Insurance Commission Commissioner Emmanuel Dooc delivers his message during the ceremony

To culminate Microinsurance Month, the Insurance Commission spearheaded an awarding ceremony themed “Gabi ng Parangal at Pasasalamat sa mga Tagapagtaguyod ng Microinsurance” to recognize organizations promoting microinsurance in the country. The awarding ceremony was held on January 31 at the Philippine International Convention Center.

Three partner insurance providers and two participating banks of the United States Agency for International Development-supported Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) Program were among those recognized during the ceremony. Country Bankers Life Insurance Corporation, Pioneer Insurance, and Philippine Prudential Life Inc., were cited as outstanding life and non-life commercial companies while the Rural Bank of Talisayan and Katipunan Bank were recognized for their mutual benefit associations.

Since 2008, RBAP-MABS has been collaborating with rural banks and the regulatory institutions to improve access to insurance options of low-income households. To do this, RBAP-MABS works with the insurance-providers on product options that can be made available to the rural bank clients while training and assisting rural banks with the licensing process of the Insurance Commission (IC) and the Bangko Sentral ng Pilipinas (BSP). To date, 354 rural bank officers and staff from 168 rural banks have completed the Basic Microinsurance Training Course and 61 banks are in the approval process of IC and BSP. Today, more than 472,600 rural bank clients and their household members are now availing microinsurance services through 128 rural bank offices.

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In celebration of Microinsurance Month, a three-day Training on Microinsurance Advocacy (TOMA) was held in Tagaytay City from January 18-20. The Microinsurance Teams of the United States Agency for International Development-supported Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) and RBAP-Rural Bankers Research Development Foundation Inc. participated.  The event was the third in a series of workshops under the Financial Literacy Roadshow on Microinsurance Advocacy that will be conducted in sixteen (16) regions of the country. Collaborators include German International Cooperation-Microinsurance Innovations Program for Social Security (GIZ-MIPSS), Insurance Commission, National Credit Council (NCC) of the Department of Finance (DOF) and Japan Fund for Poverty Reduction Program of the Asian Development Bank.

The event sought to enhance the knowledge and skills of participants to become advocates of microinsurance in the Philippines. Thirty-eight (38) individuals from various national government agencies, intermediaries, donor agencies, support institutions, local government units and service providers were present at the training.  This public-private sector mix allowed participants to witness the diversity of perspectives; which coupled with adult learning methodologies, allowed for an enjoyable and enriching experience.

Facilitators led by DOF-NCC Director Joselito Almario imparted the key message, “Financial literacy is educating, not marketing; and advocacy is convincing, not selling”.  This effectively served as the principle on which the training program’s content and activities were designed.

Key activities for Day 1 kicked off with the Facilitators’ training. Day 2 followed through with the fundamentals of Microinsurance; and Day 3 focused on group activities which allowed participants to apply the Microinsurance advocacy techniques they learned in a nurturing and learning environment.

Through the Training on Microinsurance Advocacy event DOF hopes to develop a pool of trainer-advocates with the knowledge, skills and attitudes to promote microinsurance in the Philippines.

In partnership with two RBAP-MABS participating banks, Green Bank Inc. and the Rural Bank of Mabitac, IPA studied the impact of SMS reminders with 1,259 first time borrowers. The study was designed to investigate the importance of the SMS’s timing, framing and personalization of reminders sent to borrowers.  For a period of sixteen (16) months between January 2009 and April 2010, 840 randomly selected loan clients received SMS reminders in their local dialect reminding them to pay their loans.

IPA found that the most important factor leading to significant improvements in loan payments came from personalized SMS messages. These messages were customized to state that the borrower’s account officer was sending the reminder message to pay on time.  These messages were more effective than just using the client’s name.

