Savings Mobilization
Seminar-Workshop
Session 1.
Introduction
Introduction
1. Seminar objectives
2. Why and how people save
3. What is savings mobilization?
4. Success factors
5. Keys to viable savings mobilization
Seminar Objectives
Participants will:
• Analyze their bank’s performance in mobilizing
deposits.
• Set deposit targets.
• Learn and apply market research tools for
designing new deposit products.
• Design new product concepts.
• Formulate strategies for increasing deposits.
Seminar Objectives…cont.
Group Activity 1: Why does our bank need training on
savings mobilization?
1. Arrange the reasons printed in the set of cards in order of
importance to your bank.
2. Add other reasons you think are important to your bank.
3. Paste the reasons on Manila paper and hang on the wall.
4. List down the reasons agreed upon by your group when
completing the exercise “Our understanding of why we need
training on savings mobilization”
Group Activity:
Why our bank needs training on Savings Mobilization
Session 1. Handout 1
Our understanding of why our bank needs training on Savings
Mobilization.
1.
2.
3.
4.
5.
Why People Save & How They Save
A. Why do people save?
B. How do people save?
Why do people save?

Children’s education

Capital for new or
existing business

Retirement /
wealth accumulation
Why do people save? (cont.)
 Emergency needs
– illness, disability, death
 Everyday needs
– school expenses, food, utilities,
– transportation, clothing, rent,
 Acquire fixed assets
– house renovation, appliances
 Special occasions
– fiestas, weddings
How do people save?
• Non – monetary form
• Monetary form
How do people save…cont.
Non-Monetary Form
– jewelry
– livestock
– inventory
– land
– house
– durable items
Monetary Form
– cash
– passbook
savings
– time deposit
– rosca (“paluwagan”,”
bubo-ay” )
How do people save …cont.
Problems with non-bank savings
• Cash - potential for theft, overspending, demands from family
• Jewelry - theft, loss, difficulty of selling in an emergency
• Livestock - theft, death of animal, difficult to sell in an
emergency
• Inventory - spoilage, theft, storage
• Land & house - not easy to sell
• Durable items - depreciation, theft
How do people save…cont.
Advantages of Bank Savings
• Withdraw-ability - easy access
• Security - deposits are insured; no problems of theft
• Returns - interest income; investment
• Access to other services - loans
What is Savings Mobilization?
 The process of capturing, protecting, managing
and using funds solicited from the public to
finance the bank’s lending and other capital
needs
 It is the other half of financial intermediation,
where deposits from savers are used by banks
to make loans to borrowers
Major Fund Sources for Lending
Internal Sources
• Deposits
• Loan Collections
• Earnings
• Capital
External
• Borrowings
Success Factors in Savings Mobilization
• A corporate culture to mobilize deposits
• Management commitment and support to a culture of
reliance on internal funds
• Savings mobilization viewed as a permanent and long-term
bank activity
• Competent and motivated marketing staff
• Ability to look beyond core business
Keys to Viable Savings Mobilization
1. Achieving volume
2. Managing operating costs
Keys to Viable Savings Mobilization:
Volume
How does a bank achieve volume?
1. Build trust & confidence
= Location. Convenience.
= Physical Appearance. Professional Image.
= Security.
2. Expand to clients with bigger deposits
3. Product Diversity. Feel and assess the needs of the
market
4. Institutional involvement in savings mobilization.
Keys to Viable Savings Mobilization:
Managed Costs
•
Keep interests competitive with market rates;
•
Balance administrative and transaction cost vs.
deposit balances.
Examples:
–
Give incentives such as higher interest rate, special gift,
interest paid in advance, or tax free interest when deposit is
kept at least 5 years.
Keys to Viable Savings…cont.:
Managed Costs
More Examples:
- Set higher minimum maintaining balance/s to earn
interest
- Incentives for clients and staff to increase average
outstanding balances to meet ‘break-even’ levels;
- Offer “value-added” features in place of some interest.
Ex. Free life insurance premiums, appliance, other
household items, etc.