Designing Innovative Products, Processes and Channels for the Promotion of Microfinance

This paper examines some of the products designed to respond to the diverse needs for financial services amongst the low income segment, as well as some of the innovative delivery processes currently under testing, and finally reviews the MicroSave approach to product design.The paper gives insights into the following successful innovations in this field:

• BURO, Tangail's "Contractual Savings Agreement";
• Equity Bank's Jijenge contractual loan product, with emergency loan;
• The revised "Grameen II" products;
• K-Rep/AAR's health care financing scheme;
• "Afya Card" products;
• FINCA Tanzania's Uvibiashara micro leasing product.

The paper also looks at some of the new generation delivery channels/ products such as:

• Equity Banks' Mobile Banking Service;
• Teba Bank's A-Card;
• Safaricom/Vodafone- Commercial Bank of Africa- Faulu Mobile Phone Banking;
• NABARD's Kisan Credit Card.

The author recommends a systematic approach to product development as advocated by MicroSave, wherein the product development process is broken down into the following steps:

• Evaluation and preparation;
• Market research;
• Concept/ prototype design;
• Pilot testing;
• Product launch and rollout.

The paper concludes that:

• Product development is an essential activity for market responsive financial institutions.
• Effectively conducted, systematic product development will result in more client-responsive products.
• This will reduce drop-outs, attract increasing numbers of new clients and contribute substantially to the long-term sustainability of the financial institution.