In our last blog, we looked at making the business case to MFIs to integrate financial (and non-financial) services for young people into their portfolios. One of the drivers we looked at was the need for said products to be low cost. “The cost of youth clients (and youth-friendly products) are comparable to the cost of adult clients. Loan Officers are able to integrate youth into their client portfolios without additional costs.” So how do you do that?
We developed an approach that takes 12 steps or 4 phases to build MFI capacity to offer a new youth-friendly product. In the product development (PD) cycle, we begin with phase 1 – the identify phase – to support partner MFIs in identifying the needs of their new target client. This is accomplished through targeted information gathering, analysis and conducting interviews with current clients and non-client to discern their needs and wants from a new product.
From there, we get to enter into the fun part of design, making use of the analyzed information that was gathered during the identify phase. During this phase, the product development team (both MFI and project implementer) conducts costing exercises and works through projections of what the product should and could look like, trying to envision a product that will be a) attractive to future clients, and b) something sustainable for MFIs, even if this is in the long-term.
From there, we enter into the testing phase, which we call the prepare phase. We prepare to test the new product among clients and potential clients, while adding in a feedback loop that aids in the iterative nature of this phase.
Now we are finally ready for the launch phase, where we finalize piloting of the prototype, ensure we have put strong M&E/MIS structures into place and prepare to roll out. At this point, it is a matter of fine-tuning the product, making sure the MFI staff has been appropriately trained on the new product, and that new processes/procedures and forms are ready to go to support the roll-out plan.
Of course, this sounds easy when written into a blog entry. The reality is often a bit more challenging. For MEDA’s client-centric design, we have found that some pieces come earlier than expected, some take longer than anticipated, but each step is a crucial piece in the product design.
For youth products for youth, the identify and prepare stages are some of the most crucial, as this is where we find what youth needs are and then begin testing what we think we know on these future clients. We also begin to hone in on our outreach strategies, how we can best reach youth in a low cost way for the MFI.
All 3 of our MFI partners in Morocco found that the PD process led to a creation of new, innovative products. They were developed based on the recommendations of youth clients that emerged during the identify phase. The table below highlights the prototypes from each of our 3 MFI partners in Morocco:
Descriptions of new youth loan prototypes
Thanks to the results of the market research, MFIs tailored key aspects of the product to meet youth needs. The highlights are:
Reduction in the minimum age of youth clients from 21 to 181 for INMAA and Attadamoune (Attadamoune attributed this change directly to the recommendations of the market research);
Attadamoune opened the loan to youth business start-ups;
INMAA lowered the interest rates for the youth loan2;
Maximum loan amounts were increased (INMAA’s loan was previously capped off at 20000 DH);
Guarantee requirements were relaxed;
Mandatory NFS training (Financial Education) was added to all the three youth loan prototypes.
MEDA’s experience with the PD process shows that building MFI capacity can lead to closing the gap between youth ambitions and the limited financial accessibility of products to help them achieve business and entrepreneurial goals.
1. In what ways has market research guided your product development processes? Has it led to product features that surprised you and your partners?
2. What stages do you find critical in your product development process?
1: In practice, the legal age to obtain a loan in Morocco is 18 years old, but front line staff avoided granting loans to such young clients.
2: What stages do you find critical in your product development process?