Two Perspectives on Savings Services

As per the author, the savings products and services from a saver's perspective highlight the following:

• Balancing convenience, risk and returns;
• Managing liquidity and duration: Funds for different purposes vary with respect to:
  • The amount needed;
  • The immediacy with which they are made available.
• Compulsory, locked-in savings: Compulsory savings are viewed as part of the cost of the credit, and often get converted into large lump-sums of money.

According to the author, the MFI's perspective is:

• Balancing convenience and returns: The MFIs like to:
  • Maintain few branches in densely populated areas to maximize the number of clients per branch;
  • Limit opening hours for effective complex accounting and internal control procedures;
  • Maintain large deposits for as long as possible, with minimum withdrawals, to minimize transaction and liquidity management costs.
• Managing the costs of small savings accounts.

The author concludes by stating that two different strategies are pursued by outside agencies (development or private sector) and by poor as they seek to design and deliver financial services:

• The agencies tend to use a strategy of permanence and growth and look to create sustainable institutions that deliver financial services to an ever-increasing number of clients;
• The poor generally use a strategy of replication and multiplication and look to create many small self-contained, often self-liquidating, schemes.