This finding demonstrates the effective role that SMS reminders can play in connecting with microfinance borrowers.  IPA is also conducting studies on Credit Scoring, Debt Traps and the Impact of Savings for microfinance clients in the Philippines.  For more information about ongoing research in the Philippines please visit: http://www.poverty-action.org/project-evaluations/search?country=563

Since 1997, the Program has worked with over 120 banks with more than 1,300 branches and other banking offices in the developing microfinance products, including microloans, microdeposits, micro-agri lending, housing microfinance, mobile banking, and microinsurance. These initiatives have allowed MABS participating banks to expand and offer new microfinance products and services to their clients.

During his message at the recent launch of the Paeng Awards and the Signing of the Memorandum of Agreement of Microfinance Information Data System, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. cited how the Program’s initiatives have allowed rural banks to serve their clients’ needs and provide meaningful microfinance services to the entrepreneurial poor.  In particular, rural banks have surpassed 3 million cumulative loans disbursed totaling PhP 39 billion pesos (approximately US$ 850 million) to approximately 950,000 microloan clients.

RBAP-MABS has also developed a suite of mobile phone banking applications in partnership with Globe Telecom’s G-Xchange Inc (GXI), which allow more than 300,000 rural banks clients as well as support for conditional cash transfer recipients using the GCASH platform. Today, clients can pay their loan amortization, make deposits or withdrawals, send or receive money transfers, or even provide remote payroll services via a mobile phone. Since 2006, accredited rural banks have processed more than 2.5 million mobile phone banking transactions valued at more than PhP 13 billion (US$ 300 million).  In 2012, rural banks expect to see an increase in mobile banking services and transactions with new products and services using the GCASH platform as well as new services via Smart Money.

In addition, under the Microinsurance Initiative, rural banks can now offer microinsurance products and services. In 2011, a turnkey approach to assist rural banks become licensed microinsurance agents called TRACS Compliance Process was developed by the Rural Bankers Research Development Foundation, Inc. (RBRDFI) with assistance from USAID and the International Labor Organization’s Microinsurance Innovation Facility. To date, 354 rural bank officers and staff from 168 rural banks have completed the training conducted by RBRDFI in 2011.

In partnership with RBAP International Study Visit Program, The United States Agency for International Development-supported Rural Bankers Association of Philippines– Microenterprise Access to Banking Services (RBAP-MABS) Program organized an international study group for representatives of the Cooperatives Rural and Development Bank Microfinance Services Company Ltd. (CRDB) of Tanzania on January 18, 2012.

CRDB Microfinance Services Company Ltd., a subsidiary of CRDB Bank Plc, offers wholesale microfinance services by providing tailor made products and services that address financial needs of different communities in Tanzania. Moving forward, they plan to go into retail microfinance and design more catered products reaching the formerly ‘unservable’ market niche. The visit aims to obtain lessons learnt from rural banks in implementing microfinance, microinsurance and mobile phone banking. This would eventually align their outreach strategies together with technological advancements, knowledge of specific market segment and continuous development of internal capacities to achieve maximum impact to businesses and the communities they serve.

The directors and management of CRDB participated in an exposure visit to Bangko Kabayan Inc., a RBAP-MABS participating bank.  Mrs. Teresa Ganzon, the managing director of Bangko Kabayan Inc., shared insightful first hand experiences of the bank. Likewise, the Country Bankers Life Insurance Corporation imparted how they were able to devise relevant insurance products to extend their services to the entrepreneurial poor people.

Bangko Kabayan has sixteen (16) branches all over the Batangas province and has been a RBAP-MABS participating bank since 2001. In 2000, the bank started to offer its microfinance products such as individual and group loan products for microentrepreneurs. In 2009 it included housing loans in its product portfolio. It currently serves 9,681 microfinance borrowers with an outstanding microfinance loan portfolio of more than PhP 105 million.

