Catalogue
WWB Products & Services Catalogue Women’s World Banking is a global network of leading microfinance institutions and banks from over 20 countries. The network members are diverse in size and structure but united in the firm belief that global poverty can be best addressed by increasing the economic access, participation and power of low-income women. The WWB network has changed significantly in the last few years with the inclusion of microfinance banks and other financial institutions; fully one-third of the members have formalized and changed their legal structure. The network has also expanded with 16 new MFIs and banks as members since 2007. At the same time, WWB has refined the services that its global team in New York, assisted by local consultants, provides to network members. All our offerings are now focused on assisting our network members to acquire, retain and better serve their women clients. We have also learned that for a network member to be the financial services provider of choice for women, it must also be the employer of choice for women. Thus a new focus for WWB going forward is to help network members acquire, retain and better serve their women staff and leaders as well. This catalogue provides a detailed overview of the functional expertise that WWB offers. Equally important, it details the prerequisites that must be in place before a new product or service can be introduced and traces the complementary roles of the MFI and the WWB team in the product introduction process. WWB is committed to bringing innovation and best practices to network members, who in turn, shape these insights to meet their own market circumstances, client needs and legal and regulatory environments.
WWB’s Key Offerings This diagram of a house serves to explain how Women’s World Banking is putting into practice its goal to be the pre-eminent voice for women in microfinance. We look at all our service and product offerings through the impact they will have on women; that single-minded, unique focus forms the overarching “roof” of our work. The foundation of our house is the ongoing relationship that we cultivate over time with each network member. All WWB network members have Relationship Managers assigned to them who serve as trusted advisors to the
institution’s management and board. Relationship Managers are strong microfinance generalists with the ability to analyze operations and organizations, financial ratios, policy contexts, and competitive environments in their effort to determine network members’ needs. They are the primary liaison between WWB and the network member, and best positioned to determine, with the MFI, which product offering makes the most sense at a given time. The other foundation on which our house rests is the ability to leverage our global convening power, communications channels and reputation to promote knowledge sharing and best practices. WWB has always been a platform for learning and exchange by hosting forums, publishing research, conducting workshops and organizing peer exchanges. Network members highly value the opportunity to learn from their peers, and WWB exchanges and peer learning events consistently receive positive feedback. As our network grows and diversifies, the opportunities for peer learning increase as a broader array of institutions are able to share their respective core competencies and diverse approaches to serving low-income clients. In between the roof and the foundation are the pillars of the house. WWB is the only network dedicated to conducting gender research to understand the financial behavior of poor women clients, and to promoting gender diversity among the staff and leadership of its members. Market research enables us to design products, such as savings and insurance, that better meet the needs of women entrepreneurs and their households. At the same time, we assist our network members to grow by accessing commercial capital and managing it in a fiscally responsible way. Each offering in the three pillars is described separately in this catalogue. Since 2003, WWB has had a cost sharing policy in effect with network members, primarily to demonstrate member commitment to the network and, increasingly, to address our funders’ concerns about network members’ willingness and ability to contribute to the sustainability of the network. This year, in response to the growing variety of ownership structures and levels of profitability amongst the network members, WWB is instituting a tiered annual membership fee. With the payment of this nominal fee, the network members affirm their desire and commitment to become members of the network. In turn, WWB commits to provide the following: • participation in peer learning activities; • participation in the WWB Global Meeting, held biennially; and • full access to knowledge products and best practices through WWB publications, a network member-only website, and global conferences and forums. Thus while the roof and the foundation of the house cover and support all network members, the particular product offerings that each network member chooses will depend on the state of its operations, and readiness and commitment to undertake a new engagement. Network members will be charged a market-based fee for financial products such as the loan guarantee. Network members choosing technical assistance will also be asked to share costs, which will be computed on the actual face-to-face time with the network member. The WWB cost-sharing structure can be found on the WWB network member website, in the core documents shared with each network member’s management, or through the WWB Relationship Managers.
Using This catalogue In the following folders are descriptions of our products and services offerings, including: • prerequisites that are absolutely essential before a product can be introduced; • commitment required, so that MFIs can prepare for the engagement; • expected outcomes—including those linked to WWB performance standards (indicated in bold); and • a clear outline of the key phases and steps for each engagement, highlighting the division of labor between MFIs and network members (referred to as NM throughout the catalogue).
Market Research WWB Approach A thorough understanding of clients’ needs, motivations and desires is key to successful product design. Therefore, market research is an integral part of all WWB’s product development work. Market research allows MFIs to refine client segmentation, modify existing products and service delivery mechanisms, design new products and services, and develop or refine marketing and promotion strategies. WWB helps MFIs: • Conduct quantitative and qualitative market research using state-of-the-art consumer market research techniques • Integrate Participatory Rapid Appraisal methods and gender analysis to ensure the needs and challenges of low-income clients are understood • Design a research plan based on interviews with MFI staff and industry research • Build in-house market research capacity • Present research findings and recommendations to management
Phases & Key Steps Planning and Designing Research
Effort: 2 weeks (WWB: 80% & NM: 20%)
WWB and the NM define the engagement plan, the sample population and the research tools •
The NM and WWB define an engagement plan including research objectives and/or hypotheses
•
WWB and the NM design research plan including sample definition and research instruments
•
WWB provides the NM with the Terms of Reference and Recruitment Guidelines, which are the basis of the logistic coordination and recruiting phase
Logistic Coordination and Recruiting
Effort: 2 weeks (WWB: 20% & NM: 80%)
The NM organizes the logistics of the research and recruits participants •
The NM arranges the logistics for a visit according to Terms of Reference
•
The NM recruits participants according to Recruiting Guidelines and reports on the process to WWB
Implementation
Effort: 3 weeks (WWB: 70% & NM: 30%)
WWB conducts and analyzes research •
Results Assessment
According to the engagement plan WWB conducts qualitative and/or quantitative customer research
Effort: 2 weeks (WWB: 70% & NM: 30%)
WWB presents results, preliminary implications and actions •
WWB presents findings with preliminary implications and suggested actions
•
WWB and the NM work together to develop an action plan
•
The NM integrates results into the product or service
WWB Network Performance Standards
Indicator
Best Practice Target
Weighting
Minimum Hurdle for Partial Credit
Number of Clients
25,000
10%
> 10,000
Percent of Women Clients
75%
15%
> 55%
Average Loan Balance as a Percent of Gross National Income per Capita
100%
15%
< 150%
Portfolio at Risk > 30 days
< 5%
15%
---
Operating Expense Ratio
17%
10%
< 30%
Return on Assets
2%
15%
>0
Client Annual Growth Rate
25%
5%
>0
Percent of Women Staff
30% OR 5% relative increment
5%
---
Percent of Senior Women Managers
30% OR 5% relative increment
5%
---
Percent of Women Board Members
30% OR 10% relative increment
5%
---
Total
100%
PRODUCT DEVELOPMENT Womenâ&#x20AC;&#x2122;s World Banking is committed to helping our network members design and introduce a broad array of microfinance products to better serve the evolving needs of the worldâ&#x20AC;&#x2122;s poor, especially women. Combining strategic thinking with hands-on implementation, we develop products and processes to help our network members improve their product portfolio mix and better serve customers.
Individual Lending An appraisal-based individual lending methodology that assesses household cash flows enables an MFI to considerably improve the risk diversification of its portfolio and to develop more tailored loan products that reflect the evolving business needs of borrowers.
WWB EXPERTISE
Outcomes
WWB has more than eight years of experience introducing individual lending, initially to organizations founded on a group lending model and more recently to a broader range of financial institutions. Individual lending has enabled MFIs to grow and create a platform upon which housing, rural finance and other products can be built. Individual lending exemplifies the power of a global network taking best practices from one region and adapting them successfully to other regions.
►► Improve portfolio quality
WWB Approach WWB’s individual lending methodology is based on an evaluation of a client’s capacity and willingness to pay. This is determined by conducting an integrated cash flow analysis of the applicant’s business and household, complemented with an analysis of how the loan will be invested, and a character assessment of the applicant. Guarantors and collateral may be required depending on the loan amount. Once the analysis is complete, the credit officer presents a recommendation of the loan size and terms to credit committees at the branch which helps to ensure additional oversight and operational efficiency.
