Pioneering Cashless Microfinance in Bangladesh

SAJIDA Foundation’s Experience Offering Repayment and Savings Collections Using Mobile Money

SAJIDA Foundation developed a digital financial services (DFS) solution, with support from the OPTIX program, to offer cashless payment services to its clients. Clients can repay loans and make deposits at a time and place convenient for them. SAJIDA has now been handling between 20,000 and 24,000 transactions from 8,000 clients totaling Tk. 48 million (US$600,000) every month. Customers appreciate the flexibility and convenience of mobile payments. While a positive business case for the institution remains challenging but attainable, SAJIDA is embracing change retraining staff to reflect altered staff responsibilities.

An App, a Conversation and a New Account: A Novel Approach to Talking About and Tailoring Term Deposits

Reverse engineering the loan officer-client conversation provides key insights

“How much money do people typically imagine they should have when saving for emergency needs? Is that different from what they need for the children’s education? What kinds of conversations are field staff having?”

These and similar questions are quite familiar to financial institutions trying to mobilize long-term savings from low-income clients through their field staff. In this blog post, we share the story of how mobile application usage data allowed SAJIDA Foundation, an OPTIX partner from Bangladesh to gain insights into member-staff conversations without actually being there: a kind of virtual “fly on the wall”. They gained an unprecedented look into how financial planning really unfolds as they sought to tailor a term-deposit product to people’s needs.

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Riding (the) Rocket to Digitised Microfinance

A review of customers’ experiences with cashless loan and savings collections in Bangladesh

Nasima* lives in the outskirts of Dhaka and works at her father’s vegetable stall in the market. She decided to borrow from the NGO SAJIDA Foundation to expand the stall and sell more fresh produce. SAJIDA is a microfinance institution in Bangladesh. Nasima attended group meetings with about 20 other women every week to repay her loan. Although often first to arrive and have her loan instalment recorded in her passbook, she would still have to remain in the group until the end of each meeting. As her business picked up, Nasima found it increasingly difficult to go to these sessions and her attendance dropped off. Although she would usually send her instalments with her friend Rima*, who is part of the same group, she still missed a payment. Nasima regrets not being able to be present more but feels that she simply cannot stay away from her business for an hour or more every week.

SAJIDA adopts mobile money to digitise collections

Nasima is not alone in her struggle. SAJIDA’s field officers (FOs) have heard multiple complaints from group members who struggle to attend borrowers’ meetings to repay their loans. When BFA surveyed SAJIDA field officers, 87% noted that less than half the group attended meetings regularly. Many members were, instead, making their payments through another member who was able to attend. In a parallel survey with clients, or “members” as SAJIDA calls them, BFA found that only 7.7% of members looked forward to group meetings, while only 3.9% socialised at these meetings. Those who did not attend group meetings were simply too busy to step away from their place of business or from family responsibilities.

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Is Mobile Money Killing Off the Group Microfinance Model (And Would That Be Such a Bad Thing)?

Photo by UN SG’s Special Advocate for Inclusive Finance via Flickr.

In the summer of 2017, SAJIDA Foundation, an NGO and microfinance provider in Bangladesh, made a bold decision — it was going to make an entire branch of about 1,600 clients (or members, as SAJIDA calls them) cashless. Rather than attending group meetings to make microloan repayments in person, these members would show up at a mobile money (MM) agent and make their payments through a bill-pay option at a time and place convenient for them. Going cashless meant that in one fell swoop, digital financial services (DFS) would make group meetings, the locus of traditional microcredit for decades, redundant.

What follows is the story of redefining group meetings in a world of increasingly digitized microfinance, largely based on a renewed appreciation of the non-pecuniary roles these meetings perform. This is the first of a series of pieces in which BFA will track SAJIDA’s journey over the coming months as it digitizes its operations and goes cashless. 

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‘Cross-sell Done Well’: How One Finance App Found a Balance Between Digital and Human Touch

Field officers at Sajida Foundation, an NGO and microfinance provider in Bangladesh, are constantly on the go. They each have over 300 customers to manage: They are responsible for disbursing loan payments, ensuring timely repayment, and in addition, they make up to half a dozen personal visits each afternoon. These officers also act as financial advisors to many of their clients, who they get to know well over time. But the reality of their workload doesn’t allow them to spend more time coaching clients, which is an activity many enjoy and that clients benefit from.

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How SAJIDA Foundation Nearly Doubled Customer Uptake of Savings Accounts

Afsana works at a garment factory in Dhaka and has two young daughters. She recently opened an Astha term deposit account with SAJIDA Foundation for 10,000 Bangladeshi Taka ($120) after learning about its benefits from a loan officer. For Afsana, Astha has allowed her to lock away a lump sum which is difficult to do on her limited salary and pressing needs. She explains, “My children are studying. I want to invest money for their higher education. I would also like to save up to build a house in the village one day.”

Astha, a term deposit account, allows SAJIDA Foundation members to save toward a purchase or financial goal. Members can deposit small amounts for a specified length of time while earning at-market interest. Astha, meaning “reliance and dependability” in Bengali, is a product of SAJIDA Foundation, an NGO which offers a microfinance program and various health and other development initiatives throughout Bangladesh, including long-term savings options for unbanked or underbanked individuals like Afsana.

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Mobile Money Meets Microcredit: Three Key Decisions in Taking a Concept from Design to Pilot

Photo courtesy of SAJIDA Foundation

In a previous blog post, we were introduced to how SAJIDA Foundation in Bangladesh is using evidence from data analytics, business case analysis and client research to improve cross-selling as part of the OPTIX project. SAJIDA competes with numerous microfinance institutions by providing relatively similar credit and savings products to support low-income clients. In this post, we discuss three key evidence-based programmatic decisions that were necessary to take a new mobile financial service (MFS)-based microfinance initiative from the design table to pilot testing in the field starting August 2016. This initiative enables SAJIDA to disburse loans directly into bKash accounts of its members, allows members to make loan repayments and deposit savings from their mobile wallets, and is being piloted in five branches with rather varied profiles. These observations are made from the point of view of staff at Bankable Frontier Associates who have been intimately involved with SAJIDA since the inception of OPTIX.

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Mobile Money Meets Microcredit: Creating an Evidence-Based Cross-Sell Strategy

Financial institutions, including those serving low-income clients, regularly turn to cross-selling to engage clients, but do not always consider the particular needs of the clients themselves.

Some institutions hold an inherent assumption that certain products should be “good” for clients. However, because such assumptions are not always backed by hard data or client insights, these institutions may offer products that are not relevant enough, leaving the products unused by clients and expensive for institutions.

What does it take to enhance clients’ engagement and encourage them to actively use multiple products with an institution over time?

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