Product Development requires an understanding of the diversified needs of the market and delivery of the product with the best market potential. It is a matter of balancing the consumers’ demand (needs) and the suppliers’ capacity. A product that satisfies both the consumers’ requirements and the suppliers’/producers’ capacity, will be both effective and sustainable.
There are numerous Microfinance Institutions (MFIs) in Nepal working to alleviate poverty by improving and expanding access to financial products and services for rural poor communities. Rightfully so, as access to financial services including savings and credit when communities need it the most, can lift people out of poverty and provide empowering opportunities to improve livelihoods. However, many times these interventions while stemming from good intentions are flawed in their design and implementation. The work of MFIs in developing and rolling out financial products and services for this market segment can be influenced and distorted by a number of factors. A key factor is the competition between two or more similar institutions working within the same community. Such a challenge often influences the new product developer to design its own product to compete with the other institution’s product largely on price or by slightly changing a feature of the product. However, the focus should rather be on better meeting the demand from the client’s side. This may require adjustments on product price and features, including the delivery channel. The impact of such a flawed design process is instead the presence of a large number of financial products and services that seemingly cater to the rural poor communities, but which fail to address clients’ actual needs. This often results in slow product uptake and/or over-indebtedness, as the client tries to get his/her needs met through a variety of products from numerous institutions. The impact also extends to the macro level through an underutilisation of capital.
Sakchyam’s Support for Product Development
Sakchyam Access to Finance Programme’s Financial Inclusion Component provides the necessary technical support to effectively design and launch demand-driven products in partnership with Microfinance Institutions. We consider the 8 ‘Ps’ (Population, Product, Price, Place, Process, Personnel, Promotion, Positioning) approach of MicroSave; the Desirability, Feasibility and Viability approach of Human Centered Design (HCD); Universal Standards for Social Performance Management (USSPM); Client Protection Principles (CPPs) and action research techniques in designing/reviewing financial products. The programme does this by following a carefully designed process (Fig-1).
Sakchyam’s support ensures the following:
Following the above process, Sakchyam has supported the designing of Business Loan Products for UNYC Nepal and Kisan Cooperative; Alternative Energy Loan Product for UNYC Nepal; and Migration Loan Product for NWCSC. Client/staff’s feedbacks received during piloting are used to finalize the products. Sakchyam Product Development Specialist provided technical leadership in the product development process; conducting market study; designing product prototype; validating product from respective institutions and potential clients; outreach and financial projections; developing action plan for piloting and launching; training focal staffs; coordinating with non-local stakeholders; monitoring the piloting process and evaluation of the product performance to finalize it for launching.
The impact of following the above process is the successful uptake of the new financial product(s) by the clients to suit their needs. Because the products have been designed with the clients’ needs in mind, they are more likely to be helpful for the client. Addressing the interest and capacity of MFIs, their outreach and financial projections, action and research in finalizing the product etc. ensures the effectiveness of the product for the institution. This implies a win-win situation for both, the financial service providers, as well as the consumers of the services.