Criteria for SUccess Prerequisites • Proven lending capacity and demonstrated strong financial performance • Significant market demand for individual loans among current and potential clients
Commitment • A clear vision and commitment from the network member over a one- to two-year period—at both the board and management level • A cross-functional team led by a project manager
►► Increase number of clients ►► Enable larger loans to support business growth
Real Results WWB has successfully introduced individual lending to one-third of its network, including MFIs in in Bosnia and Herzegovina, Morocco, Jordan, Pakistan and India. In 2009, WWB is also applying the methodology with MFIs in Bangladesh and China. Cumulatively, these introductions have reached more 150,000 new borrowers with a portfolio outstanding of more than US$ 140 million.
Thought Leadership WWB How-To Guide: Introducing Individual Lending
Phases and Key Steps Planning
Effort: 1 month (WWB: 70% & NM: 30%) Determine whether the NM is ready to implement individual lending and create a detailed plan to ensure success of future phases •
WWB assesses the industry and competitive environment of the NM
•
WWB estimates the market potential and structure for individual lending
•
WWB determines organizational readiness
•
WWB and the NM create an action plan for the product, including team required
Product & Process Design
Effort: 10 weeks (WWB: 70% & NM: 30%)
Design and test the new product and establish necessary process for NM •
WWB identifies the client segments and selects the target population for the individual lending segment
•
WWB conducts and analyzes the market research
•
WWB and the NM design the product and processes
•
WWB helps the NM build institutional capacity to conduct a pilot
Pilot Test
Effort: 2 months (WWB: 30% & NM: 70%) Pilot continues 6 months Test products and services in selected NM branches and monitor results •
WWB prepares the NM for the pilot and trains relevant staff
•
The NM deploys pilot
•
WWB and the NM analyze the performance of the pilot
•
The NM adjusts the pilot based on results
Implementation
Effort: 3 weeks (WWB: 30% & NM: 70%)
Based on lessons from the pilot, the NM begins to roll-out the product across the organization •
WWB and the NM develop a rollout and implementation plan
•
WWB builds the NM’s institutional capacity for the rollout
•
The NM begins the rollout
Monitoring & Evaluation
Effort: Ongoing (WWB: 10% & NM: 90%)
The NM monitors the success of the launch and adjusts the product design and implementation strategy accordingly •
The NM monitors success against objectives and product impact
•
WWB and the NM identify necessary changes and develop a plan to implement these changes
Rural Lending
Introducing rural lending allows MFIs to diversify their portfolios and address the unique needs of low-income rural populations who have traditionally lacked access to financial services.
WWB EXPERTISE
Outcomes
Rural lenders face special challenges related to agricultural risks—seasonal incomes, variable yields, weather and market risks. MFIs must adopt lending practices that mitigate and share these risks among others in the sector. WWB has worked across three continents to help MFIs introduce rural finance and adjust their lending methodology to accommodate varying cash flows. WWB, uniquely, applies a gender focus to the implementation to ensure access for women.
►► Increase number of clients
WWB Approach WWB works with MFIs to: • Analyze the market to minimize risk, including: identify areas with high agricultural potential, conduct risk assessment of a sample of rural households including farm and off-farm income generating activities to define target segments • Design a product that matches demand and complements existing informal financing mechanisms • Increase risk exposure gradually—begin by financing low-risk farmers (those with short-term crops and a steady income) in low-risk regions (irrigated land), then progress to financing perennial and seasonal crops • Create distribution channels such as mobile banking to reduce costs, and alliances with key value chain players to reduce price volatility
Criteria for SUccess Prerequisites • Successful implementation of, or a willingness to introduce, an appraisalbased lending methodology • Agricultural regions that are in close proximity to branches • Strong potential for crop diversification within the MFI’s potential target market • Internal capacity (both time and capabilities)
Commitment • Board and management commitment for a one- to two-year period—at both the board and management level • Willingness to hire a rural lending specialist
►► Expand into rural areas
Real Results WWB is currently working on rolling out rural finance in China, Uganda, Colombia and the Dominican Republic. In the past three years we have helped 6 MFIs in 3 countries implement this methodology.
Thought Leadership WWB Focus Note: Rural Finance for Small Farmers: An Integrated Approach
Phases and Key Steps Planning
Effort: 1 month (WWB: 70% & NM: 30%) Determine whether the NM is ready to implement rural lending and create a detailed plan to ensure the success of future phases •
WWB assesses the industry and competitive environment in rural areas, including banks and government programs
•
WWB estimates agricultural market potential and structure
•
WWB determines organizational readiness, including rural presence and distribution channels
•
WWB and the NM create an action plan for the rural lending product, including the team required
Product & Process Design
Effort: 3 months (WWB: 70% & NM: 30%)
Design and test the new product and establish the necessary process •
WWB identifies agricultural potential of the different regions the NM is targeting
•
WWB identifies the farmers’ profiles and selects the target segments
•
WWB conducts and analyzes market research
•
WWB and the NM design the rural product and processes, paying particular attention to grace periods and seasonal cash flows
•
WWB helps NM build institutional capacity to conduct a pilot
Pilot Test
Effort: 1 month (WWB: 30% & NM: 70%) Pilot continues 6 months Test products and services in selected NM branches and monitor results •
WWB prepares the NM for the pilot and trains relevant staff
•
WWB helps the NM design a distribution channel strategy for rural areas
•
The NM launches the pilot
•
WWB and the NM analyze the performance of the pilot
•
The NM adjusts the pilot based on these results
Implementation
Effort: 1 month (WWB: 30% & NM: 70%)
Based on lessons from pilot, the NM begins to roll out the product across the organization •
WWB and the NM develop a rollout and implementation plan
•
WWB builds the NM’s institutional capacity for the rollout
•
The NM begins a rollout; for each new region the NM evaluates the agricultural potential of region and farmers’ segment selection
Monitoring & Evaluation
Effort: Ongoing (WWB: 10% & NM: 90%)
The NM monitor the success of the launch and adjusts product design and implementation strategy accordingly •
The NM monitors success against objectives and product impact
•
WWB and the NM identify necessary changes and develop a plan to implement these changes
Housing By adding housing finance to their product offerings, MFIs are able to have an immediate and significant impact on their clients’ quality of life.
WWB EXPERTISE
Outcomes
Drawing from a pool of experts, WWB provides technical assistance in designing a full-service housing loan program. This offer is tailored to benefit women in particular, who more often work from home and are able to realize extra income from renting newly available space.
►► Increase number of clients
WWB Approach
Real Results
WWB takes a holistic approach, integrating architects as well as linking microenterpreneurs with certified builders to ensure housing quality and encourage MFIs to monitor use of loans. WWB works with MFIs to:
WWB is currently implementing housing finance in Colombia, the Dominican Republic, Bosnia and Jordan. Since 2000, WWB has helped 7 network members introduce housing finance with an emphasis on home improvement loans.
• Diversify the client base to include salaried employees • Modify existing appraisal-based lending to include a construction budget • Form strategic alliances with construction material suppliers and non-profit institutions specializing in home construction and renovation • Tailor product features and loan terms to address home ownership and land title rights for women
Criteria for SUccess Prerequisites • Successful implementation of, or willingness to introduce, an appraisal-based lending methodology • A credit department capable of monitoring and enforcing a standardized lending process • Senior management open to creating a housing technical assistance unit • Availability of longer-term funding to match longer-term loans • A due diligence assessment of internal capacity (both time and capabilities)
Commitment • Board and management commitment for a one- to two-year period—at both the board and management level • A cross-functional team led by a housing project manager accountable for implementation and for integrating staff with specialist skills
►► Improve quality of clients’ housing
Thought Leadership WWB’s Housing Focus Note to be published in 2009
Phases and Key Steps Planning
Effort: 1 month (WWB: 70% & NM: 30%) Determine whether the NM is ready to implement housing loans and create a detailed plan to ensure success of future phases •
WWB assesses the industry and competitive housing environment of the NM, including mortgage banks, government programs and other sources of long term financing
•
WWB estimates the market potential for housing loans, including owners and renters
•
WWB determines organizational readiness
•
WWB and the NM create an action plan for the product, including team required
Product & Process Design
Effort: 3 months (WWB: 70% & NM: 30%)
Design and test the new product and establish necessary process for the NM •
WWB segments potential clients by income and home ownership status
•
WWB conducts the market research
•
WWB and the NM design the product and processes, including a technical assistance unit
•
WWB helps the NM build institutional capacity to conduct a pilot
Pilot Test
Effort: 2 weeks (WWB: 30% & NM: 70%) Pilot continues 6 months Test products and services in selected NM branches and monitor results •
WWB designs the structure of the technical assistance unit
•
WWB and the NM create a price sample price list of construction costs
•
WWB prepares the NM for the pilot and trains relevant staff
•
The NM launches the pilot
•
WWB and the NM analyze pilot performance
•
The NM adjusts the pilot based on these results
Implementation
Effort: 1 month (WWB: 30% & NM: 70%)
Based on lessons from the pilot, the NM begins to roll out the product across the organization •
WWB and the NM develop a rollout and implementation plan
•
WWB builds the NM’s institutional capacity for the rollout
•
The NM begins the rollout, for each new region the NM evaluates housing potential and analyzes types and costs of construction
Monitoring & Evaluation
Effort: Ongoing (WWB: 10% & NM: 90%)
The NM monitors the success of the launch and adjusts product design and implementation strategy accordingly •
The NM monitors success against objectives and product impact
•
WWB and the NM identify necessary changes and develop a plan to implement these changes
Savings Savings is a critical tool in poverty reduction for low-income households. Deposit mobilization reduces MFI’s dependence on external funding and allows them to attract new clients.
