NRT 2011: Market Leadership for Rural Banks in Microfinance

An Invited Presentation at:
The 2011 RBAP-MABS National Roundtable
24 May 2011, Hyat Hotel, Malate, Manila

Developed & Presented by:
Ned Roberto, Ph.D.
Roberto & Associates, Inc.

Note: No part of this briefing material may be circulated, quoted, or
reproduced for distribution without the written approval from
Roberto & Associates, Inc.
© 2011 by Dr. Ned Roberto. All rights reserved.

What Is
Market
Leadership ?

3

Define and Understand …
… with this first case.
 In 2010, Wells Fargo =
6,335 retail branches called stores.”
12,000 ATMs
280,000 employees
> 70 million employees
1 of the Big Four Banks of the U.S.
with BofA, Citigroup, JP
Morgan Chase.

How Attained & Sustained …
… MARKET LEADERSHIP.
 Understood early brutal fact of deregulation = banking is a
commodity.
 So, pioneered application of technologies  chosen
metric of superior performance = profit per employee.
 Early leader in 24 hour banking by phone.
 Early adopter of ATMs
 1st to allow people to buy & sell mutual funds at an ATM
 Pioneered in Internet & e-banking.

Service Differentiating Even with
“Commoditization” …
 Case: ING Direct Bank*.
 March 2001, opened Cafes in 6 cities: Chicago,
Philadelphia, L.A., NYC, St. Cloud MN, Waikiki,
Honololu.
 Inside each Café, account-holder can via several
terminals, check status of account, surf internet
free of charge.
 Also features seminars on financial topics like
money management, handling one’s retirement,
mortgages and credit management.

Is that all that’s needed for …

… Rural Banks
to attain Market
Leadership in
Micro-Finance?

No, that’s not all!
 The micro-finance context = different & broader.

 Rural Banks’ designated mission and objective in
micro-finance =
“To do WELL and to do GOOD.”
 The 2 cases of Wells Fargo & ING = both after the
“Do-Well” goal only.

To Do Good to Whom?
 To the marginalized poor, the Class DE.

 The marginalized poor micro-entrepreneurs.

 And who are these?

The Socio-Economic Classes
SEC Categories % of Total*
 Class AB (Rich) segment 5
 Class C (Middle Class) segment 15
 Class DE-1 (Borderline Poor) segment 40
 Class DE-2 (Middle Poor) segment 25
 Class DE-3 (Extreme Poor) segment 15

*Sources: Socal Weather Stations & Poverty Mapping by Prof. Estrella
Domingo.

So to Which Poor?
 To do “well” 
 Where can you make money?
 The Borderline Poor segment.

 To do “good” 
 Who has the most need?
 The Neediest of the Needy (Extreme Poor)
segment.

Are there …
… Micro-
Entrepreneurs
in the Extreme Poor
Segment?

Payatas Food Stall

© 2006 Dr Ned Roberto. All Rights Reserved

 A Payatas Food Stall micro-entrepreneur …
 47-year old lady in Phase 3, Lupang Pangako, Payatas.
 Food stall = 2m x 5m with 1 shelf & 2 “eskaparate” for
food display.
 Food menu: sopas, spaghetti, lugaw, champorado,
paksiw na bangus, nilagang baboy, ginisang upo,
cooked rice, cigarettes & posporo.
 Sourcing of raw materials:
“Lahat ng paninda ko sa taipapa sa urban ko binibili. Ako
mismo ang nagluluto. Yand sigarilyo dun ko binibili sa mini
grocery dyan sa Belcas.”


 Sourcing of raw materials: (con’t – 2)
“Madaling araw ako namamalengke. Mga 4 ng umaga.
Nilalakad ko lang papunta at pabalik. Tapos pag dating sa
bahay, handa agad ng lulutuin. Para sa pang-almusal may
champorado, lugaw at sopas. Sunod yung spaghetti para idi-
display na ng 6:30. Mas maraming dumadating pag umaga.
Mga kapitbahay dito na nabili ng almusal. Bihira lang ang
dayo. Topos pahinga. Pag nakapahinga na, luto naman para
sa tanghalian. 2 hanggang 3 putahe lang. Kasi matumal
ngayon at walang pasok sa eskwela.”
“Sa ngayon di na muna ko nagtinda ng softdrink. Kasi
naubusan ako ng puhunan. Pag me customer na gustong
magsoftdrink, binibilhan ko na lang sa kabilang tindahan.
Pero sa June umpisa na ng pasukan, kaya ko nang magtinda
uli ng softdrink.”

