Financial literacy education on credit reporting, movable financing and lending in Kyrgyzstan

Transcription

1 Financial literacy education on credit reporting, movable financing and lending in Kyrgyzstan Prepared for IFC March 17th, 2014

2 2 Agenda General population research findings Identified benefits of financial education for FIs Current tools used by FIs and their effectiveness Recommended strategy Recommended tools Products development process

3 3 General population research findings 57% borrowed at least once 50% 37% 17% 13% 6% spends all their income Save 76% of savers keep money at home are at risk of over-indebtedness identifies repayment capacity as an important factor is aware of credit bureau

4 4 Agenda General population research findings Identified benefits of financial education for FIs Current tools used by FIs and their effectiveness Recommended strategy Recommended tools Products development process

5 5 Financial education key goals Financial education gives people tools to skillfully manage their money, so that with the use of financial services they can: achieve their realistically set financial goals address the risks

6 6 Financial education for clients of financial institutions Saving/repay ment capacity Financial strategy Identifying own needs: financial goals Capacities Needs Knowledge Risks Understanding product terms and conditions Rights and obligations Addressing the risks

7 7 Benefits for financial institution Portfolio quality Cross sales Depo sits Reputation Repayment capacity Financial goals Seasonality calendar Product terms and conditions Smart borrowing rules Safety cushion

8 8 Agenda General population research findings Identified benefits of financial education for FIs Current tools used by FIs and their effectiveness Recommended strategy Recommended tools Products development process

9 9 Current tools used by FIs in Kyrgyzstan Consultations Trainings Educational leaflets Videos & TV spots Posters

10 10 Consultations for microfinance clients Delivered by field staff Embedded into core business process Time: from 10 to 30 min Oral communication preferred Enables cross sales Increases field staff skills Limited resources needed + Training of all field staff is required Incentives or targets needed Limited content product centered Not every Loan Officer is born to do it -

11 11 Trainings for microfinance clients and/or population (especially rural areas) Delivered by staff or external trainers (variety of models) Actual skills development Additional motivations to participate Oral communication preffered + From 1h to 1 day Certified trainers needed Quality of delivery often weak Difficult to attract audience Limited outreach Resource consuming -

12 12 Posters Content: smart borrowing rules, financial services use Posted in branches, markets and public places Visual communication preferred and appealing Good in attitudes changing Limited resources required Limited content No skills or knowledge development + -

13 13 Educatonal leaflets Content: all types of messages Distributed in and outside branches Hold a lot of content Most effective post-training or post-counseling Low cost Not attractive design (current) People do not like to read + -

14 14 Videos Attitude changing messages Broadcasted in branches or in TV Cartoon or soap opera type Broad outreach Visual communication preferred and appealing Good in attitudes changing Costly Limited content + -

15 15 Clients preferences Micro entrepreneurs less willing to devote time Rural residents more willing to participate in trainings Oral and visual communication preferred over written

16 16 Cultural aspects to be taken into account Supporting factors Dynamism Intuitivism Self-preservation Concreteness CONTENT Aspiration to ensure material status Matching the actual resources with the family budget Time importance Preventing factors Perception of time Contemplativeness Tribalism A non-obligation VOCABULARY Simple Local languages

17 17 Agenda General population research findings Identified benefits of financial education for FIs Current tools used by FIs and their effectiveness Recommended strategy Recommended tools Products development process

18 18 Recommended approach Target group Tools Message s Delivery channels

19 19 Strategy based on 3 pillars Campaign Training Counseling Awareness & attitudes Skills in money mgt Fin services understanding Clients Population Population (including clients) Clients Tv, posters, radio, marketing gadgets 4-6 h interactive workshop Product delivery process

20 20 Comparison Up to now Consultation: product and transparency focused Training: product marketing Ad hoc posters and videos What s new Counseling: clients needs & risks centrered, cross selling Training: clients skills development for better quality Posters and videos with series of educational topics Educational text messages

21 21 Agenda General population research findings Identified benefits of financial education for FIs Current tools used by FIs and their effectiveness Recommended strategy Recommended tools Products development process

22 22 Recommended tools Counseling to be delivered by FIs Training to be delivered by NGOs, in cooperation with FIs, or directly by FIs Posters, videos, marketing gadgets by FIs to clients Videos, posters to general population by financial sector (i.e. associations)

23 23 Counseling for clients HOW? During all points of contact: marketing and clients outreach, loan application, disbursement, payment. WHAT? Financial planning Safety cushion management Saving risk diversification Smart borrowing rules Cash flow analysis Investments needed: Training of field staff in counseling techniques Procedures update and monitoring system Benefits: Increased knowledge, basic skills and positive attitudes among clients Improved relationship with clients Cross sales (better understanding of clients needs by field staff)

24 24 Counseling for clients - example Process Outreach to clients Counseling areas Financial planning Cross sales Loan application Repayment capacity assessment Cross sales Disbursement Smart borrowing rules Safety cushion Cross sales Repayments

25 25 Training for general population HOW? 0,5 day interactive workshop In cooperation with NGO Using local authorities as infrastructure WHAT? setting financial goals family budget building, including seasonality safety cushion management saving risk diversification Investments needed: Costs of organization: trainer fee, tea break, materials Benefits: Increased financial literacy skills among population Increased base of future clients Responsible institution reputation

26 26 Videos by FIs HOW? Series of 4-5 videos about average families 3-5 min movie broadcasted in periodic thematic series WHAT? household budget management smart borrowing rules savings Investments needed: Costs of movie making and equipment to broadcast it Benefits: Increase of positive attitudes among clients Responsible institution reputation

27 27 Posters by FIs HOW? Series of 4-5 topics (one per poster) Changed every few weeks with prevailing pictures and graphics (limited text) WHAT? Smart borrowing rules Savings Addressing overindebtedness Credit bureau Investments needed: Costs of design, printing and distribution among branches Benefits: Increase of positive attitudes among clients Responsible institution reputation

28 28 Text messages by FIs HOW? Series of 12 learning messages (or adapted to loan cycle), sent once a month with a reminder about the payment 3-4 cycles WHAT? Smart borrowing rules Savings Credit bureau Investments needed: None Benefits: Strengthening of positive attitudes among clients Responsible institution reputation

29 29 Marketing gadgets by FIs HOW? Notebooks, calendars, miniatures of posters or pictures from videos, with key messages Distributed by field staff WHAT? Credit terms and conditions Deposit terms and conditions Smart borrowing rules Saving strategies Addressing overindebtedness Credit bureau guarantors and their responsibilities Investments needed: Design, production and distribution costs Benefits: Strengthening of positive attitudes among clients Reputation Marketing and brand strengthening

30 30 Videos by financial sector HOW? 4-6 month campaign in TV 3-5 min videos of average family WHAT? household budget management smart borrowing rules savings Investments needed: Costs of movie making and airing Benefits: Increase of positive attitudes among clients Reputation of the sector

31 31 Agenda General population research findings Identified benefits of financial education for FIs Current tools used by FIs and their effectiveness Recommended strategy Recommended tools Products development process

32 32 Training and counseling module development Curriculum developemnt Training of Trainers 2 days Training of Counselors 1 day Counseling practice and evaluation 2 days Adaptation of materials

33 Microfinance Centre Koszykowa 60/62 m Warsaw, Poland Tel.: Fax: Thank you!