Beyond Basic Credit and Savings:
Developing New Financial Service Products for the Poor

3. Monitoring And Evaluation Of The Pilot Test
A. Monitor Financial And Organisational Consequences

The MFI should pay careful attention to both the financial and organisational results of introducing the new product, both on a short and medium term basis. Regular visits to the branches should examine the effects on the number and nature of clients, on the work-load of staff at all levels of the organisation, and on costs, liquidity, capital funds and ultimately profitability. Clearly, these will change over time and the "short and medium term" will vary according to the speed of marketing outreach and resulting client take-up of the new products, as well as the time-frame of the products on offer. It is often easier to understand the dynamics of products with a shorter maturity than those that require longer term commitments from the MFI and its clients. Nonetheless, as soon as possible, the MFI should attempt to project the long-term financial and organisational implications of the new financial service product being pilot tested.

B. Conduct market research

As part of the pilot testing process, the MFI should also conduct periodic evaluations through its staff (and where necessary or desirable consultants) to examine the clients' perceptions and use of the new product. These surveys can be conducted through both informal discussions and more formal qualitative techniques (focus group discussions etc.) in an attempt to examine the reactions of clients to the product (both positive and negative), and in particular how could the product and its delivery be improved to better meet their needs.

BURO, Tangail are starting to use "Customers' Consultative Groups" which are formed of elected kendra (comprising 20-30 members - 4-6 groups) leaders and hold regular consultations with the Branch staff, occasionally with Head Office staff in attendance. These Customers' Consultative Groups were formed to "develop an increasingly co-operative form of participatory management" and "allow the BURO, Tangail staff a better understanding of the needs, grievances, problems, opportunities and constraints (economic and social) of the members; and give the members a clear understanding of their organisation, its opportunities and constraints (financial and operational), and its policies" (BURO, Tangail, 1996).

Particular attention should be given to the risk of over-extending the clients' household economic flows from which savings deposits or loan repayments must ultimately come. Many MFIs (and indeed formal sector financial organisations) have experienced problems when the loans issued exceeded their clients' capacity to repay, and contractual savings agreements present similar risks.

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Hari Srinivas - hsrinivas@gdrc.org
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