Pulling Levers Toward Sustainability. A Framework for Small-Balance Deposit Mobilization

Topic :

Yet, financial service providers (FSPs) are often reluctant to engage in mobilizing the savings of low-income populations, which disproportionately excludes women, whose incomes are often smaller and more irregular than men’s. The economics of small-balance accounts presents challenges that make it difficult for providers to make a profit from these accounts. High upfront costs, high transaction frequencies, and distance from traditional banking outlets are among the main deterrents. Despite these challenges, the sheer size of the unbanked population suggests that small-balance deposit mobilization represents an opportunity—albeit one that requires hard work and patience—for FSPs to advance financial inclusion while accessing a relatively untapped market.

THE MOTIVATION to develop this framework is to share the experience of financial services providers (FSPs) that participated in the UNCDF MicroLead Expansion Programme. This paper highlights small-balance deposit mobilization (SBDM) business models used by the MicroLead partner FSPs, many of which are in the process of finding a path to profitability.

THE PURPOSE OF THE FRAMEWORK is to help guide any provider to make a “Go/No Go” decision about engaging in SBDM and, if the provider chooses to proceed, it outlines the set of levers that can make it viable. The framework can be applied to providers considering SBDM for the first time, as well as those considering making significant up-front investments to scale or deepen their current small-balance savings offering. For those FSPs struggling with an existing SBDM initiative, it can also help determine whether to continue or exit this initiative.

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