What problems do credit-based financial institutions commonly face when developing savings services?
For a credit-based institution, managing the shift to being a full-fledged financial intermediary is a complex challenge, bigger than simply developing new products and adapting some management systems. The transformation to a full financial intermediary fundamentally changes a financial institution. Some of the biggest challenges include: Sufficient Staff Commitment – Many institutions find that one of the biggest obstacles to developing sound savings operations is staff resistance. To overcome this, savings-oriented human resource management is crucial. If the existing institutional culture, staff incentives and evaluation system reward only strong credit performance, management must change these to prioritize savings. Cost Recovery – There are two keys to viable savings mobilization: 1) attracting an adequate volume of deposits and 2) managing operating costs. Achieving this volume and level of cost control requires rigorous management, appropriate incentives, effective mechanisms f
