Financial Landscape Baseline: Service Innovations of Pro Mujer Peru

This paper discusses access to financial institutions and services in areas covered by Pro Mujer Peru's (PMP) service innovations. The study focuses on the Premium Product (PP), a large group loan for relatively successful microentrepreneurs and the Feria Product (FP), a small group loan targeting petty traders at traditional markets in rural areas. Findings indicate that:

• PMP's innovations are not an improvement over competitor offerings in terms of highly valued credit features;
• PP helps PMP retain successful clients and reward them with a bigger loan, and can become a niche product for microentrepreneurs interested in large group loans;
• FP's value proposition pertains to the service delivery model;
• PMPs service model demands consistent presence in rural areas, offering long term potential to educate clients;
• FP presents advantages over competitors in terms of transaction costs. 

The study offers broader lessons for the industry. It demonstrates pitfalls of a credit-led and credit dependent approach to microfinance. Finally, it shows that transaction costs can be more important than price, offering a window of opportunity for providers unable to match the price features of competitors.