Action research is an important part of the GAFIS program.  On the demand side, we will test key hypotheses around savings activity.  On the supply side, we seek in-depth understanding of how large banks can profitably deliver useful savings products to the poor.

Research Agenda

Core hypotheses to be tested by GAFIS action research include:

Demand-side

• Proactive marketing around product relevance and benefits is necessary to increase usage and reduce churn/dormancy of savings products.
• The most successful inducements to savings are:
  • clearly explaining product functionality & relevance,
  • consistent and opportunistic reminders,
  • social marketing, and
  • creative (but sustainable) incentives to save.
• ‘Nudging’ works, and works best if attached to an existing cash flow.

Supply-side

• The business case for micro-savings accounts can be made & sustained through:
  • economies of scale,
  • branchless account opening and sustainable ongoing service delivery,
  • products that are relevant & useful to client households (leading to increased usage and reduced churn).
• Strong institutional commitment is necessary to sustain any momentum of savings products focused on poor segments.
• To the extent agents are a part of the business model/case, incentives and quality control at the agent level are critical to creating and maintaining tripartite (bank, customer, agent) active participation and, in turn, critical to overall model success.

In order to test these (and other) hypotheses, GAFIS will use a mix of research methods, intertwined with the actual product development, design, marketing, rollout and evaluation.

Demand-side research includes in-depth Financial Diaries

This approach gathers and analyzes a detailed view of the “portfolios of poor” and financial management strategies (using formal & informal financial devices):

• Track all household (HH) cash flows
• for 24 months
• 2 visits per month per HH (= 50 visits per HH)
• 200 (+/-) sample size
• = 10,000 interviews

The demand side research will include other, more conventional quantitative and qualitative research.

 

On the supply side, among other things, GAFIS is keen to really assess financial performance of savings products.  We do not yet have a crystallized template or formula for conducting such analyses, and indeed are not yet convinced such a template/formula approach is most appropriate.  We seek to develop and apply innovative methods to assess such financial performance, and we welcome guidance, suggestions or contributions in this area.  Key areas to dig into include:

• Costs
  • Account opening costs;
  • Account maintenance costs;
  • Transaction costs;
  • Channel costs;
  • Incentives (management, staff, agents);
  • Marketing costs;
  • Opportunity costs;
  • Regulatory compliance costs;
  • Interest payments and other ‘rewards’ to customers;
  • Identifying fixed vs. variable costs.
• Benefits
  • Float margin;
  • Fees;
  • Cross-sell opportunities;
  • Other.