Even among microfinance practitioners, the term “microfinance” has often narrowly referred to “microcredit”.  Microcredit has often been the main focus on microfinance efforts to help move the low-income sector out of poverty. New evidence and case studies, however, show the impact of savings including how households use it to expand their livelihood activities, grow small businesses and how it serves to cushion the impact of emergencies.

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.

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