WWB EXPERTISE
Outcomes
Introducing voluntary deposits into credit-led MFIs requires fundamental shifts in organizational culture, the development of new core competencies, increased cost management and expansion into new market segments to reach sustainability. WWB has introduced savings since 2003 and offers a full-service technical assistance package that assists MFIs in adding sustainable savings products to their mix of offerings.
►► Increase percent of women clients
WWB Approach WWB works with MFIs who, under local regulation, are permitted to mobilize deposits, to: • • • • •
Conduct in-depth market research to determine savings needs Map the stages in the savings introduction process Develop a savings product mix and marketing strategy Adjust MIS and processes and strengthen treasury and risk management Utilize brand strategies that build trust with current and potential clients
Criteria for SUccess Prerequisites • • • • •
Transparent ownership structure and effective governance The institution must be legally licensed to mobilize savings from the public Stable macroeconomic and political conditions Strong core competencies within the existing credit lending methodology Positive client perceptions of, and trust in, the institution
Commitment • A clear vision and commitment from the network member over a one to two-year period—at the board and management level • A cross-functional, network member project team that is led by a project manager • Willingness to provide staff and/or hire a savings product manager and make the often costly capital investments required
►► Increase number of clients ►► Decrease reliance on external funding
Real Results Women’s World Banking has worked with MFIs in the Dominican Republic, Pakistan, Mongolia and Benin to introduce or fine-tune existing savings offerings.
Thought Leadership WWB How-to Guide: Introducing Voluntary Savings
Phases and Key Steps Planning
Effort: 3 weeks (WWB: 80% & NM: 20%) Determine whether the NM is ready to implement voluntary savings and create a detailed plan to ensure success of future phases •
WWB assesses the macroeconomic and competitive environment of the NM
•
WWB determines organizational readiness
•
WWB creates an action plan, including team required
Product & Process Design
Effort: 5 weeks (WWB: 60% & NM: 40%)
Design and test the new product and establish necessary process for the NM •
WWB conducts and analyzes the market research
•
WWB and the NM design a product and processes
•
WWB helps the NM build institutional capacity to conduct a pilot
•
WWB and the NM design pilot implementation
Pilot Test
Effort: 6-8 weeks (WWB: 50% & NM: 50%) Pilot continues 9-12 months Test products and services in selected NM branches and monitor results •
WWB prepares the NM for the pilot and trains relevant staff
•
The NM deploys pilot
•
WWB and the NM analyze pilot performance
•
The NM adjusts the pilot based on results
Roll Out Implementation
Effort: 3 weeks (WWB: 30% & NM: 70%)
Based on lessons from pilot, the NM begins to roll out the product across the organization •
WWB and the NM identify key lessons from the pilot
•
WWB and the NM develop a rollout and implementation plan
•
WWB builds the NM’s institutional capacity for rollout
•
WWB helps the NM develop marketing plan
•
The NM begins rollout
Monitoring & Evaluation
Effort: Ongoing (WWB: 20% & NM: 80%)
The NM monitors the success of the launch and adjusts product design and implementation strategy accordingly •
The NM monitors success against objectives and product impact
•
WWB and the NM identify changes required and develop a plan to implement these changes
Health Insurance Insurance is an effective mechanism to help low-income households cope with the often catastrophic costs of health care.
WWB EXPERTISE
Outcomes
Less than 3 percent of the world’s poor have access to health insurance; as caregivers, women bear the brunt of the costs associated with medical emergencies. Recognizing the need to fill this gap, WWB is forming strategic partnerships to design and implement microinsurance products with MFIs.
Number of clients with health insurance coverage
WWB Approach
Demand and supply research studies have been completed in Colombia and Jordan, and the global caregiver program pilot will be launched in 2009
WWB’s approach to health microinsurance is implemented on two levels. The first level focuses on technical assistance designed to help network members introduce or improve health microinsurance. The second level is implemented through a partnership with global insurance provider Zurich Financial Services Group, in which WWB offers a caregiver health insurance program to help women clients and their families better cope with financial burdens often associated with a medical emergency—lost wages, childcare, transportation, and a portion of actual health care costs. Together, these two levels result in a comprehensive approach to health microinsurance, taking advantage of the benefits of the economies of scale of a global network where possible.
Criteria for SUccess Prerequisites • Positive client perceptions of institution and its products • Willingness of executive and senior management to invest in the capacity building and hiring of marketing and operations staff, including an insurance product manager, to effectively roll out and market microinsurance products
Commitment • A clear vision and commitment from the network member over a one to two-year period—at the board and management level • A cross-functional project team led by a project manager • Capacity to effectively manage a relationship with a commercial insurer
Real Results
Thought Leadership Upcoming white paper on microinsurance and gender authored by WWB in collaboration with the Microinsurance Center, International Labour Organization, Zurich Financial Services Group and the University of Bath
Phases and Key Steps Planning
Effort: 4 weeks (WWB: 80% & NM: 20%) Determine whether the NM is ready to implement a health insurance program and create a detailed plan to ensure success of future phases •
WWB assesses the policy, legal and business environment for microinsurance
•
WWB determines organizational readiness
•
WWB creates an action plan, including team required
Product & Process Design
Effort: 8 weeks (WWB: 60% & NM: 40%)
Design and test the new product and establish necessary process for the NM •
WWB conducts and analyzes demand research to determine access to, and satisfaction with, existing health care coverage
•
WWB conducts supply side research to understand the product offering of public and private health insurance providers
•
WWB assists the NM in identifying an insurance partner and formalizes the partnership
•
WWB and the NM design the product and processes
•
WWB and the NM design a client education program on microinsurance
•
WWB and the NM conduct product prototype testing
•
WWB helps the NM build institutional capacity to conduct pilot
•
WWB and the NM design pilot implementation
Pilot Test
Effort: 6-8 weeks (WWB: 30% & NM: 70%) Pilot continues 9-12 months Test products and services in selected NM branches and monitor results •
WWB prepares the NM for the pilot and trains relevant staff
•
WWB helps the NM design a distribution channel strategy for rural areas
•
The NM deploys the pilot
•
WWB and the NM analyze the performance of the pilot
•
The NM adjusts the pilot based on these results
Roll Out Implementation
Effort: 1 month (WWB: 30% & NM: 70%)
Based on lessons from pilot, the NM begins to roll out the product across the organization •
WWB and NM identify key lessons from pilot
•
WWB and the NM develop a rollout and implementation plan
•
WWB builds the NM’s institutional capacity for the rollout
•
WWB helps NM develop marketing plan
•
The NM begins a rollout
Monitoring & Evaluation
Effort: Ongoing (WWB: 20% & NM: 80%)
The NM monitors the success of the launch and adjusts product design and implementation strategy accordingly •
The NM monitors success against objectives and product impact
•
WWB and the NM identify necessary changes and develop a plan to implement these changes
MARKETING With MFIs under pressure to grow sustainably over the long-term amid an increasingly competitive environment, creating a customer-centric organization can set an institution apart. Womenâ&#x20AC;&#x2122;s World Banking works with network members to fully integrate marketing techniques into strategy and product designâ&#x20AC;&#x201D;from headquarters to the branches.
