MFIs’ Financial Products and Services: An Overview of SP Report Data

Posted by: Taea Calcut

As mentioned in an earlier post, MFIs exist first and foremost to provide financial products and services to populations underserved or excluded by formal financial institutions. So, what have MFIs identified as the most important products and services to meet their clients’ needs?

Graph 1: Percentage of MFIs Offering Financial Products/Services (n = 166)

 

Using data from a sample of 166 MFIs that submitted social performance reports to MIX, we find that 100% of MFIs offer credit products to their clients, yet less than half currently offer additional products or services (Graph 1).  Of those MFIs that do offer additional products and services, insurance emerges as the most popular product type.

Table 1: Credit Product Breakdown (n = 166)

 

Looking at the credit product breakdown illustrated in Table 1, MFIs are most likely to provide microenterprise loans (97%). This data suggests that microcredit is primarily seen as a means of increasing income, creating employment, and supporting enterprises development. The next most popular credit products are loans for housing (51%) and small and medium enterprises (51%).

Table 2: Insurance Product Breakdown (n = 80)

With regards to insurance, illustrated in Table 2, life and credit life insurance represent the most popular offerings among 80 reporting MFIs, at 63% and 59% respectively.  Smaller percentages of MFIs also provide coverage for expenses related to health, accidents, livestock and agriculture, and homes.

Table 3: Service Breakdown (n = 58)

In addition to products, MFIs may also offer a range of services. The most common of these are money transfer services, offered by 64% of 58 reporting MFIs as shown in Table 3.  Voluntary savings facilitation by MFIs legally restricted from mobilizing funds themselves emerges as the next most popular service, provided by just under half (45%) of MFIs. 10% of MFIs also reported offering a varied range of “Other” services, including microleasing, direct deposit, video conferencing with family members based abroad, and cell phone card sales.

Table 4: Savings Product Breakdown (n = 45)

For the 45 MFIs who report offering a savings product (Table 4), 87% provide simple savings accounts where clients can deposit money and earn interest on the account over time.  Others provide more sophisticated products, such as fixed term deposits, special purpose savings, and checking accounts.

How do MFIs identify client needs and prioritize financial product and service offerings? Future posts will explore this question, and we also welcome readers’ input in the comments below. 

Comments

[Sheirin]

Your post suggests that MFIs are actively making a value judgment on the needs of their clients, but you make no mention of the wide range of regulatory constraints under which MFIs are operating. These constraints have great influence in determining the product offering of an MFI given its legal structure. Perhaps a better way to examine MFI priorities would be to look at product offering relative to regulatory environment or legal structure, or the predominance of "to provide a wider variety of X product and Y service" as a reason to transform?