Rural Banks Providing Financial Education in Branchless Banking

By Cheryl Lualhati Balingit, RBAP-MABS Special Projects Coordinator

In Filipino grammar, adding the prefix mag is a nifty way to verbalize a noun. This extends from everyday, colloquial conversation Mag-kape tayo (Let’s have coffee) Mag-sine tayo (Let’s watch a movie) to more profound exhortations, like Mag-bago na tayo. (It’s time we make a change). The United States Agency for International Development-supported Rural Bankers Association of the Philippines Microenterprise Access to Banking Services (RBAP-MABS) Program with assistance from Microfinance Opportunities (MFO) is now assisting rural banks to extend this further to promote mobile phone banking services with the launch of mag-CellBank! and the pilot testing of the Financial Education for Branchless Banking Project.

mag-CellBank!, the new logo for mobile phone banking services, employs the prefix mag to cell (for cellphone) and bank. Mag-CellBank! is an enthusiastic call for clients to perform banking transactions using their cellphones. The new name, along with a visual identity, is integrated into the new Financial Education for Branchless Banking toolkit that is currently being used by three pilot banks – GM Bank, Cantilan Bank, and 1st Valley Bank. mag-CellBank! services include Text-A-Payment (TAP), Text-A-Deposit (TAD), Text-A-Withdrawal (TAW), and phone-to-phone transfers and payments.

mag-cellbankLaunched in June 2010, the Financial Education for Branchless Banking Project is implemented by the RBAP-MABS Program with support from MFO, a Washington-based global nonprofit that develops consumer-focused ideas and solutions for the microfinance industry. The project, which is implemented in partnership with The MasterCard Foundation, aims to increase the uptake and use of mobile phone banking services through the use of financial education tools.

The dissemination and use of the toolkit rounds up close to a year of work and preparation.

Earlier this year, MABS and MFO conducted focus group discussions and interviews with target groups and individuals to gather sufficient information for the design of the financial education program’s content and delivery strategy. The results showed the information gaps and users’ fears that needed to be addressed to encourage trial and eventual adoption of mobile phone banking services. The challenges facing bank staff in promoting MPBS also surfaced, with the lack of training and teaching materials as among the most pressing. The study also brought to light the need for materials for the use of banks’ cash-in/cash-out (CICO) partner-merchants. CICOs are businesses, usually neighborhood sari-sari (variety) stores, where clients can cash-in (change cash to GCASH) or cash-out (change GCASH to cash).

The toolkit comprises:

  1. Two posters (promoting Text-A-Payment and Text-A-Deposit) designed to be displayed in bank branch lobbies and storefronts of CICOs;
  2. A tri-fold standee for CICOs’ countertops and display areas;
  3. A two-sided standee for banks’ countertops;
  4. An all-in-one user’s manual which contains step-by-step instructions for completing transactions, a section teaching clients how to make savings plans and savings goals, with pages where clients can set up their own savings plan and goal, a frequently asked questions and troubleshooting section which highlights the safety features of the service; and a table where clients can record their mag-CellBank transaction details;
  5. A picture flipbook, that utilizes storytelling to communicate the benefits of mag-Cellbank and outlines the procedure for completing transactions as well as stories for how and why to use a mobile phone for loan payments and for deposits.

The tools highlight the positioning of mag-CellBank! as helping rural bank clients save time and money. Microloan borrowers do not need to travel to the bank to pay their loan amortizations. Using mag-CellBank/Text-A-Payment, they can pay their loans from wherever they are. Since they do not need to travel to the bank, they save on time and transportation costs. Through Text-A-Deposit, depositors can deposit to their account as frequently as they want and in small amounts. Because they can easily and conveniently make deposits, clients can build up their savings and avoid spending their savings on non-essential purchases. While Text-A-Withdrawal allows them to conveniently make withdrawals without having to come to the bank.

Account officers have come to dread stretches (left photo) like this that passes through heavily forested areas – these are sites of several highway robberies and hold-ups. On the right is the common mode of transport in and out of Baungon; note the dusty roadside. During the summer, passengers endure a virtual dust storm as vehicles blow out dust.

Account officers have come to dread stretches (left photo) like this that passes through heavily forested areas – these are sites of several highway robberies and hold-ups. On the right is the common mode of transport in and out of Baungon; note the dusty roadside. During the summer, passengers endure a virtual dust storm as vehicles blow out dust.

The tools highlight the positioning of mag-CellBank! as helping rural bank clients save time and money. Microloan borrowers do not need to travel to the bank to pay their loan amortizations. Using mag-CellBank/Text-A-Payment, they can pay their loans from wherever they are. Since they do not need to travel to the bank, they save on time and transportation costs. Through Text-A-Deposit, depositors can deposit to their account as frequently as they want and in small amounts. Because they can easily and conveniently make deposits, clients can build up their savings and avoid spending their savings on non-essential purchases. While Text-A-Withdrawal allows them to conveniently make withdrawals without having to come to the bank.

For banks, mag-CellBank! allows them to expand to areas that are otherwise, hard-to-reach. Account officers do not need to travel to these areas as frequently as when they had to make collections – they only have to schedule regular monthly monitoring visits. Because they no longer collect and carry money from the field back to the bank, account officers are less exposed to risks like highway robbery.

The benefits of mag-CellBank! are clearly seen in a place like Baungon, Bukidnon. Baungon is a 2nd class municipality about 45 kilometers south of Cagayan de Oro City. The municipality is accessible by a road that is mostly unpaved, narrow, and winding making travel difficult. Residents have to endure the dust during the dry season and slippery, muddy roads during the wet season. Despite the poor road infrastructure, Baungon is a thriving community. Agriculture is the main industry, with most of the residents growing cassava and papaya as contract farmers for big agricultural companies.

1st Valley Bank’s Cagayan de Oro City Branch expanded to Baungon in 2010 and is currently serving microloan borrowers from the area. The area’s distance from the branch, compounded by the rough roads, make weekly collections very costly for the bank. There are stretches of the road passing through forested areas where highway robberies and hold-ups have occurred even in broad daylight and this poses a very real danger for account officers who regularly have to collect and transport money.

On the other hand, traveling to the bank to pay their amortizations is very costly for the clients. They have to pay PHP85 (US$2) each way for the 35-minute jeepney or van ride.

DSCN58571-300x224Which is why microloan client Irene Paredes welcomes mag-CellBank! “This will now make it easy for me to pay my loans, I do not have to wait for the account officer anymore every week. My schedule is irregular, sometimes I have to run errands, so this (mag-CellBank!) is very convenient for me. I am also thinking about becoming a CICO partner – I know that are a lot of households here that have children studying outside Baungon – I may be able to serve their remittance needs”.

Until April 2012, staff of the three pilot banks will be promoting mag-CellBank, giving clients like Ms. Paredes opportunities to grow their businesses and increase their income, and enjoy the convenience of banking through their cellphones.

mag-CellBank! na tayo!

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