Marketing Strategy A winning marketing strategy is fundamental for MFIs to create sustainable long-term growth in an increasingly competitive environment.
WWB EXPERTISE
Outcomes
WWB established a marketing practice in 2004 with the explicit purpose of helping MFIs refine their market position, design more customer-centric products and services, increase their customer acquisition and retention rates, and develop differentiated brand positions that educate and empower low-income clients. WWB has worked with MFIs to design innovative marketing strategies that are instrumental in establishing them as market leaders.
►► Increase number of clients
WWB Approach
►► Increase product “takeup”
A marketing strategy is most effective when it is an integral part of an MFI’s business strategy and is centered around client satisfaction as the primary goal. WWB works with MFIs to:
Real Results
• Conduct qualitative and quantitative customer and industry research to understand their needs and the variables that affect customer acquisition and retention and competitive position • Design a marketing strategy to achieve a set of measureable and quantifiable objectives based on the organization’s goals • Build a monitoring plan into the marketing strategy to continually assess the impact of specific marketing tactics, and to inform the development of new products and/or enhancements to existing products
Criteria for SUccess Prerequisites • Willingness to use the marketing strategy as the primary tool for defining all marketing initiatives and decisions—product development, campaigns, product launches, brand development, and others—at all levels throughout the organization, from head office to the branches
Commitment • A clear vision and commitment from the network member over a one- to two-year period—at the board and management level [add marketing team bullet] • Active participation of the MFI’s marketing and leadership team in the project and sufficient allocation of their time to validate the project approach and content, participate in project checkpoints and provide timely feedback
►► Increase percent of women clients ►► Increase client growth rate
WWB has worked with an MFI in Jordan to develop a marketing strategy and build internal marketing capacity. We have also supported MFIs in Bosnia, Brazil, the Dominican Republic, Jordan and Pakistan in developing their marketing strategies.
Thought Leadership WWB Publication: Marketing for Microfinance
Phases and Key Steps Marketing Analysis
Effort: 4 weeks (WWB: 70% & NM: 30%)
WWB analyzes the NM with special emphasis on its marketing team, activities, competitive environment and customers •
WWB conducts industry research to understand the NM’s position in the market
•
WWB conducts qualitative and/or quantitative customer research to deeply understand the NM’s clients across the different segments
•
WWB analysizes the NM’s current marketing strategies, tactics and history
Marketing Strategy Development
Effort: 2 weeks (WWB: 50% & NM: 50%)
WWB and the NM design the marketing strategy •
WWB and the NM develop the marketing plan, including setting objectives, strategies and selecting the appropriate tactics
Monitoring and Evaluation
Effort: Ongoing (WWB: 30% & NM: 70%)
WWB and the NM decide on the appropriate measures to evaluate the success of the marketing strategy, continuously listening to customers, creating a more customer-centric organization •
WWB recommends tools to elicit customer feedback, monitor results and adapt to continuously improve the marketing strategy
•
The NM monitors success against objectives, especially acquisition and retention rates
•
WWB and the NM identify the changes required and develop a plan to implement these changes
Branding By building a brand, an MFI can both increase profitability and empower women, turning them into loyal customers.
WWB EXPERTISE
Outcomes
Since the inception of WWB’s marketing practice in 2004, research studies have proven that branding can be a powerful social marketing tool for building brand equity and inspiring and encouraging women entrepreneurs in their efforts to expand their businesses and improve the well-being of their families.
►► Increase number of clients
WWB Approach WWB works with MFIs to: • Conduct a benchmarking study to identify potential opportunities to distinguish an MFI’s brand position from the competition • Conduct qualitative and quantitative research with clients (current and potential) and MFI staff (board, management, field staff) to develop a brand position • Select a creative agency to build the brand position • Test the brand messaging and visual identity with clients and staff • Prepare for the launch and effective communication of the brand • Implement a monitoring and evaluation framework to continuously collect feedback on clients’ needs and adapt products, processes, and messages based on those needs
Criteria for SUccess Prerequisites • Management commitment to regularly evaluate the effectiveness of the new brand • Capacity in the marketing department to track results of the brand launch at monthly, quarterly, and yearly intervals and to implement modifications • Commitment to hire an external creative agency to help develop the brand
Commitment • Clear vision and commitment from the network member over a one to twoyear period—at the board and management level • Active participation of the network member’s marketing and leadership team in the project
►► Increase percent of women clients ►► Increase client growth rate ►► Increase differentiation in the market ►► Increase brand value
Real Results WWB worked with and MFI in Bosnia-Herzegovina to launch a new brand position to improve client retention by celebrating women clients. Their return on investment improved dramatically over a six-month period: loan renewals averaged 97% and 90% for solidarity and individual loan clients, respectively; new loan clients averaged 25% and 15% higher for solidarity and individual loan clients, respectively.
Thought Leadership WWB Publication: Marketing for Microfinance
Phases and Key Steps Local Agency Selection
Effort: 2 weeks (WWB: 50% & NM: 50%)
WWB provides the NM assistance in selecting the appropriate local agency that will conduct the branding redesign •
WWB helps the NM solicit proposals from local branding agencies
•
WWB helps the NM select an agency based on the following criteria:
•
»»
Quality of work
»»
Shared values
»»
Quality of staff
»»
Familiarity with the target market
»»
Experience in advertising products and services
WWB collaborates in communicating with the agency throughout the process
Market Research
Effort: 4 weeks (WWB: 70% & NM: 30%)
Through market research WWB helps the NM analyze its current brand position both internally and externally •
WWB conducts an evaluation of the competitive market
•
WWB conducts research with clients to assess the current brand, addressing their concerns and motivations in choosing a financial institutions
•
WWB reviews the brand with staff and key stakeholders to understand current status, and the vision for the brand
Brand Development Creative Process and Testing
Effort: 6 weeks (WWB: 20%, NM: 20% & Agency: 60%)
The agency develops a brand, tests options with consumers and refines these options to select a final branding concept •
Based on the research, the agency goes through a creative process to develop different options for: »»
brand framework
»»
main communication messages
»»
visual identity
•
WWB conducts qualitative research to test the options and refine the messages to better reach clients and staff
•
WWB and the NM select a final brand concept
Internal and External Brand Launch
Effort: 6 weeks (WWB: 20%, NM: 60% & Agency: 20%)
The NM launches the new brand internally and externally •
WWB helps the NM prepare its organization to adapt to the new brand, creating the internal communications and training materials for staff
•
With the help of the agency and WWB, the NM designs a marketing campaign to launch the brand externally, making sure that current and potential clients know and understand the new brand
Monitoring and Evaluation
Effort: Ongoing (WWB: 30% & NM: 70%)
The NM reviews the impact of the new brand launch, both internally and externally •
The NM monitors success against objectives, particularly acquisition and retention rates
•
WWB helps the NM to monitor the impact of the new brand through additional qualitative research of customers and staff
•
WWB and the NM identify necessary changes and develop a plan to implement these changes
Customer Delight Customer delight programs allow MFIs to increase customer loyalty and retention and establish a unique brand position with products and services that reward customers and exceed their expectations.
WWB EXPERTISE
Outcomes
Customer Delight is a marketing strategy that drives innovation by placing the client at the center of everything that an organization does. WWB uses a “Voice of the Client” methodology to continually assess clients’ needs, and define a plan for how an institution can more effectively respond to those needs. Customer delight is most effective in those institutions which have already achieved high levels of customer satisfaction.
