Page 160 - Special Topic Session (STS) - Volume 1

STS422 Robin G. et al.
$52 to $172 million of savings into the four FSPs. Likewise, reducing the
borrower exit rate by 10 percent (from 39 percent to 29 percent) is estimated
to contribute an additional $304 million to the loan portfolio of the four FSPs,
equivalent to an increase of 24 percent in the portfolio. Improving borrower
retention will help FSPs to better manage operational expenses. Assuming
acquiring a new customer is at least five times costlier than retaining an
existing one, it is estimated that a 10 percent reduction in borrower exits could
further reduce the operational expenses of the four FSPs by around $54
million.
Key barriers to savings mobilization and factors contributing to the
prevalence of passive savings accounts include the attractiveness of informal
savings over formal savings, limited delivery channels for women and in rural
areas, limited linkage between savings accounts and payments and income
streams, and low financial literacy. Key barriers to borrower retention include
weak customer assessments and limited customer loyalty programmes. Under
the influence of increased customer data collection, big data analytics and
digital finance movements, the potential to use consumer data for product
development and policymaking has increased. Below we identify a selective
set of financial technologies (fintech) and digital finance measures for FSPs
and policymakers that can ease the transition from access to use of financial
services.

Figure 1: Exit Rates by Gender for Depositors and Borrowers measured through Survival
Analysis.

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