA.

Support that helps them make

the best of their money, for e.g.

training in business or finance

management.

Loan officers should be very patient because it’s their job

to explain and guide the people of the loan group

- Guatemala

They should understand me and my business well,

otherwise they will not know how credit-worthy I am

- Russia

Client needs are similar across markets

A fair rate of interest on the

loans they are issued.

A simplified process to apply

for loans and withdraw funds.

High quality customer service

that is respectful and supportive,

and acknowledges that every

individual has different

circumstances.

Access to different products

and services, to help improve

other areas of their lives

Business training should be available to all those who

take loans on business management to help grow

the business- Tanzania

They should have lower interest rates for those who have paid their loan on time. Those who have been with

FINCA for a long time, should get gifts. - Georgia

Your brand awareness is low

Although we didn’t include any non clients in the research, existing clients did comment on not being aware of FINCA like they were other MFIs in the market.

Your brand awareness is being driven currently by word of mouth

“I hadn’t heard of FINCA until a friend told me about them. You don’t see adverts for them, like other banks”

- Tanzania

Once clients form a relationship with FINCA, they have positive associations with the brand You offer quick and flexible loan disbursements to

people who find it hard to secure finance from anywhere else.

You are seen as a corruption free zone who keeps their promises.

The insurance provided to clients is valued and adds to FINCA’s appeal.

The group network provides support and encouragement to your clients and is a valued part of the experience.

Clients value the informal advice they receive from loan officers that helps them better manage their money and business.

FINCA staff treat clients with respect and make them feel welcome at the branches

Some views of FINCA

I have set up my business because of FINCA. I can now dream about rebuilding my

house because of them.- Zambia

I found out about FINCA through friends. I got very good

information on what type of loan would be right for me and was

very happy with the experience.- Uganda

When you enter their office, you feel that they are friendly and ready to help. You feel valued.

It’s different in other banks- Georgia

For older women, it is very difficult to find a salaried job. But with FINCA, I could set up my own business. It has given

me independence.- Guatemala

There is little differentiation between competitors

Clients do not tend to differentiate between brands and

products in the market. However, for some clients, there is a

strong word-of-mouth factor that drives perceptions of your

competitors based on:

Interest rate offered

Speed of loan application process and the documentation

required

Repayment terms, and flexibility of the loan

Staff attitude and conduct

Infrastructure, availability of an ATM network and credit

cards

Some views of your competition

It is possible to pay more ahead of the

schedule so you can reduce the interest on

the loan.- Russia

Parabank gives you a Goldcard, which makes it easier to take a loan the

next time.- Azerbaijan

They have a low interest rate, and a national brand and ATM network. They also advertise a

lot in all kinds of media.- Tanzania

They give you a loan within 3 hours if you have been a client before.

They also reduce the interest after your first loan. But the requirements to apply for the loan are too many.

- Honduras

Loan Officers shape a positive perception of FINCA

Loan Officers (LOs) are the first port of call for most of your clients.

Empathic and supportive LOs create a positive view of FINCA from the word “go”

The more active your staff are in helping clients with the application process, or providing information at various stages, the more reassured and confident your clients feel.

The LO was very warm and

friendly and knowledgeable. He guided me through the application process.

- Uganda

The LO was very direct and honest, and provided a lot of moral support through the

application process. - Honduras

You play a positive role in clients’ lives

My kids can go to school because of FINCA. They also offer a free

insurance to clients to protect your spouse and children.

- Tanzania

FINCA brings light into the country. If you have

troubles, you should go to FINCA.

- Azerbaijan

And this influences how they view the brand

FINCA helped my family prosper and helped my

business grow. - Honduras

I was like a dry and dying tree., now I’m strong as

an oak tree.- Georgia

However, there are some concerns about the experience

The current loan size is not big enough for all customer needs and the interest rate charged is seen as high

Loyalty and good credit behaviour are not rewarded

Some policies (such as insurance or bonus) are seen as inconsistent

There is not enough explanation provided if the amount sanctioned is less than applied for

Some feel that the high-turnover of FINCA staff results in lower individual attention to clients

The external view

Insight from investors, donors and stakeholders

FINCA has a good track record and reputation

You are seen as someone who

operates at the local level which

ensures sustainability

You have a proven track record

across many countries

You inspire confidence through

your transparent and

personalised operations

The people at FINCA are good and professional. They also know their

clients very well- Investor

FINCA is one of the top MFIs in the country,

and they have a proper network.

- Stakeholder

FINCA are seen as an international leader in MF

Stakeholders see you as an MFI

that operates in situations and

countries without enough

financial institutions.