►► Increase client retention
WWB Approach WWB works with MFIs to: • Conduct qualitative research regularly with clients to understand their needs; data from this research is used to create the “clients’ lens”—how clients view what they want from an organization—and develop product attributes • Involve senior management to help define the “lens” for the organization— how the organization’s viewpoint is aligned with that of clients’ • Design a quantitative survey instrument based on product and service attributes to statistically measure satisfaction levels for each attribute; use regression analysis to identify drivers of client satisfaction and delight • Develop an action plan to address client requests • Design and conduct a plan for monitoring client satisfaction regularly
Criteria for SUccess Prerequisites • High client satisfaction levels for current clients • Willingness and capacity of internal marketing team to conduct research on a periodic basis and to develop and implement customer delight programs
Commitment • Clear vision and commitment from the network member over a one- to twoyear period—at the board and management level • Active participation of the MFI’s marketing and leadership team • Willingness of the institution to dedicate time and resources to customer service training and monitoring at all levels of the organization • A marketing manager and support team
►► Increase percent of women clients retained
Real Results WWB worked with an institution in Colombia to launch a customer delight program, which customers confirmed as the kind of preferential treatment they appreciate most.
Thought Leadership WWB Publication: Marketing for Microfinance
Phases and Key Steps Customer Understanding
Effort: 5 weeks (WWB: 80% & NM: 20%)
WWB and the NM listen to clients, getting deep insights into how to improve the customer experience •
WWB conducts qualitative and/or quantitative customer research to deeply understand clients’ satisfaction levels with the NM and potential areas of improvement
Develop Customer Delight Program
Effort: 3 weeks (WWB: 60% & NM: 40%)
WWB works with the NM to develop a customer delight program to address the areas of improvement revealed in the consumer research •
WWB and the NM design a program to improve client satisfaction
Monitor the Results
Effort: Ongoing (WWB: 30% & NM: 70%)
Evaluate the results and continuously improve the program •
WWB recommends tools to monitor results and to adapt and continuously improve the program
•
The NM monitors success against objectives and impact, especially retention rates
•
WWB and the NM identify required changes and develop a plan to implement these changes
INSTITUTIONAL FINANCE The rapid growth of the microfinance sector has been fueled by the increased participation of a wide variety of financial services providers and investors. Understanding how to manage these relationships can be challenging for MFIs in this new, more commercialized funding environment. Womenâ&#x20AC;&#x2122;s World Banking provides a comprehensive suite of advisory and brokering services to support network members in developing diversified sources of commercial funds, identifying appropriate investment partners, and negotiating with investors to achieve optimal terms.
Loan Guarantee Program Accessing local currency loans at competitive rates is an important way for MFIs to increase their commercial funding and minimize exposure to foreign exchange risk.
WWB EXPERTISE
Outcomes
WWB has been providing loan guarantees since 1980. WWB’s loan guarantee program enables MFIs to obtain lines of credit in local currency by sharing credit risk with local lenders. WWB’s reputation in the industry allows for collaboration with other financial institutions, helping MFIs to access otherwise unattainable funding.
►► Increase number of clients
WWB Approach MFIs access local bank loans through a guarantee wherein WWB issues a standby letter of credit, backed by a U.S. investment-grade bank, to a commercial bank in the MFI’s local market. The local bank, in turn, provides at least twice the amount of the guarantee to the MFI in the form of a local currency loan, allowing the MFI to diversify funding sources, build credit records in their local market and bridge the gap between perceived and actual credit risk. In some cases, WWB will partner with other guarantee providers to expand the size of the loan guarantee.
Criteria for SUccess Prerequisites • Network member must be in good standing and meet three absolute performance criteria beyond the Best Practice Standards: »» Debt to equity ratio should not exceed 7 times »» Write-offs must be less than 2 percent (calculated as annual write-offs divided by average gross loan portfolio) »» Operational self-sufficiency must be greater than or equal to 100 percent • Bank partner must be willing to leverage the WWB guarantee at least 2 times
Commitment • Demonstrate a clear commitment to paying prevailing commercial market rates • Focus on strong growth and outreach • Negotiate an improvement of local terms for every renewal • Commit to meeting loan and guarantee covenants and reporting requirements
►► Improve return on assets and return on equity (where loan guarantee encourages lender to reduce interest rates) ►► Improve access to new funds ►► Decrease foreign currency exposure ►► Decrease average cost of commercial funding and improve loan terms over time
Real Results WWB has provided loan guarantees to six network members since 1995, totaling access to US$10.6 million in local funds.
Thought Leadership ►► Women’s World Banking Capital Markets Guide (section VII) ►► WWB Focus Note: Foreign Exchange Risk Management in Microfinance
Phases and Key Steps Planning
Effort: 2 weeks (WWB: 80% & NM: 20%) Determine NM funding needs, establish eligibility of NM, and ensure local market regulations allow for loan guarantees •
WWB analyzes the NM’s capital needs
•
The NM confirms its eligibility by completing the Affiliate Performance Update and providing its most up-to-date financials
•
WWB researches market regulations and evaluates local market conditions to ensure feasibility of the guarantee and the existence of local bank partners
•
WWB and NM agree on the goals and expectations of a potential guarantee
•
If the guarantee is a renewal, the NM must be able to improve the local bank’s lending terms
Marketing & Structuring
Effort: 3-4 weeks (WWB: 60% & NM: 40%)
Determine appropriate loan guarantee structure •
WWB conducts a field visit to better understand the NM’s needs and to research local processes
•
WWB and the NM identify local banks and review the requirements for approval
•
WWB and the NM reach out to local banks with summary marketing materials
•
WWB and the NM agree on local bank partners
•
WWB and the NM evaluate current funding structure and cost of funds to determine appropriate structure
•
WWB prepares preliminary term sheet
•
WWB presents the guarantee proposal to its Board for approval
Negotiation
Effort: 3 weeks (WWB: 60% & NM: 40%)
Prepare and negotiate all legal documentation •
The NM negotiates the loan terms with a local bank
•
The NM prepares the required legal documentation »»
Standby Letter of Credit
»»
Local bank loan agreement
»»
Loan guarantee agreement
»»
Promissory note
Disbursement
Effort: 1-3 days (WWB: 50% & NM: 50%)
Sign documents and the local loan disbursement •
Issuance of Standby Letter of Credit to the local bank
•
Approval of all loan documents and disbursement of funds
Monitoring
Effort: Term of Loan Guarantee (WWB: 10% & NM: 90%)
Provide required monitoring reports •
The NM provides agreed-upon reports on a monthly basis to WWB and lender
•
The NM completes Affiliate Performance Update on a semi-annual basis
Brokering & Advisory Brokering and advisory services connect MFIs to a wide range of funding sources, including local lenders, international investors and public markets.
WWB EXPERTISE
Outcomes
WWB is recognized as an industry leader in its ability to bridge the gap between the capital markets and MFIs. With broad industry contacts established over its 30-year history, WWB can connect MFIs with the right kind of investors for their specific needs and bring its expertise to bear in negotiating and structuring transactions for the mutual benefit of MFIs and their investors.
►► Increase client growth rate
WWB Approach
►► Expand access to capital
WWB introduces MFIs to new lenders and investors, providing access to a wider investor base and decreasing exposure to limited funding sources. In order to fully access the public markets, WWB works with MFIs to develop financing options such as structured vehicles, securitizations or public offerings. After funding alternatives are identified, WWB assists in the due diligence process and in loan negotiations, reviewing term sheets and agreements to ensure that MFIs are getting the most favorable terms. WWB’s annual Capital Markets Conference, a leading industry event, provides MFIs an opportunity to meet investors and other industry specialists, learn about current trends in the market, and showcase their institutions through the MFI competition.
►► Improve terms of loans and investments
Criteria for SUccess Prerequisites • Willingness to share capital needs and engage WWB’s global team in negotiations with lenders and investors • CFO and/or finance manager committed to exploring alternate financing options and willing to dedicate time to facilitate due diligence requests
Commitment • Investment of time and resources in accessing new sources of funds, exploring innovative financing structures and entering public capital markets
►► Improve return on assets and return on equity (by lowering cost of funds)
Real Results ►► Since 2000, WWB has successfully assisted one-third of its network to secure approximately US$ 90 million in debt financing from a combination of capital sources. ►► WWB hosts the Microfinance and the Capital Markets Conference annually, which includes an Investor Forum specifically designed to connect investors with MFI managers.
