Financial products Details

The microfinance industry is one of the few remaining industries in the world that is primarily product- rather than market-driven. With the rising recognition of the costs associated with high levels of drop-outs and their implications for achieving sustainability, there is a growing appreciation of the need to deliver client responsive products. Increasing levels of competition in many markets have also highlighted the importance of a market-driven approach to microfinance. There is little reason to doubt that the microfinance industry will follow the trend of the commercial world towards a market-driven approach and that MFIs that do not respond to the needs of their clients will eventually fail.

Many MFIs are looking at new product development as a way of responding to their clients’ needs. However, they often do not understand the complexity and cost of product development. This note suggests a few essential questions to ask prior to setting about new product development.

These questions are as follows:

1. Motivation: “Are we starting product development to make our MFI more client-driven?”
2. Commitment: “Are we setting about product development as a systematic process based on defined objectives?”
3. Capacity: “Can our MFI handle the strains and stresses of introducing a new product?”
4. Cost Effectiveness and Profitability: “Do we fully understand the cost structure of our products?”
5. Simplicity: “Can we refine, repackage and re-launch existing product(s) before we develop a new one?”
6. Minimize Confusion, Complexity, and Cannibalisation: “Are we falling into the product proliferation trap?”

• looking before you leap (EN)
• observando antes de saltar (ES)