Bangko Kabayan is also one of the three banks to be licensed by the Insurance Commission and the Bangko Sentral ng Pilipinas to market, distribute and sell microinsurance products. In 2010, it collaborated with Country Bankers Life Insurance Corporation to improve access on insurance options of its microenterprise clients and to cover the microfinance loan portfolio of the bank.  As one of the partner-insurers of RBAP-MABS, Country Bankers Life has provided insight into the needs and preferences of low-income clients, based on a market assessment study conducted by RBAP-MABS in 2009.  Lessons from the study led to the collaborative effort of Bangko Kabayan and Country Bankers to expand insurance coverage to benefit microenterprise households served by the bank. As of June 2011, fifteen (15) of its branches has distributed microinsurance products to 1,568 principal/policy holders and their 5,331 dependents.

During the 2011 USAID supported Rural Bankers Association of the Philippines – Microenterprise Access to Banking Services (RBAP-MABS) Program Regional Roundtable Conference, Grameen Foundation Project Manager, Julie Peachy, shared the results and findings of the CARD Bank Savings Mobilization Project. The project is a three-year effort aimed at reaching 1.45 million new savers in the Philippines, India, and Ethiopia. The savings product being pilot-tested, the Matapat, is a voluntary savings product designed to allow savers to make small and frequent deposits. Several options are available to encourage clients to make deposits: during center meetings, via over-the-counter deposits in bank branches or microfinance bank offices (MBOs), and through deposit collections by savings associates. Withdrawals, on the other hand, can be made at ATMs, in addition to the traditional over-the-counter withdrawals.

Ms. Peachy gave some of the results and pilot test findings. First, she said that savings for kids’ education; pooling money for additional business capital, emergencies, payment for utility bills; and having another savings account aside from the voluntary savings account are among the primary motivations for savings.

Ms. Peachy gave some of the results and pilot test findings. First, she said that savings for kids’ education; pooling money for additional business capital, emergencies, payment for utility bills; and having another savings account aside from the voluntary savings account are among the primary motivations for savings.

On the other hand, savers cite accessibility, or the ease of withdrawing funds from the account when needed, as the most valued product feature. They also value the product for its low maintaining balance, the range of deposit options, and account privacy.

In conclusion, Ms, Peachy said that effective savings mobilization requires the involvement of the entire organization. The project must also be built on the basics – a thorough understanding of customers via market research and a disciplined product development process. Human capital management practices must also be in place to effect change. The business case and business model also have to be well defined.

Ms. Peachy clarified that so far, results show that there is no correlation between savings and poverty level, and points to the fact that the poor can indeed save.

Ms. Peachy admitted that initially, CARD Bank faced challenges in training the staff to sell and promote a voluntary savings product. Initially, they had a separate group handling the voluntary service, but they soon found out that was not a very efficient way to promote the new savings service so it is now promoted by all the staff.

With the objective of explaining one of the tools that can be employed to avoid client over-indebtedness, Ms. Rose Rivera Microfinance Consultant of The Catholic Organization for Relief and Development Aid (CORDAID) shared the organization’s client mapping initiative in the Philippines. During the Regional Roundtable Conference of the USAID supported Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) Program held on November 09 at the Hyatt Hotel in Manila, Ms. Rivera discussed how the mapping helps determine levels of client saturation in an area and how the information can be effectively used as a tool in strategic planning and policy making. She further explained how the client maps can be contrasted to and compared with the National Statistical Coordination Board (NSCB) to check coverage against such factors as regions with the highest poverty levels. The client maps can also then be used to help banks and MFIs to target new markets.

Ms. Rivera discussed the research methodology, specifically, how the ratios of outreach were calculated over a given parameter to yield information on levels of saturation and the scope and limitations of the project.

To close her presentation, Ms. Rivera announced that CORDAID aims to expand the mapping initiative to a nation-wide scale all the way to the barangay level. She encouraged rural banks to join the client mapping initiative as this will ultimately strengthen the Philippine microfinance industry and provide better planning and market research data for MFIs.