 Best sellers and sales:
“Champorado at sopas ang pinakamabenta araw-araw.
Bumibenta ako ng P200 bawat kaldero araw-araw. Gulay ang
pinakamabenta sa tanghali kasi P10 per order lang. Minsan
me nabili ng P5 na order, pinagbibigyan ko na lang kasi
naaawa ako sa mga walang pambili. Sa gulay bumibenta rin
ako ng P150 to P200 a day. Nag-aaverage ako ng P600 to
P700 na benta bawat araw.”
“Last week, noong Linggo naka P650 to P750 ako sa 3 putahe
lang na niluto ko. Dinuguan, chopsuey at laing. Marami
kasing nagsimba na dumaan dito. Siyempre kaka-suweldo.
Me mga scavengers din dyan sa kabila sa Phase 1 ang
nagbilihan dito. Pag Linggo, yung iba tinatamad na ring
magluto at dito na lang bumibili ng pananghalian. Nakaka 30
to 40 customers ako.”

 Puhunan and microfinance:
“Nung minsang kinapus ako ng puhunan at kinailangang ko
talagang ituloy itong maliit kong bisnes, nairefer ako ni Kapitan
sa bangko na nagpapa-utang daw ng micro-credit. Di naman
ako na-approve at di daw ako qualified. Wala kasi akong
collateral at acceptable guarantor. Sa coop na lang dito ako
umutang ng pampuhunan. ”


Sta Mesa Food Stall


 A Sta. Mesa Food Stall micro-entrepreneur …
 55-year male along Teresa Riles, Sta. Mesa.
 Food stall = 2.5m x 3.5m.
 Food menu: mechado, nilagang baka, adobong sitaw,
paksiw na baboy, pritong isda, ginataang tilapia,
adobong baboy, kanin.
“Lahat ng paninda ay sa taipapa ng Sta. Mesa ko binibili.”


“Sa umaga, nagluluto ako ng maling, hotdog, longganisa, pansit
at champorado. Yan ang mabenta.”
“Every other day lang ang pagluto ko at lahat nauubos. Medyo
pare-pareho lang ang benta. Mga 20 katao ang kumakain dito
araw-araw.”
 Sales and customers:
“Nagpapautang ako. Pero hanggang 3 araw lang at sa mga
suki lang. Awa naman ng Diyos, wala namang hindi
nagbabayad.”


 Sales and customers: (con’t – 2)
“Sa ngayon, mahina kasi walang pasok. Pag Sunday, yun ang
kalakasan. Kasi walang ibang nagtitinda.”
“Bumebenta kami dito pag Sunday ng almost P2,000 arawan.
Mas mabilis maubos ang tinda pag Linggo. Hindi katulad pag
week days. Matakal maubos kasi maraming nagtitindang iba.”
“Mga 15 taon na kami nagtitinda dito. Nakapagtapos na mga
anak namin sa pagtitinda lang ng ulam.”
“Wala kaming problem sa pagkukunan ng puhunan. Meron kami
ditong mahusay at maaasang paluwagan. Di ko alam yang
micro-finance pero nadinig ko na. Micro-micro, e baka ma-
microbyo pa kami dyan.”

Payatas Sari-Sari Store


 A Payatas Sari-Sari Store micro-entrepreneur …
 40-year old lady in Phase 2, Lupang Pangako, Payatas.
 Store size = 2m x 5m “nakapalibot ng makapal na chicken wires.”
 Selling: detergent powder/bar, matches, cigarettes, katol, soy
sauce, vinegar, cup noodles/instant noodles, repacked paminta/
bawang/laurel, powdered milk/chocolate, ginisa mix, Mang Tomas
sarsa, bath soap, Zonrox, vetsin, Emperador Brandy, Downy
fabric conditioner, shampoo sachet, hair gel, lighter, diaper,
sardines, uling, bigas, repacked chlorine, quail eggs, mango,
ponkan orange, tinapay, chitchiriya, biscuits, candies, softdrinks.


