Responsible Bundling of Microfinance Services
Financial institutions serving the poor can offer a range of savings, insurance, and even nonfinancial products in addition to their core credit products. Bundling these products into one packaged sale can be a cost-effective distribution strategy and a means to differentiate the provider’s offering by its added value to clients. However, it may also raise the risk of confusing clients who receive too much information at once and do not fully understand the secondary products they are offered or the risk that clients feel pressure (whether direct or indirect) to purchase those ancillary products.
We partnered with Crezcamos, a microfinance institution in rural Colombia, to explore the influence of a joint sales strategy on the uptake, understanding, and recall of crop insurance products. Our mixed-methods research design combined qualitative interviews with end clients, loan officers, and other Crezcamos staff with a randomized intervention testing the impact of “unbundling,” or separating the insurance offer from the loan application process on take-up and understanding of the insurance. We worked with Crezcamos to develop a standardized approach to offering the insurance product, which relied on an explanatory video and other tools and emphasized crucial information about the product while underscoring the voluntary nature of the client’s decision.