Thought Leadership ►► WWB’s Capital Markets Guide for MFIs ►► WWB Focus Note: Strategies for Financial Integration: Access to Commercial Debt
Phases and Key Steps Brokering Services Identify Needs
Advisory Services Identify Needs
Effort: 5 days (WWB: 90% & NM: 10%)
Effort: 5 days (WWB: 90% & NM: 10%)
Determine funding gaps
The NM engages WWB to assist in addressing financing challenge
•
WWB reviews capital needs survey and interviews NM management
Explore Options
•
WWB and the NM discuss challenges and agree on process to address
•
Prepare Terms of Reference, if necessary
Explore Options
Effort: 3-4 weeks (WWB: 50% & NM: 50%)
Effort: 20 days (WWB: 80% & NM: 20%)
Identify funding options and partners
Research and analyze international options locally
•
WWB and the NM determine type of funds needed
•
WWB researches local market conditions, available funding sources, and regulatory requirements
•
WWB and the NM identify potential funders
•
WWB connects the NM with funders
•
WWB helps the NM prepare marketing and due diligence materials
Negotiations
•
WWB evaluates the NM’s current situation, including capital structure, cost of funds, financials, competitive landscape, local debt and equity markets, regulatory requirements, and others as appropriate
•
WWB prepares a preliminary set of possible solutions including description, advantages and challenges, process, and preliminary costs
•
WWB conducts a field visit, if necessary
Determine Course of Action
Effort: 6-8 weeks (WWB: 60% & NM: 40%)
Effort: 20-40 days (WWB: 60% & NM: 40%)
Negotiate terms and legal documentation with partners
Select solution to pursue
•
WWB and the NM negotiate term sheet with funder
•
Determine an appropriate solution and secure board approval if necessary
•
WWB and the NM review required legal documentation
•
Identify appropriate partners, if applicable
•
Create a timeline for implementation
Closing/Disbursements
Implementation
Effort: 3-5 days (WWB: 10% & NM: 90%)
Effort: 5 days (WWB: 10% & NM: 90%)
Finalize closing and disburse capital
Employ agreed-upon plan and monitor results
•
The NM finalizes and signs the legal agreement
•
Funder disburses money
Monitoring Provide agreed-upon periodic reports •
The NM provides timely reports to funder
•
WWB and the NM strengthen relationship with funder through constant communication
•
The NM continuously monitors the third party and provides feedback
Capital Structure Strategy Optimizing capital structure allows MFIs to use funds efficiently, minimizing costs and decreasing exposure to limited funding sources.
WWB EXPERTISE
Outcomes
WWB is uniquely positioned to provide expertise on the costs and benefits of various sources of funds for MFIs, because of our understanding of the local context in which MFIs operate and our experience working with a variety of commercial financial institutions. WWB works with MFIs to create financing strategies that achieve the right proportion of savings, debt, and equity to minimize cost of funds while maintaining appropriate capital and liquidity levels.
►► Minimize cost of funds
WWB Approach WWB works with MFIs to develop and implement an equity and liability management plan that will allow the institution to achieve the optimal capital structure mix for its local context and strategic plans. Using existing financial projections, WWB will determine the achievable mix of equity and liabilities which will result in the lowest cost of funds. We also conduct scenario analysis with MFIs to ensure their proposed capital structure is flexible and adaptive to changing operating environments.
Criteria for SUccess Prerequisites • A senior management team, particularly a CFO, committed to optimizing capital structure • Provision of detailed data, including: financial projections; an estimation of the cost of various forms of debt, equity, savings and other capital structure products; prudential regulations governing use of savings, borrowings and equity; a business plan, a current debt schedule and all existing loan documentation • Senior management team prepared to create an implementation plan
Commitment • Senior management must have the time and resources to supply all relevant data and engage in the analysis and implementation of the plan
►► Maximize net income ►► Achieve funding flexibility to optimize liquidity management, capital adequacy and exposure to funding sources
Thought Leadership ►► WWB Occasional Paper: Strategies for Financial Integration: Access to Commercial Debt ►► WWB How-To Guide: Introducing Voluntary Savings
Phases and Key Steps Research
Effort: 10 days (WWB: 50% & NM: 50%) Understand the industry, country and market situation in which the NM is operating and the various equity and liability products available to the MFI •
WWB conducts country and market research
•
The NM provides updated 3-year financial projections
•
WWB obtains a full set of country prudential regulations that govern the microfinance industry
•
The NM provides a debt schedule with loan agreements, documenting each outstanding loan
Analysis
Effort: 20 days (WWB: 90% & NM: 10%) Use the NM’s financial projections to derive the optimal mix of capital structure products to maximize net income and funding flexibility •
WWB and the NM estimate the cost and viability of raising various equity and liability products
•
The NM determines a maximum allowable percentage of each product based on prudential regulations and corporate policy
•
WWB uses financial projections to apply various proportions of debt and equity products to maximize the net operating income resulting from the various mixes
Design of Optimization Plan
Effort: 5 days (WWB: 70% & NM: 30%)
Use results of analysis to prepare a plan for achieving the optimal capital structure from the current starting point •
WWB shares the results of the analysis with the management team
•
WWB and the NM develop a plan for raising the optimal amount of equity and liability products over time to meet the goals of the capital structure strategy
Implementation & Evaluation
Effort: TBD (WWB: 30% & NM: 70%)
Implement the plan, evaluate the results and review annually to incorporate changes in the operating and regulatory environment •
WWB and the NM’s finance team take steps to identify the new sources of debt or equity and incorporate them
•
WWB and the NM’s savings team determine a plan to optimize savings mobilization
•
Management reevaluates the capital structure as operating conditions change
Financial Risk Management A strong financial risk management policy helps MFIs limit potential losses and can help attract lower cost capital by improving rating with agencies and regulators.
WWB EXPERTISE
Outcomes
WWB was one of the first players in the industry to advocate for strong financial risk management (FRM) for all MFIs, regardless of legal structure. To complement our on-site work with institutions, WWB co-developed an FRM tool and e-course with Citi that is used throughout the industry. WWB teaches FRM at the Boulder Microfinance Institute and to industry trainers.
►► Reduce exposure to maturity, interest rate and financial exchange risks
WWB Approach
Real Results
WWB provides practical guidance for MFIs in implementing financial risk management strategies. We advise on the development of institutional structures such as risk management and asset-liability management committees to proactively assess financial risks. WWB assists in implementing established best practices in accordance with the MFI’s needs and regulatory requirements. We have developed reporting templates for MFIs to assess financial risks, such as foreign exchange, interest rate and asset/liability mismatch risks, as well as to assess the adequacy of sources of liquidity.
WWB has assisted 12 MFIs, representing a variety of legal structures, to implement FRM best practices and procedures,thereby reducing exposure to financial risks and losses. WWB has certified 17 trainers and conducted 3 international workshops, reaching more than 100 MFIs.
Criteria for SUccess Prerequisites • Provision of relevant prudential regulations and any policies, procedures and reports currently used by the MFI to monitor financial risks • Commitment from senior management, finance team and other related teams to implement FRM and participate in risk management committees • Assignment of representatives from the finance team, senior management and the IT department to receive FRM training and develop and implement best practices for the organization
Commitment • Commitment from MFI leadership to implement agreed-upon best practices and establish a risk management committee • Commitment from the board and senior management to establish and participate in monitoring committees such as an asset-liability management committee and a risk management committee • Finance and treasury teams committed to preparing periodic reports
►► Improve liquidity ratios
Thought Leadership ►► WWB Financial Risk Toolkit and e-course for practitioners ►► WWB Financial Risk Management Tool for Trainers of Practitioners ►► WWB Focus Note: From Dollar to Dinar: the Rise of Local Currency Lending ►► WWB Focus Note: Hedging in Microfinance and Foreign Exchange Risk Management in Microfinance
Phases and Key Steps Assessment
Effort: 5 days (WWB: 50% & NM: 50%)
Determine the NM’s current financial risk management practices and create an appropriate training module •
The NM provides WWB with current financial risk management policies and procedures, reports and applicable prudential regulations
•
The NM assigns staff to participate in training
•
The assigned staff review the FRM Toolkit and self-study e-course
•
WWB conducts a gap analysis of current FRM practices versus best practices
•
The NM and WWB agree on objectives for FRM training
Training
Effort: 3 days (WWB: 90% & NM: 10%) WWB conducts training sessions for: •
Risk management overview
•
Institutional roles and responsibilities
•
Organization’s policies for balance sheet accounts, such as asset/liability mismatch, interest rate re-pricing risk, and foreign exchange risk
•
Liquidity and cash management
Practical Exercises & Template Preparation
Effort: 1 day (WWB: 70% & NM: 30%)
Develop pilot reports that will be used to manage financial risk and identify staff for implementation of FRM •
WWB and the NM determine processes that need to be in place to create reports
•
WWB works with relevant departments and staff to create initial FRM reports
•
The NM identifies necessary committees
•
The NM management and staff present an FRM proposal to the Board for approval
Implementation
Effort: Ongoing (WWB: 5% & NM: 95%)
Implement FRM practices for the network member •
Develop schedule of reports that must be prepared periodically for review by risk management committee
•
Identify a target date to have first comprehensive risk management committee meeting
Monitoring & Evaluation
Effort: As needed (WWB: 50% & NM: 50%)
Provide reports so that WWB may monitor progress and offer feedback •
The NM provides WWB new reports and any additional policies
•
The NM provides minutes of risk management and asset-liability committee meetings
•
WWB is available to answer questions
Investor Readiness Training Investor-ready MFIs are able to respond efficiently to due diligence requests, positioning themselves in the most favorable light and securing capital more quickly.
