Mobilizing Savings from the Urban Poor in Pakistan: An Initial Inquiry
This report aims to support the development of market responsive, manageable and viable savings products by deposit-oriented financial institutions in Pakistan. The report states that microfinance banks (MFBs) are in the process of planning for micro-savings products and will, therefore, benefit from information about client demand. The authors use qualitative research methods to understand the savings needs, practices and preferences of low-income savers. They focus on the urban poor in two cities of Pakistan. The report presents the following findings:
- The urban poor need to save;
- The urban poor do save;
- They select savings mechanisms based on how appropriate their attributes are for the needs being addressed.
It identifies the following key considerations for products design:
- What is the target market for the financial institutions' savings product?
- What product types should financial institutions use to tap the savings of the urban poor?
- How should financial institutions market to the urban poor?
- How can the delivery model support market responsive, viable savings operations?
In conclusion, the report recommends that:
- Financial institutions looking to mobilize the small savings of the urban poor need to explore their institutional capabilities;
- Sustainable savings operations need to add value to the client and fit the organization's capabilities, so that the organization can mobilize deposits in volumes that sustain savings operations.