You are seen as a strong partner

who is reliable and someone

your stakeholders can grow

with.

Your clients are reassured by

your global presence

Our aim is to grow financial inclusion for the world’s

poorest people. Given FINCA’s presence, they represent a

good partner for us.- Donor

They are building an international network out of what are historically

local units.- Stakeholder

There is a good balance of commercial acumen and social mission

You are seen as an organisation

with capable professionals which

assures stakeholders that you

are well managed

Your social mission is realised in

that lending has a positive

impact on clients

However, some stakeholders are

unaware of your social mission

and think that you are in the

business of small loans

Social mission is important because it’s what sets apart

an MFI. - Donor

Professional values combined with a good social mission means

greater efficiency and that social goals are met.

- Stakeholder

Stakeholders welcome the move to professionalise

Professionalising FINCA would ensure that your brand is

able to survive in an increasingly competitive market.

It is an opportunity to grow and offer new types of

products such as savings, insurance, financial education

etc

Credit only does not drive complete financial inclusion. Offering people access to savings, the opportunity

to build assets and to educate people on financial management is an even more powerful proposition

- Donor

Brand of the future should be based around the idea of increasing people’s well

being and fairness- Stakeholder

There is concern FINCA is not adapting fast enough

Improving how you use

technology is integral to being

competitive in the market

Being responsive to the different

markets by empowering staff to

make decisions is important.

Your brand is seen as being a bit

behind the times and needs a

renewed focus

Big corporations like us like to align themselves with

future focused businesses. We like to partner with people who are thought

leaders and who are shaping the future of financial inclusion.

- Donor

All the decisions have to pass through the CEO

which is time consuming. Should delegate to staff to

make it more efficient- Stakeholder

Conclusions drawn

Under today’s brand, one

unique differentiator did not

rise to the surface.

We did however, get a clear

idea about FINCA’s relative

strengths and

weaknesses, and what

attributes could naturally

form the basis of a

differentiator and what would

require a bigger shift

We did not find ONE unique differentiator

There are attributes FINCA does not currently have to differentiate around...

FINCA is not the quickest to grant loans in the market

While your loan disbursement is

relatively quick compared to

competitors, the loan application

process itself can be arduous,

especially on subsequent loan

cycles.

Clients described this as

frustrating, especially when they

feel they proved their reliability to

FINCA by repaying earlier loans

on time. The impact of having to

wait for loans can prove costly for

clients

“I could lose my business if I don’t receive my loan in

time”Client Tanzania

FINCA does not offer the cheapest rates

Clients recognize you are

not the cheapest player

in the market, nor

commercially is it

possible to be.

Therefore differentiating

around price is not a

viable option for FINCA.

“The interest rate FINCA charges is too high”

Client Zambia

“FINCA should reduce its interest

rate”Client Uganda

FINCA is not now a product innovator

FINCA has a one size fits all

approach to loans. It has one

product to cater to the

differing needs of all its

clients. There was a strong

desire for FINCA to diversify its

product portfolio and to create

different types of loans that

serve client needs better “I would like loans for

construction and home improvements”

-Guatemala

“It would be good to have 2 sorts of housing loans, one for

renovation and one for building on new land”

-Tanzania

FINCA does have attributes that can be built on to differentiate in the future…

FINCA is seen as more helpful and friendly

Clients talked about FINCA staff being friendlier than most

other MFI’s or banks. They appreciate the warm welcome

they get when they enter a branch and that loan officers

come to visit. There is however a word of caution on this.

Your ‘friendliness’ is being jeopardized by internal policies,

such as loan officer rotation. Although the policy is in place

to minimize loan officer corruption, from a client

perspective, they build a relationship with a loan officer

and then out of the blue someone new turns up without

any prior warning, damaging the relationship. “Nice and friendly people work at FINCA”

-Georgia

“When the loan officers enter the office, you feel that they are friendly and ready to help. It’s different

in other banks”-Georgia

Clients trust FINCA as they are treated with respect

FINCA doesn’t hound clients on loan repayment day, unlike

competitors. You send them a reminder via text and trust that

they will pay. Other MFI’s will ring every hour until the loan is

repaid. Clients appreciate this and see it as a sign of respect.

Creating a trusted brand positioning is a huge opportunity

area. Given the markets you operate in, where corruption and

exploitation are rife, having a financial partner you can trust

is enormously appealing to clients. “I had an account with Barclay’s, but I shut it down. Every time I went into a bank they had the pen chained to the

desk, if they won’t trust me with a pen, why should I trust them with my money?”