WWB EXPERTISE
Outcomes
Since its inception, WWB has been connecting MFIs to investors and other mainstream commercial funding sources. Years of experience give WWB insight into what investors look for in a potential investment and how to appeal to them.
►► Increase access to capital
WWB Approach WWB assists MFIs in effectively communicating institutional information to capital providers through summary sheets, investor presentations, institutional profiles and offering memorandums. We work with MFIs to prepare data rooms and packages that contain the information necessary to respond to due diligence requests from lenders, investors, regulators and rating agencies. We assist in preparing investment marketing materials and coach MFI management in communicating with the investor community.
Criteria for Success Prerequisites • MFI willing to appoint a team to prepare financial projections, institutional pitches and business plans in order for WWB to assist in creating investor outreach documentation • Have data necessary for this documentation, including: »» Macroeconomic and industry data »» Competitor landscape »» Historical financials and key indicators »» Portfolio performance »» Business plan and projections
Commitment • Prepare and update institutional information on a regular basis • Dedicate management resources to organizing institutional information and preparing presentation materials • Assign senior staff member to oversee investor relations
►► Accelerate negotiations with investors ►► Improve terms of loans and investments
Real Results WWB has assisted many network members to prepare for interactions with investors resulting in faster due diligence and smoother negotiations.
Thought Leadership ►► Women’s World Banking Capital Markets Guide, Section 9 ►► MFI Profiles for Investors presented at the annual Capital Markets Conference and Investor Forum ►► Occasional Paper: Strategies for Financial Integration: Access to Commercial Debt
Phases and Key Steps Assessment
Effort: 1-5 days (WWB: 50% & NM: 50%)
Understand the financing goal of the network member and determine materials necessary for effective investor outreach •
Develop an outreach plan to investors based on capital needs survey and discussions with NM management
Preparation
Effort: 1-3 days (WWB: 10% & NM: 90%)
Gather information •
The NM assigns an investor relations staff member who has necessary access to data
•
The NM shares requested materials with WWB
•
The NM and WWB agree on a presentation format and outline
Production
Effort: 2 weeks (WWB: 50% & NM: 50%) Create presentation materials •
The NM and WWB develop presentation materials
•
The NM commits staff to provide periodic updates of materials
Review & Rehearsal
Effort: 1-3 days (WWB: 80% & NM: 20%)
Review materials with senior management •
The NM’s senior management approves materials that are to be presented to investors in accordance with the outreach plan
•
WWB and the NM’s senior management review materials to determine how best to showcase the NM with investors
Monitoring & Evaluation
Effort: As needed (WWB: 80% & NM: 20%)
Update materials on a periodic basis •
The NM ensures materials are kept up-to-date with the NM’s financials and market conditions
•
WWB conducts periodic review of materials
FORMALIZATION The question of whether to transform from an NGO to a regulated institution is one of the most important decisions that an MFI management team and board will undertake. Womenâ&#x20AC;&#x2122;s World Banking supports our network members through all phases of this transitionâ&#x20AC;&#x201D;from the strategic decision itself straight through to shareholder selection.
Formalization Support Through formalization, NGO MFIs become regulated institutions. It is a complex undertaking, which, when done well, can result in faster growth and outreach, greater product diversification, improved management and governance and increased efficiency.
WWB EXPERTISE
Outcomes
The transformation process can take years and WWB works with network members throughout the process. Since WWB began offering formalization support in 2003 we have worked with nine institutions in eight countries in various phases of the process. In 2008, WWB strengthened its existing formalization capability to include additional service offerings from capital markets advisory to branding and marketing. Approximately one-third of WWB network members are already formalized financial institutions, and an additional third intend to formalize within the next three years, enabling our network members to learn from those who have successfully transformed.
►► Increase growth and client outreach
WWB Approach
►► Increase efficiency and sustainability
WWB assists MFIs in conducting feasibility studies to predict the result of formalization, financially and on the organization’s mission. We also work with institutions to develop a strategy for both the NGO and the resulting financial institution, create a formalization plan and secure regulatory approval, develop the business plan and financial projections, conduct a high-level equity valuation and advise in potential investor selection, outreach and negotiations.
►► Further the commitment to the organization’s mission
Criteria for SUccess Prerequisites • • • • •
A regulatory environment that allows for formalization Board and senior management support for formalization Commitment to preserve the organization’s mission Competitive and operating environment conducive to profitable operations Interest from like-minded potential equity-holders sufficient to meet minimum regulatory capital requirements • A dedicated staff member, consultant or team assigned to manage the implementation of the formalization plan
Commitment • Firm belief by the Board and senior management that becoming a regulated, for-profit financial institution with outside equity ownership is the best way to achieve the organization’s mission • Frequent and open communication within the organization, which is critical to minimize employee and client stress and uncertainty
►► Increase product diversity ►► Improve access to new funds ►► Improve management, transparency and governance
Real Results WWB has assisted MFIs in The Gambia, Kenya, India, Uganda, Bosnia, Russia, Colombia and the Dominican Republic through various aspects of the formalization process, resulting in new commercial organizations with greater client outreach and a continuing commitment to WWB core values.
Thought Leadership ►► WWB Focus Note: Stemming the Tide of Mission Drift: Microfinance Transformations and the Double Bottom Line ►► WWB NGO Strategy Manual
Phases and Key Steps Awareness Building
Effort: 90 days (WWB: 40% & NM: 60%)
Conduct exposure visits •
WWB arranges for the NM to visit a variety of institutions who have successfully formalized
•
The NM visits MFI, meets with management of the institutions and regulators and gathers best practices
Feasibility Study and Transformation Planning
Effort: 45 days (WWB: 50% & NM: 50%)
Conduct feasibility study and secure board approval •
WWB and the NM senior management work, along with accountants and legal counsel, to create a feasibility study that takes into account the institution’s regulatory, competitive and macroeconomic environment to determine the legal structure and business plan for formalization
•
WWB and the NM determine the business plan for the existing legacy NGO, if it will maintain operations
•
WWB and the NM present a plan to board for approval
Legal, Business and Financial Planning
Effort: 90-120 days (WWB: 55% & NM: 45%)
Prepare implementation plan •
NM assigns a formalization team, which should include the general manager, financial manager and credit officer. The NM may choose to hire a full-time formalization manager. The NM should engage legal counsel and accountants for certain phases of planning.
•
WWB and the NM develop a detailed business plan »»
Conduct in-depth market research to assess competitive and macroeconomic environment and determine strategy to best position new entity
»»
Develop a business strategy, organizational structure, capital structure, financial projections, and product mix
»»
Determine legal transformation plan to ensure proper establishment of legal entity and transfer of assets and liabilities
•
Create a detailed business plan and financial projections for the NGO, if it will maintain operations
•
Conduct a high-level equity valuation based on finalized financial projections to prepare for negotiations with potential investors
•
Analyze the pool of potential investors and develop a list of ideal targets
Shareholder Outreach
Effort: 90 days (WWB: 70% & NM: 30%)
Determine the need for external sources of equity and recruit like-minded investors •
The NM determines the amount of equity to be raised from outside sources based on financial projections
•
WWB and the NM prepare a summary marketing document for target investors to determine level of interest
•
The NM shares the business plan with interested investors and requests term sheets from committed parties
•
The NM invites serious investors to conduct on-site due diligence. WWB assists the NM in preparing a data room and ensuring that the management team and regulators are available for meetings; WWB assists the NM in shareholder negotiations
Implementation Implement formalization plan
Effort: 60 days (WWB: 10% & NM: 90%)
LEADERSHIP DEVELOPMENT As the microfinance sector evolves, executives and senior management will be confronted with an even more uncertain business environment. MFIs that invest in the leadership development of their staff are more likely to survive and prosper. Rooted in our belief that gender diversity is a symptom of a healthy vibrant organization, Womenâ&#x20AC;&#x2122;s World Banking supports our network members with both individual leadership development and institutional development of talent, particularly that of women staff.