“Yang mga groceries, binibili ko sa Phase 1. Kay Belga at sa
NSA grocery dito lang sa Payatas Urban.”
“Ang mga prutas, sa commonwealth market. Yung uling
dinideliver dito. Ganun na rin ang softdrink. Inoorder din yan
sa Phase 1.”
“Malakas dito ang benta ng uling at bigas. Sa groceries,
malakas ang sardinas, asukal at Lucky Me!”
“Nuong nakaraang linggo, ang benta ng sardinas – P200. Mga 2
dosena. And Lucky Me! – P100 o mga 1 dosena. Bigas, ½
na sako at ang uling, P200.”

 Best sellers and sales: (con’t – 2)

“Linggo ang pinakamabentang araw. Kasi suweldo at saka
yung iba nagbabayad na ng utang. Kapag Sunday, nakaka-
isang libo ako kasam na dun ang nagbabayad ng utang.
Umaabot na humigit kumulang sa 50 ang customers kapag
Linggo.”
“Lunes naman ang pinakamatumal. Mga P500 lang ang benta.
Pero mga 50 katao rin. Kaya lang kaunti lang ang binibili.
Siguro dahil nakapamili na ring ng ibang pangangailangan
pagkasahod ng Sabado.”


 Sales and customers:
“Nagpapautang ako kasi kung hindi ka magpautang, hindi ka din
nila bibilhan. At saka minsan, naaawa ako kung hindi ako
magpautang.”
“Ang madalas kong pinauutang ay 7 days lang ang tinatagal. Kasi
mauubos din yung puhunan ko kung matagal ang bayad.”
“Sa isang daan, mga 50% yung siguradong masisingil. Yung mga
kakilala lang ang siguradong magbabayad agad.”
“Ang karaniwang mga customers ko ay mga scavengers o sa mga
tambakan nakatira.”


“Kung minsang di ako makasingil kaagad ng mga utang,
kinakapus yung puhunan ko. Pero ang lakas at malaki na ang
coop namin dito. Dun ako nahiram ng ipangtatawid ko.
Nakakaraos naman lagi. Mahirap dun sa micro-credit sa
bangko. Daming hinihinging dokumento. Me kelangang pang
garantor. Di ko gamay kausap ang mga tao dun. Iba. Pero
iniisip ko rin yan. Kasi gusto ko rin namang palakihin itong
negosyo ko. Kaya lang nga puede rin naman itong coop namin
para dyan.”


Sta Mesa Sari-Sari Store


 A Sta. Mesa Sari-Sari Store micro-entrepreneur …
 55-year old lady with store along riles near Teresa, Sta. Mesa.
 Store size = 2m x 5m with 5 shelves = 3 on the left, 1 on the right,
1 in the center; and a counter in front.
 Selling: Modess, battery, cuticle remover, acetone, scotch brite,
lighter, Knorr sinigang, detergents (powder & bareta), kandila,
gamot (Medicol, Diatabs), taling goma, tawas, chlorine, asukal,
posporo, CDO & Karne Norte, Youngstown Sardines, katol, chalk,
sobre, suka, toyo, toothpaste, Milo, Tank in sachet, Lucky Me
Chicken Noodles & Pancit Canton, panundot sa kalan, mantika,
uling, softdrinks, Zonrox, shampoo (7 brands), Ginisa Flavor Mix,
breading mix, paminta, laurel, tina, biscuits, candies, vetsin,
cigarettes (3 brands), coffeemate, repacked coffee, tinapay,
chitchiria (2 brands).

 A Sta. Mesa Sari-Sari Store micro-entrepreneur …
“Sa palengke ako nabili ng ibinebenta dito. Yung iba, dinideliver
gaya ng softdrinks. Meron ding sinasama ko sa coop buying.”
“Malakas ang benta pag Sabado at Linggo. Mga 20 to 25
customers. Wednesday ang pinakamahinan. Less than 20
ang bumibili.”
“Nuon, nagpapautang ako weekly. Ang bayad sa weekend.
Kaso pagdating ng weekend e kalahati lang ang binabayad.
Pagkatapos ay mag dadagdag uli ng utang.”


