Why are Digital Interactions Among Savings Groups So Low?

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The findings from the Qualitative Impact Assessment Protocol synthesis confirm that ISM users do open individual accounts. However, they do not typically use these accounts to contribute to or receive loan disbursements from group savings. The monitoring data that SatF’s partner FSPs gathered as part of regular program assessment supports this finding: Despite relatively high uptake and usage of both group and individual bank accounts, digital M2G/G2M transactions remain low.

Why are member-to-group and group-to-member (digital) interactions so low?

In discussion with our partnering FSPs, SatF has identified five potential reasons for low uptake of M2G/G2M digital channels.

First, for a few ISM users, saving in different accounts (group vs. individual) helped them organize the money in different “buckets” for different purposes. Savings with the group accounts tended to focus on long-term goals (e.g., business investments), while individual accounts were more likely to be used to save for short-term or unexpected needs. This distinction calls into question the utility of linking group and individual accounts digitally, because the two represent different tools in ISM users’ mental accounting.

Second, in contrast to the first reason, some users saw the accounts as serving essentially the same purpose, with little need to have both. One group said their members didn’t have enough money to save in personal accounts on top of their group contributions. The positive peer pressure of savings groups and the requirement to contribute to retain active member status might also lead savers to prioritize saving in the group. This suggests that individual accounts serve as a “container” for any leftover money after savings to the group are made.

Third, digital or mobile G2M/M2G transactions raise the france whatsapp number data problem of double bookkeeping for ISMs, requiring them to reconcile digital transactions and balances with cash balances. Understandably, ISMs are reluctant to take on this additional work, especially since one of the key value offers of ISMs to their members lies in the transparency of transactions: Group members can see the cash, both when they contribute and when they take out loans. They can also physically check the lock box at meetings. So far, none of SatF’s FSP partners have found a digital solution to streamline and integrate this process while maintaining this degree of transparency and convenience.

Fourth, one key value of formal ISM accounts to users is that they provide interest payments, and potential future access to loans from the FSP that provides the group account. However, FSPs’ low interest rates were often cited as a deterrent to opening and using both individual and savings group accounts. This is corroborated by a 2019 SatF study on ISMs and their users in Zambia, which found that in order to be attractive, FSP value propositions had to “put users’ money to work” to earn more money, instead of just allowing it to sit idly.

Fifth, in two cases, ISM users saw individual bank accounts and mobile money accounts as interchangeable, with mobile money sometimes preferred because the agents are already known to users, and because it can be used for a variety of payments/transactions outside the group. This points, once again, to the importance of understanding user needs: Those who want to balance security with liquidity may prefer mobile money, whereas those looking for mechanisms that enforce restraint and commitment might prefer bank accounts, which are harder to access and therefore offer a greater degree of protection from impulse spending.