-Tanzania

“When you go into a branch they don’t look down at you, they treat

you with respect”-Mexico

FINCA lends responsibly

Clients as well as stakeholder appreciate the professional and

responsible attitude FINCA takes towards lending. It allows

them to feel like they are in ‘safe hands.’ and they won’t get

into financial difficulty by taking a loan they can’t afford.

Clients also take pride in being associated with a professional

financial organization- there is merit around differentiating

around being a professional financial organization “You’ll not be cheated at FINCA

as you’ll get detailed information about loan terms

and conditions, it’s not the same in other banks”

-Georgia

But there are dilemmas in deciding on a differentiated positioning

The biggest market need is for technology solutions

Clients want more technology focused innovations to enable them safer and more convenient access to finance. Depositing or transferring funds often means a long journey & poses security risks for clients.

However, FINCA is currently behind the market on technology innovations across the network. As other players enter the sector, technology will become a need to play factor and you can’t afford to get left behind.

“Branches are far away, I fear carrying money out of

the branch”-Honduras

“It’s a race in Uganda to get mobile banking

implemented, whoever wins will own the market”

Management Interview, Africa

Clients want greater flexibility and personalisation

They desire a more flexible repayment schedule, particularly those clients whose businesses do not see an immediate ROI

Clients also talked about wanting more products and services, such as access to education, housing, agricultural loans and personal savings accounts

Currently FINCA are not delivering on this and clients are becoming educated that increasingly competitors are delivering

“FINCA’s competitor is training women in candle making, soap making and basic business skills, I have a loan with them

too”-Guatemala

The role of the social mission is n0t consistent

There is a disconnect between the brand at a global level and how it is delivered on the ground.

At a global level, the mission is at the centre of communications and the brand promise, however at a local level, the brand is focused on its commercial and professional attributes.

This is demonstrated by the fact loan officers are incentivised on their financial performance, rather than their social performance.

“There is not really a social mission, FINCA has just

determined a special corner of the market.”

Stakeholder, Africa

Thank you!

Appendix

Global competitor analysis

Key Competitors to Consider for Positioning

• Access Holdings

• Equity Bank

• Opportunity International

• ProCredit Holdings

• Vision Fund

• WOCCU Member Credit Unions

Competitor Considerations

• Some occupy strongly commercial banking spaces, while others favor the non-profit poverty reduction territories

• No competitor is in all FINCA markets

• Most FINCA markets have unique competitive landscapes

While a single global differentiation strategy will work for FINCA, it will need to be implemented at the individual country level to ensure success.

Access Holdings

• Established by investors, both public and private

• Commercial banking model

• Centrally controlled network

• Professionalism, customer service and commercial returns

VISION: To foster, in a profitable way, sustained access of the poor to adequate financial services.

MISSION: to become a leading strategic investor in commercial microfinance, build-up a global network of microfinance institutions, and to be a recognised promoter of the commercialisation of the global microfinance industry.

Equity Bank

• Covering the broadest positioning territory:1. Purpose: We exist to transform the lives and livelihoods

of our people socially and economically by availing them modern, inclusive financial services that maximize their opportunities

2. Vision: To be the champion of the socio-economic prosperity of the people of Africa

3. Mission: Offer inclusive, customer focused financial services that socially and economically empower our clients and other stakeholders. 

4. Positioning: “Equity provides Inclusive Financial Services that transform livelihoods, give dignity and expand opportunities”

5. Tagline: “Your Listening, Caring Partner”6. Motto: “Growing Together in Trust”

Opportunity International

• Serving the poor in 7 FINCA countries

• Unique faith based approach

• Also utilizing third party equity and debt

• VISION: A world in which all people have the opportunity to provide for their families and build a fulfilling life. 

• MISSION: To empower people to work their way out of poverty, transforming their lives, their children’s futures and their communities.

ProCredit Holdings

• Operating in 9 FINCA markets

• Mix of private and public sector investors, although, “The private owners are the company's driving force.”

• Utilizing regulated, commercial approach

• Focusing on small and medium enterprise borrowers

• Transparency and professionalism are core values

Vision Fund

• Working in 14 FINCA countries

• Focused on poor children

• New strategy is to concentrate on Asia & Africa

• By 2014 planning to have 50% of funding from individuals, corporations and grant funders

WOCCU Member Credit Unions

• Not a network as other competitors

• Grass-roots focused institutions

• Not-for-profit, member-owned financial cooperatives 

• Occupy a unique, often legally protected segment of the marketplace