Client Voices: collecting client data for structured microfinance social performance feedback

Enhancing microfinance transparency &

accountability through direct client monitoring
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Background
In the last few years, the microfinance sector has systematically expanded and
deepened information on social outreach and performance. Many of these efforts are
focused on strengthening third-party reporting validation. However, consistent
information on whether clients experiences match the aspirations of MFIs is still limited.
This regards especially client protection and, by extension, how clients value the
relationship with their finance provider.
Although many MFIs collect client feedback, the used approaches often lack
transparency, data quality and common standards. This limits making customer-oriented
decisions and constraints effective client monitoring. Meanwhile, the rise of mobile
technology created an opportunity to collect broad feedback from clients in a costeffective manner.
Our proposed Voice of the Client approach builds on Hivos experience with citizen
monitoring. It goes beyond complaint mechanisms by not awaiting client feedback, but by
pro-actively asking for it. When the opinion of clients is made public, MFIs are stimulated
to provide clear information on how they protect customers. To foster MFIs transparency
and accountability, client-level data should therefore be made available on platforms
such as MIX Market, alongside other MFI-performance data. At the same time, client
data and benchmarks are important for the institutions own portfolio management (thus
providing options to make the intervention self-sustaining). Our approach is linked to
existing industry initiatives aiming at assessing consumer protection, such as the Smart
Campaign Client Protection Certification.
Approach and pilot
The proposed intervention is designed in three distinct parts: a preparatory phase (six
months), a pilot (12 months) and roll-out (24 months). The approach builds on close
partnerships with local networks to help ensure broad MFI participation and local
relevance. We also have a clear collaboration with global experts (such as the MIX
Market and the Smart Campaign) to ensure that data collection is consistent with global
standards and based on reliable client feedback.
Data will be collected from on average 1250 clients per MFI per year. Contact is through
direct calls and Interactive Voice Response. Independent monitoring firms will be
contracted to ask customers factual and neutral questions about microfinance service
delivery through straightforward quantifiable response options. The interviews will cover
seven global client protection issues and three open questions defined by participating
MFIs.
The pilot in phase 2 will start with five partner MFIs per country in India and Peru. In
phase 3, 75 MFIs with 2.25m clients in five countries are expected to participate, followed
by further roll-out (see next page):

Client Voices: collecting client data for structured microfinance social performance feedback

Timeline
Pilot country 1
Pilot country 1-2
Countries 2
Countries 3-5

Phase 1
6 months
Preparing

Phase 2
12 months
Pilot

Phase 3
12 months
12 months
Roll-out
Roll-out

Expected project outcomes:

Phase 1: the core team will establish partnerships in targeted pilot countries during
the 6-month preparatory phase. A local firm will be contracted to carry out interviews
and a programme manager will coordinate operations. The supervisory board already
established a technical committee to refine indicators and the survey methodology.
Phase 2: the pilot will launch with a sample of five MFIs per country. Based on this
experience and MFI feedback, the indicators and approach will be finalised for the
roll-out. The pilot findings will be made available to MFIs, clients, funders and
networks to build awareness and promote change towards consumer protection.
Phase 3: in the roll-out phase we expect that 75 MFIs will participate across five
countries. During this phase, a set of new tools will be available for the industry: a
scoring system to help microfinance stakeholders assessing client satisfaction of
microfinance initiatives; country scorecards; and MFIs will be able to use the survey
outcomes to diagnose regularly the health of their portfolio. The results will also be
useful for national financial authorities and for other initiatives aiming at promoting
transparent pricing, such as MFTransparency.
Governance and sector involvement
Representatives of Hivos and MIX currently oversee the efforts to ensure the success of
the client-monitoring programme. Operational input is given by the technical committee,
which include key stakeholders and survey experts. We will also include local key players
such as microfinance networks to ensure proper buy-in, compliance with local data
disclosure laws and scalability of the initiative.
We will be working with microfinance network organisations to reach partner MFIs and to
promote the programme at the country level. To ensure scalability of our plans, it will also
be important to reach out to the investors community and gain their involvement in
setting up an agenda for promoting client level data collection.
Budget
The overall budget for the preparatory and pilot efforts (18 months) is estimated at
392k. Hivos has committed funding for a portion of this and has secured support from
one financial institution and two technology firms. The team is now inviting other
interested parties to discuss collaboration and funding opportunities so that the intended
scale can be reached.
Estimated budget and
Prepare
Pilot
Roll-out
output
6 months
Year 1
Year 2
Year 3
Total budget
97k
295k
225k
592k
Accumulated
97k
392k
617k
1.2m
Current funding pledged 400k (covers 33% of the total budget)
Funding needs
- 303k
-8k
392k
608k
Active countries
1
1
2
5
Involved MFIs
1
5
20
75
Involved clients
30k
150k
600k
2.25m
Cost per client
3.23
1.97
0.37
0.26