Paper

Mobilizing Savings from the Urban Poor in Pakistan: An Initial Inquiry

Linking demand-side findings to supply-side considerations of Pakistan's savings operations

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.