How to build stronger client relationships with SMS messaging

Mobile phone ownership is steadily increasing. In 2016, Gallup World Poll estimated that 82% of adults worldwide personally owned a mobile phone. Individuals are using their mobile phones for a variety of daily interactions. Your financial institution must keep up with your clients and their changing behaviour.

As stated in CGAP’s article How SMS Messaging Can Change Financial Behaviours, “digital technologies can be turned from barriers to enablers of the kinds of behaviours that financial services providers want to drive.”

In the past, you and your field officers only had a few ways of communicating with your microfinance bank or rural bank’s clients. Your team was limited to a short list of ways to reach your clients including:
  1. Traveling to visit all your clients individually, requiring hours of transportation
  2. Calling your clients on the phone one-by-one to relay information about their accounts
  3. Relying on messengers: asking other community members to relay information to your clients

Today, your financial institution can build stronger relationships with your clients through more consistent and reliable communication. This is possible even when your clients are far from one of your branches or between their regularly scheduled meetings with your team.

“When I review the performance of our branches month after month, I can see our portfolio quality is getting better since we started sending repayment reminders with Instafin Messaging.”

Stronger client relationship, stronger portfolio performance

Based on our customer research and academic research, Instafin Messaging is enabling financial institutions to take more control of their loan portfolio and its performance. When your clients are repaying their loans on their time, according to the loan payment schedule you created, you are strengthening your loan portfolio. When your clients are repaying their loans on time, you are earning revenue that allows you to then create and disburse more loans, or to increase the amount you can lend to your current clients.

Stronger portfolio performance enables your financial institution to drive profitability and attract investment from funders who consider metrics including:

  • Operational and profitability costs and ratios
  • Gross Loan Portfolio (GLP)
  • Outstanding and disbursed loans
  • average maturity of loans
  • Portfolio at Risk (PAR) levels – PAR30, PAR60, PAR90, PAR180
  • Risk Coverage Ratio (loan loss reserve / PAR30)
  • number of rescheduled loans and reasons for the rescheduling

By improving your repayment rates and decreasing your PAR levels,  you are improving your ability to access funding to finance your business’ growth.

Enabling you to take control of your Portfolio at Risk

Portfolio At Risk (PAR) is the percentage of your total loan portfolio that is at risk. The risk is measured by the number of days that your client’s payment is late or overdue. After a certain number of days have past after a loan payment is due, generally 90 days, the loan is considered as a default. With Instafin Messaging, you can remind your clients of their upcoming payments. Sending payment reminders can lead to higher repayment rates, reduced PAR, more efficient field officers and improved client meetings.

On average, financial institutions start reducing their Portfolio at Risk within the first month of enabling Instafin Messaging. Their Portfolio At Risk continues to decrease month after month.

What is Instafin Messaging and how does it work?

Instafin Messaging is one of Oradian’s Additional Services that is built into Oradian’s platform. It is a messaging service that enables you to send messages directly to your clients’ mobile phones directly from your Instafin dashboard. It is streamlined communication between your clients and your team. Instafin Messaging is a service created so you can automatically communicate with your clients in real-time. This is your opportunity to improve your portfolio performance and build stronger client relationships.

“More of my clients are sending repayments for their loans on time — without having to call them on the phone and remind them about their repayment.”

Improving communication with your clients through Instafin Messaging

When you equip your team with Instafin Messaging, you choose which types of messages you want to send to your clients. For example, you can send a message when your clients:

  1. Receive approval on their client application
  2. Receive a loan disbursement
  3. Deposit funds into their accounts
  4. Withdraw funds from their accounts
  5. Make a loan repayment
  6. Have a repayment due soon
  7. Are late on a repayment

Ask these two questions to find out if your business can benefit from Instafin Messaging

1. Is your portfolio aligned with industry standards?

Portfolio quality is a key metric for your financial institution. It affects your profitability and can play a role in determining if you will receive funding from other banks or lenders. It is in your best interest to make sure your portfolio breakdown matches the industry standards. Compare your portfolio to the industry standards for the following metrics:

Your portfolio breakdown

  • Active loans
  • 1-30 days overdue
  • 61-90 days overdue
  • 91-180 days overdue
  • 181-365 days overdue

Key indicators

  • Field officer productivity
  • Operating expense ratio
  • Portfolio yield
  • Outstanding loan portfolio size
  • Risk coverage ratio

2. Are your clients getting the most from your meetings?

If your meetings with your clients are only about administration and collecting payments for loans, you are missing opportunities to share other information. Your team could use this valuable face-to-face time with their clients to share best practice, talk about financial education and offer other financial services. Are you using your time with your clients wisely?

Download your free guide to stronger client relationships with Instafin Messaging