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Teaching Elephants to Tango: Working with Post Banks to Realise Their Full Potential
Topic : Microfinance
The paper begins by pointing to conclusions drawn in a CGAP study – CGAP’s paper, “Financial Institutions With A “Double Bottom Line”: Implications for the Future of Microfinance” (CGAP, 2004) notes that “that there are over 750 million accounts in various classes of financial institutions that are generally aimed at markets below the level of commercial banks, and that some substantial fraction of these institutions’ clients are probably poor or near poor”. These institutions are referred to throughout this important paper as “Alternative Financial Institutions” (AFIs).
This paper follows up by setting out two questions:
- Do the AFIs really serve the poor?
- Is the quality of service offered by the AFIs adequate to make a significant contribution to developmental goals?
Building on Micorsave’s experience of several years working with the Kenya Post Savings Office Bank (KPOSB) and Tanzania Postal Bank (TPB), this paper looks at the potential of post banks for serving large numbers of low-income people and the opportunities and challenges for those who seek to realise this potential.
After profiling both banks the paper conducts its analysis through a PEST and SWOT methodology. PEST analysis is used to discuss the broader environment in which they operate, based on: Political, Economic, Social/Legal and Technological factors. SWOT analysis is used to analyse the individual institutions based on their: Strengths, Weaknesses, Opportunities and Threats.
The final part of the paper looks at the lessons learned from working with both post banks. It suggests that there are a number of key lessons for those seeking to assist them in realising their potential. Firstly, it is important to secure the buy in of key members of the management team that will act as champions for the changes being made. Thereafter it is important to develop and communicate a coherent strategy for the change process using participation with customers and staff from as widespread over the organisation as possible. The lessons also note the need to undertake successful market research to inform product development and marketing; product costing exercises that lead to pricing revisions or economies; and process mapping that leads to substantive changes in operational procedures – all of which can lead to significant bottom-line benefits. Furthermore, the paper also suggests that massive re-training and re-deployment may also be necessary at times.