Women in Leadership Workshop Investing in the development of women managers is essential for high performing, mission-driven institutions to foster innovation, and build a cadre of leaders who are powerful role models for the institution and the low-income women clients they serve.
WWB EXPERTISE
Outcomes
The Women’s Leadership Development Program was launched in 2005 to respond to the declining numbers of women in the senior ranks of WWB’s network members. WWB partners with the internationally renowned Center for Leadership and Change Management at The Wharton School of Business to deliver the course.
Increased percent of women in middle and senior management
WWB Approach The Women in Leadership Workshop is a five-day leadership development course for women in mid- and senior-level management at MFIs to develop their leadership skills and attain top jobs in their organizations. • Before participating in the course, participants are asked to fill out short surveys which are analyzed by leadership experts to help understand their individual leadership style • During the course participants develop their own road map to leadership and leave with an individualized action plan, as well as assigned mentors, to help them achieve their goals • The course is a combination of lectures, small group work, individual work and one-one-one coaching • Alumni participate in a leadership exchange to expose them to technical knowledge, innovation, and inspiring leaders in microfinance
Criteria for SUccess Prerequisites • High-potential women who have demonstrated the ability to lead people and teams in their organization and are currently occupying senior positions • Junior executives who are being groomed to take on more senior leadership positions over the short term (two to three years) and who are motivated to take on new leadership challenges and opportunities
Commitment • Explicit institutional support from top management to support the participants in the execution of their action plans • A willingness to create opportunities for the growth and development for high-potential, top-performing women managers
Real Results Since 2006, WWB has hosted three Women in Leadership Workshops, with a total of 80 participants from 30 institutions in 21 countries.
Thought Leadership WWB Publication: Transforming the Landscape of Leadership in Microfinance: Maintaining the Focus on Women
Organizational Gender Assessment By offering equal opportunities for high-performing women and men staff to be hired and retained, MFIs increase the likelihood of social and financial returns.
WWB EXPERTISE
Outcomes
WWB has been championing the need for gender diverse institutions since its inception. WWB’s Organizational Gender Assessment (OGA) helps institutions understand how to attract and retain qualified men and women and attain a gender balance at all levels of the institution.
►► Increase percent of new staff that are women
WWB Approach
►► Increase percentage of women awarded promotion
The OGA is designed to diagnose obstacles, challenges and opportunities faced by women staff members and leaders and results in clear action steps to eliminate those obstacles and create an enabling and inclusive work environment. WWB works with MFIs to: • Identify an internal champion and define the business case—the motivation for undertaking this analysis and its relation to mission and bottom-line • Conduct a full analysis of workforce statistics, HR manuals, job descriptions, and training manuals to understand the institution’s current state in terms of diversity and equal opportunity • Conduct in-depth interviews, focus groups and workshops with leadership and staff to understand their attitudes toward gender diversity, career advancement opportunities and overall work culture, as well as perception of staff’s experience in the organization • Identify critical areas for focus and action steps and design a plan for measuring progress on key metrics against baseline data
Criteria for SUccess Prerequisites • A clear vision from top management about the institution’s motivations for promoting gender diversity • Appointment of a project manager or internal champion with sufficient authority to execute the program and report to top management • A strong human resources team to work closely with the project manager
Commitment • Active leadership by the project manager or internal champion to ensure the execution of the program’s activities
►► Increase retention of existing women staff
►► Increase opportunities for professional development for women staff
Real Results Since launching the OGA in 2008, WWB has worked in Bangladesh and Pakistan on improving institutional conditions for women staff and managers.
Thought Leadership WWB Publication: Transforming the Landscape of Leadership in Microfinance: Maintaining the Focus on Women
Phases and Key Steps Planning
Effort: 2 weeks (WWB: 50% & NM: 50%) Determine with the NM whether an Organizational Gender Assessment is aligned with the leadership’s vision for the organization and assess commitment from senior management and governance to launch the project •
NM identifies the business case, or its relation to the mission and bottom line
•
The NM identifies internal champions and an internal project leader
•
WWB and the NM generate preliminary hypotheses to identify key potential areas for constraints to women’s advancement
Pre-field Work Analysis
Effort: 4 weeks (WWB: 70% & NM: 30%)
Conduct analysis of gender and employment in the national context as well as conduct assessment of the organization to understand current diversity statistics and human resources policies and programs •
WWB conducts research on gender and employment in the national context – legislation, trends in female formal sector employment, higher education data, traditional gendered attitudes on production and reproduction
•
The NM prepares all requested data to be analyzed
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WWB conducts an analysis of the institution’s written materials: HR manual, job descriptions, training manual, incentive policy, and written materials to market or promote available positions
•
WWB reviews the workforce statistics: profiles of senior staff and board, percentage of women at all levels (governance, senior and middle management, field staff), and statistics on recruitment, promotion and retention of staff
Organizational Assessment
Effort: 2 weeks (WWB: 80% & NM: 20%)
Conduct in-depth interviews, workshops and focus groups with stakeholders—board, senior staff, middle managers, field level staff, and clients—to understand attitudes about gender diversity, organizational culture, and experiences of both men and women staff’s •
WWB conducts in-depth interviews, workshops and focus groups with the NM leadership and staff
•
WWB and the NM leadership team review research findings, proposed areas of focus and recommended action steps
Implementation
Effort: 2 months (WWB: 20% & NM: 80%)
The NM begins to roll out the program across the organization •
WWB and the NM develop rollout and implementation plan
•
WWB builds the NM’s institutional capacity for rollout
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The NM begins rollout
Monitoring & Evaluation
Effort: Ongoing (WWB: 10% & NM: 90%)
The NM monitors success of the launch and adjusts program design and implementation strategy accordingly •
The NM monitors success against objectives and impact
•
WWB and the NM identify changes required and develop a plan to implement these changes
Knowledge Exchange WWB has always been a platform for learning and knowledge exchange by hosting forums, publishing research, conducting workshops and organizing peer exchanges. Network members highly value the opportunity to learn from their peers, and WWB exchanges and peer learning events consistently receive positive feedback. As our network grows and diversifies, the opportunities for peer learning increase as a broader array of institutions are able to share their respective core competencies and diverse approaches to serving low-income clients.
Workshops WWB workshops provide immediate and interactive exposure to timely issues in microfinance. These workshops bring together network members to exchange lessons learned; WWB product services experts also participate. Workshop topics—including product diversification, financial risk management, and rural finance—are based on demand from the network members. The workshops are designed to support and enhance performance improvement among participating network members and usually are integrated with technical assistance in product development. WWB workshops provide network members with valuable exposure to other leaders in microfinance, opportunities to showcase their institutions, learning and networking opportunities, global perspectives and, where relevant, performance improvement support.
Peer-to-Peer Exchanges On-site peer-to-peer exchanges are powerful and practical means by which microfinance practitioners can learn directly from their peers through visits to their institutions. WWB brokers these exchanges between network members seeking practical knowledge on specific topics and other network members or industry players recognized as leaders on those topics. This hands-on approach plays a vital role in educating our network members about the newest innovations in microfinance.
Publications WWB publications are a primary component of knowledge sharing both within the network and with the entire industry. WWB publications disseminate the experiences and practices of WWB network members, enabling them to learn from each other’s work. These are produced by the WWB global team in collaboration with network members, distilling their expertise and research, and sharing innovative products and services with our network members to help them better serve their clients
“[WWB] creates linkages between local and international institutions by fostering partnerships, common vision and mission.” —Humaira Islam, Founder and Executive Director, Shakti Foundation for Disadvantaged Women (Bangladesh)