 Best sellers and sales: (con’t – 2)

“Mabenta ang sigarilyo, cape, toyo, tinapay at biskuit. Gusto ko
ngang maging dealer ng prepaid card ng selfon at ang daming
nagtatanong. Asikasuhin ko siguro pag medyo nalibre ako.”
 Expansion plans and micro-financing:
“Sobrang liit na nitong lugar ko. Gusto kong i-expand sya.
Hihiram ako sa coop namin ng kapital. Yung tindahan dun sa
kabila, nagyayaya na sama kami sa micro-loan sa bangko at
ganun daw ang puede dun. Mag-partner. Pero nakasanayan
ko na kasi sa coop. So bakit pa?”


Poverty Alleviation Program
Implications
 Stop calling the borderline poor as the
“enterprising poor” as if no entrepreneurs can be
found in the extreme poor segment.
 Change poverty segmentation priorities. The
most need and the segment where the biggest
difference is to be made are with the extreme poor.
So reach this segment first.

Are the Microfinance
Establishments …
… reaching the
“Neediest of the
Needy,”
the Extreme Poor
Segment?

Are the “wholesale” MFEs …
… reaching them?
 The likes of: CARD, NWTF, Bansalan
Coop, Uplift, …
 Not really!

What about those of you …
… who are “wholesale” Rural Banks?
 Those of you who are multiple branch Rural Banks, are you
reaching them?
 To what extent?
 What’s your loan portfolio split like?
 What % go to micro-entrepreneurs in the Borderline Poor
segment, the Middle Poor segment, and most importantly, to
the Extreme Poor segment?

What about the “Retail” MFEs?

 Are the “retail” MFEs reaching them?

 Those local NGOs, are they?
 Those of you who are “retail” Rural Banks, who are Single
Office RBs, are you reaching them?
 To what extent?
 What’s your loan portfolio split by the poor segments like?

So Who’s Able …
… to only do well but unfortunately not yet do good?
 Do “well” = profitable.
 Do “quite well” = quite profitable.
 Do “very well” = very profitable.

 Who’s able to do and has the facts to show they do
well and also do good at the same time?

So What Do You Do?

 How can you Rural Bankers reach the micro-
entrepreneurs in the …
 Borderline Poor segment,

 Middle Poor segment, and

 Extreme Poor segment most especially?

In doing so, how can …

… you “DoWell”
& “Do Good”
at the same time?

1st. Stop Thinking …
… “competition,” at least at the rural bank branch
level.
 At the “category” level, … sana ganun.
 That is, at the rural bank as an industry vs other
categories of financial institutions participating in
micro-financing.

2nd. Start Thinking …
… instead (as one option) about a “FIT” between
a poor segment & an MFI.
 In what poor segment are the Rural Banks as a
category best suited to do well and to do good?
 What about the other micro-financing categories?
 How feasible, doable?

3rd. Start Thinking …
… instead (as another option) of carefully assigning
the attainment of:
 Your “doing well” objective to your “wholesale” lending
function or group.
 Your “doing good” objective to some of your “retail”
branches.

4th. Start Thinking …
… instead (as still another option) “CSR” (Corporate
Social Responsibility).
 Let your CSR Group take care of your “doing good”
objective including “doing good” to the neediest of the
needy, the Extreme Poor micro-entrepreneurs.
 Then your mainstream rural banking office and
branches will take care of “doing well” from which your
CSR “doing good” activities will source funding
support.

So, This Is How …
… Rural Banks as a category, as an industry will
gain
… sustainable
… market leadership
… in microfinance
… to assist micro-entrepreneurs
… in the borderline poor, middle poor
and most of all, extreme poor segments.

And This Is WHEN …
… it will make marketing sense
… to speak
… of market leadership
… for Rural Banks
… in Microfinance.

In closing, let’s pray as Reinhold Niebuhr did:

“God grant us the serenity
to accept the things we cannot
change, the things we can, and the
wisdom to know
the difference. Amen.”

Questions you were unable to ask?

Email me at:
ned.roberto@gmail.com

NRT 2011: Market Leadership for Rural Banks in Microfinance

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