On the supply side, the global financial crisis in 2008 exposed the risks of relying heavily on funding from investment banks and companies. These developments were among the main reasons for cultivating microdeposits cited by MABS Research and Monitoring Coordinator Ferdinand Sia during the session on microsavings mobilization during the 2011 USAID-supported Rural Bankers Association of the Philippines – Microenterprise Access to Banking Services (RBAP-MABS) Program Regional Roundtable Conference. Aside from illustrating the impact of the deposit portfolio to the overall financial strength of the banks, Mr. Sia also explained the long-term benefits of supporting deposit mobilization efforts, especially among children and for economically active clients, as the trend is for an individual’s income, and with it, savings level, to increase as they advance during their various life cycles. From a marketing perspective, a wide deposit base gives a bank an opportunity to build a lasting relationship with clients and an entry point for offering other products and services.

Use of Raffles

Mr. Sia also presented actual strategies employed by RBAP-MABS participating banks to boost deposit levels including micro-deposits. One successful strategy deployed by several rural banks is the offering of raffle promotions. Clients get a chance to win prizes (usually household appliances, vehicles, or double-your-balance incentives) either by opening a deposit account or by depositing amounts in specified increments. Deposit balances and number of accounts were compared eighteen months before the promotion, during the promotion, and six months after the promotion. Results showed that deposit accounts increased during the promotion (4%), and that the deposit account growth rate was at 11% six months after the promotion. This can partly be attributed to the Filipino’s strong cultural penchant for lotteries and games of luck and chance.   Similar strategies have been successful utilized by Bank Rakyat in Indonesia for the past two decades.

While some unscrupulous bankers have in the past taken advantage of raffle schemes to promote various risky financial ventures, Mr. Sia pointed out that it is easy for bankers to differentiate their raffle promotion in such a way as to demonstrate that it the bank is strong and that the raffle is legitimate. First he recommended that the bank secure all necessary permits to conduct the promotion from the Department of Trade and Industry (DTI) and publicly share this information with their clients.  Secondly, he recommended that the bank should prominently display the prizes in branches and lastly, that prizes are handed out in public with a representative of the DTI.

Kiddie Savers

Another strategy banks are using to promote savings services is to children depositors. For banks there are several immediate as well as long-term benefits. These include cross-selling services to the parents of child savers, better brand marketing, improved customer loyalty, and investing in the borrowers and savers of tomorrow as children learn to save and trust the bank over several years.

Promotional Events with Celebrities

A third strategy is inviting celebrities (movie stars or popular singers) to grace the launch of a savings promotion. One bank gave clients tickets to the event upon opening a deposit account and found this strategy to be very effective in attracting new depositors.

During the second part of the session on the future of mobile phone banking in the Philippines, Paolo Baltao, President of Globe’s G-Xchange Inc. (GXI) announced their continuing collaboration with the USAID-supported RBAP-MABS Program on various new products and promotions for GCASH accredited rural banks. This would further promote and expand mobile phone banking services utilizing the GCASH platform.  To make it easier for clients to cash-out their GCASH funds, GXI has partnered with RBAP-MABS to offer a specialized ATM card that doubles as a photo ID card called the Rural Bank FaceCard.

Rural Bank Facecard from John Owens on Vimeo.

Under the new initiative, interested and accredited rural banks will be able to identify and tap the most influential people in their communities, such as the president of the tricycle drivers or vendors association, church or community leaders, heads of civic organizations, doctors, dentists, or other leading professionals in the community to share the benefits of obtaining a FaceCard in order to make it easier to access their bank account through GCASH and ATMs.

In addition, GXI also highlighted a new initiative launched during the Roundtable Conference for salary employees called GCash PowerPay+.  This initiative is geared for all employees receiving their salaries via Text-A-Sweldo, whether bank employees or employees of companies that have payroll service agreements with the bank.

Mr. Baltao also shared the expected expansion of GCASH to facilitate the government’s Conditional Cash Transfer program called Pantawid Pamilyang Pilipino Program (4Ps) and he encouraged more banks to participate to support these efforts and also to benefit from the increasing use of GCASH in the countryside.  He also expressed how impressed Globe is with the strong partnership with the rural banking sector.