Stay in touch with your clients through Instafin Messaging

Within the financial services industry, we see two major trends that are affecting how financial institutions must work. First, mobile phone ownership is steadily increasing. In 2016, Gallup World Poll estimated that 82% of adults worldwide personally owned a mobile phone.

Second, the population in many developing countries is becoming younger, with a higher percentage of the population being made up of individuals less than 30 years old. In developing countries, 67% of those between 15-24 years old have internet access.

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.”

Enabling your financial institution to serve the clients of the future

Individuals from this growing young population are your financial institutions new clients  – your clients of the future. As they grow up and finish schooling, they will need financing to either to start their businesses, buy or rent a home, support their families or invest in their future.

Internet access and changing client behaviour means your financial institution must change to serve your clients of the future. 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. You can meet your clients’ demand for digital financial services and real-time communication through their mobile phone. 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

You can improve your communication with Instafin Messaging by using any messaging channel including SMS, WhatsApp, Viber, etc. The decision on which messaging channel is most important for you depends on your clients: whether they have mobile phones or smartphones, where do the live and what is the network like there, and what kind data packages or plans are your clients using. Depending on your answers to these questions about your clients, SMS is a strong catch-all choice. SMS messages can be received by any client, even if they have a very old phone with no data capabilities.

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

Being smart about the messages you send

While you enable Instafin Messaging, you need to be smart about the messages you send. Questions to ask to improve how well your messages are received include:

  1. Can this message type replace some operation which is currently taking place?
  2. Can this message type address an issue (e.g. fraud) which we have experienced in the past?
  3. Could this message type reduce the amount of time a member of staff is working on the task?
  4. Is this message type likely to have a positive effect on our PAR?
  5. Could this message type introduce our clients to a new process which can be developed on in the future?

Aligning Instafin Messaging with your strategy

Enabling Instafin Messaging is one of the steps to becoming a fully digitised financial institution. Instafin Messaging is a simple way to encourage clients to get used to receiving financial information through a digital channel. This will facilitate further moves to digitalising services and processes. Successfully implementing any new technology, tool or service requires that you align it with your business strategy. Instafin Messaging is suitable for most institutions that strive to achieve the following benefits:

    1. Improve your portfolio performance
    2. Reduce operating costs
    3. Maintain strong, lasting client relationships

Instafin Messaging enables you to reap these tangible business benefits by:

    1. Improving your portfolio: enabling you to send reminder messages to your clients to reduce the percent of your Portfolio At Risk (PAR) or portfolio in arrears
    2. Reduce operating cost: reduce airtime usage, reduce instances of fraud, reduce the amount of time it takes to recover late or missed repayments
    3. Maintain strong, lasting client relationships by enabling your field officers to spend more time educating your clients, rather than spending their time chasing clients who have late payments

Practical considerations to ensure success with Instafin Messaging

In addition to strategy, you should also consider other practical concerns. For example, will you be able to collect your clients phone numbers? If you do not already have their phone numbers in a digitised core banking system, your team must start collecting your clients’ phone number collection. This can be time-consuming and expensive, but most financial institutions cannot afford to miss the opportunity to communicate easily and affordably with their clients.

You must also consider how you will use Instafin Messaging. You must be sure to keep your clients informed, without sending too many messages. It is necessary to make sure that the messages you send have a benefit for clients and your institution. If you send too many messages, their positive effects may be lost and people may become frustrated about receiving the quantity of messages.

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:

Financial Inclusion Expert at Oradian

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