Poor people have shown that they want and need savings and deposit accounts, and those that have access to them can use them well. However, servicing numerous small savings accounts is costly for financial institutions. Instead of using formal services, people often keep their savings somewhere in their home, place money with friends or family for safekeeping, invest in livestock or goods, or join a savings group. Informal savings play an important role in many people’s lives, although these channels can be more risky than formal savings accounts.

Technology, through the use of mobile payments, automatic teller machines, and agent networks, is helping to reduce the cost of collecting and servicing small deposit accounts. Banks are spared the obligation to directly service these small accounts, which makes them more cost effective for both client and provider.

In conjunction with better services through new channels, more research is needed to develop and market better tailored products and services. People want to save for their children’s education, to improve their communities, to cope with death and disaster, and to make themselves less vulnerable to unpredictable shocks. Providers need to better understand why and how people save and then develop products tailored to their needs.

A woman counts her earnings. Photo by Jay Bendixen, 2012 CGAP Photo Contest