A Dormant Savings Account is a Missed Opportunity - Here are 5 Things You Can Do

December 16, 2013

Grameen Foundation and Grameen Foundation India have worked with Intellecap to create a 4-part series highlighting challenges and solutions for various aspects of the Business Correspondent Model. This blog was created by Abby Addis and Kimberly Davies. Click here for the full studies on dormancy, the business model, channel innovation, and operational challenges.

After creating a new savings product, piloting it, rolling it out, and finally getting  customers to sign up, you may be shocked to find those accounts remained unused, or dormant. This hurts your bottom line and potential for sustainability, and is not helping your clients better manage their personal assets.

What can you do to increase usage? Recommendations based on our experience with Cashpor Microcredit are below:

  1. Build client trust. Poor clients in villages are very cautious of trusting outsiders with their money, and many have probably had or heard of bad experiences in the past. Client trust is a must for a successful program. Demonstrating that clients can transact frequently and access their funds in times of emergency is one way to strengthen their confidence (for more on trust, see our case study: Insights on Savings Behaviors of Clients, pg. 9­).
  2. Leverage technology to simplify processes. Ensure the account open process is simple for clients. In Cashpor’s case, a new tool was created to automate the process and decrease lag time. This also increases client confidence in using the account.
  3. Build staff capacity. Hold training sessions to build staff skill sets so they could recruit and maintain clients for savings. A comprehensive capacity building program can help staff understand the BC model, the technology behind it and enhance customer and sales skills and techniques.
  4. Create incentive schemes. Focus not just on account openings, but also regular transactions and the building of average daily balances. The balance of the three is important for long term savings sustainability. Cashpor created a “Sultan of Savings” scheme with gold coins for best performers as one program, but there are many possibilities solutions.
  5. Develop a customized financial literacy and marketing program. Create a customized financial literacy toolkit to help clients, especially first-time account holders, better understand the savings products and how to utilize their accounts.

India’s government has promoted financial inclusion on a policy level, but with a focus solely on enrollment, dormancy is a looming concern. Dormancy indicates that the newly banked are still not mainstreamed into the formal banking system and are missing out on opportunities that could help them move out of poverty.

Our techniques are explained in more detail in our full case study. What techniques have you discovered to combat dormancy in savings accounts? Please share so we can continue to learn from each other.