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John Keaten
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Savings Emerging as New Focus in Microfinance Industry

NEW YORK, January 13, 2010 – Women’s World Banking (WWB), a thirty-year old network of leading microfinance institutions and banks dedicated to the economic empowerment of women, today announced a landmark $8.5 million grant from the Bill & Melinda Gates Foundation. The grant will enable WWB to create over the next ten years innovative savings products and services for nearly seven million low-income people in Latin America, Africa and Asia.

WWB will use the foundation grant to support investments at four of its flagship network members in elements that are vital to effective savings mobilization: market research, product design, effective marketing and sales, and innovative service delivery methods. The network members are Banco ADOPEM in the Dominican Republic, WWB Colombia, Kenya Women Finance Trust, and Kashf Microfinance Bank in Pakistan.

“As the microfinance industry matures, we are seeing the beginning of a major shift from a focus on credit to an emphasis on savings,” said WWB president and CEO Mary Ellen Iskenderian. “We’ve seen an increased demand for savings products among the poor – who face limited access to safe, secure places to save – but formal savings mechanisms have yet to be developed on the scale necessary to make savings affordable and accessible. This grant from the Bill & Melinda Gates Foundation enables us to meet this critical need by developing innovative, formal saving mechanisms for the millions of low-income people served by our network members in Latin America, Africa and Asia.”

WWB research in six countries found that the poor save between 10 to 15 percent of net monthly household income for a variety of purposes, such as the education of children, health emergencies, housing and marriage. Savings occurs mostly through informal mechanisms, such as storing money at home. When formal savings vehicles exist, they are often inflexible, inconvenient, and do not allow clients to access their money whenever they need it. WWB also found that women tend to be the savers in a poor household, so it is critical to design savings products with women’s needs, aspirations and mobility in mind.

“This signature package of grants represents our first bold effort with the microfinance community to provide poor people safe places to save their money,” said Bob Christen, director of Financial Services for the Poor at the Bill & Melinda Gates Foundation. “We see it as a major step to drive change and help broaden the microfinance business model to include savings.”
A portion of the grant will support the creation of a “social soap opera” in the Dominican Republic, which will be the centerpiece of a campaign to increase financial literacy and educate the public about the importance of saving. While most poor households must save for emergencies, there is a tendency to believe that saving small amounts of money is futile. This soap opera, which would feature story lines highlighting responsible financial management, seeks to alter cultural attitudes and behaviors related to money. WWB will work in collaboration with Puntos de Encuentro, a Nicaraguan NGO with a proven track record of using a TV serial drama to effect social change. These same socio-cultural attitudes, including gender behaviors related to money, are similar across Latin America and the Caribbean. Given the popularity of soap operas across much of the Spanish-speaking world, the project has the potential to create a ripple effect, resonating across the region.

Funding will also support the collaboration between WWB and the design firm IDEO, which WWB contracted to work with Kenya Women Finance Trust, to explore customers’ perceptions of making deposits through alternative distribution channels including correspondent banking, ATMs and cell phones.

WWB’s focus on increasing access to formal savings is part of its long-term goal of improving the financial well-being and economic independence of low-income people around the world, particularly women. This grant puts WWB at the forefront of expanding global access to savings products and services that will empower millions of poor women and men with financial independence.

“We will continue to look for new and innovative ways to increase global access to savings products and services for the poor,” added Iskenderian. “Loans or credit were the model for the first thirty years of microfinance. Savings is the future.”

This grant to WWB is part of the foundation’s Financial Services for the Poor initiative, which is working with a wide range of public and private partners to harness technology and innovation to bring quality, affordable savings accounts and other financial services to the doorsteps of the poor in the developing world. The foundation believes that setting aside small sums in a safe place allows people to guard against risks, build assets, and provide opportunities for the next generation.

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Women’s World Banking (WWB)
WWB is a leading global network of 40 microfinance providers and banks, working in 28 countries to bring financial products and services to low-income entrepreneurs, especially women. The network is supported by an international team of experts based in New York who deliver expertise in product design and distribution, access to capital markets, and customer care and insight. The network serves over 20 million micro-entrepreneurs. For more information on WWB, please visit its website at www.womensworldbanking.org.