ASA's Culture, Competition and Choice: Introducing Savings Services into a MicroCredit Institution

Recognizing the importance of, and growing interest in introducing savings products into microcredit institutions, MicroSave Africa and CGAP collaborated to study the dynamics of institutional change during the Association for Social Advancement's (ASA) transformation from a microcredit to an MFI.

The paper states that moving from a compulsory, locked-in savings system to a voluntary open access savings service requires significant changes in management and information systems, personnel/training, organizational culture and the mandate to mobilize savings. ASA's experience provides some very important lessons for the microfinance industry, which include:

• Open access savings systems require a different type and complexity of control built on a clear segregation of duties and efficient and transparent management information systems;
• Transition from forced to voluntary savings services also involves profound changes in the attitudes and behavior of staff;
• Locked-in savings can be a source of capital for the institution, but in the long term, such arrangements can create default and drop-out incentives;
• Moving from compulsory to voluntary savings products can also lead to a high degree of 'cannibalization' particularly in saturated markets;
• In Bangladesh, individuals within the MFI target group are already being given one and often multiple loans and the potential for mobilizing savings from this group may be limited;
• Better knowledge of clients outside their current target group must be acquired if MFIs are to design, market and deliver savings products appropriate to non target groups.