Steps
The implementation steps for the CRM bank, and microcredit program should be started by finding the professional team that will be engaged in assessing the market and implementing the necessary steps for micro-crediting development.
The next step is the arrangement of the proper banking financial structure as well as the assessment of the marketing situation. The impoverished people are often too skeptical on the matters of crediting, hence, the promo campaign should be arranged. People should realize that they have an opportunity to take microcredit, start business activity, and then return the credit. The next step is risk assessment. The effectiveness of micro crediting in poor regions is 20% (The Microcredit Summit Campaign, 2008). This means that in average 1/5 of the clients are able to overcome the poverty line, while up to 15% of credits are not returned because of various reasons (decease, catastrophe, murder, imprisonment etc.)
Definition of development strategy is the following key step in micro crediting development. This involves the selection of software and hardware basis of the financial activity and the outlining of the analytical tools that will be used for adequate assessing of the progress.
Development Plan
Short-term
This presupposes the creation of the consumers’ base and arrangement of the initial steps for providing micro-crediting to the population. The steps and actions required for creating this plan are as follows:
- Risk assessment (including demographic study)
- Creation of the technical basis, and communication system arrangement
- Launch of the promo
Mid-term
- Assessment of the incomes and losses
- Application of the analysis tools
- Extension of the personnel (creation of the proper delegation structure and motivation system)
- Improvement of the IT base
Long-term
- Improvement of the crediting obligations and decrease of the interest rate. Creation of lax crediting system
- Providing of credit insurance system
- Cooperation with social structures for defining the risks of non-returning (Migration services, Public Health, etc. )
Marketing Strategy
The marketing strategy of the company involves numerous social, marketing and financial aspects of crediting development.
Product
Micro-credits ranging from $ 25 to $ 1000 (7 levels of loans) for starting a business. These are not consumers’ credits, hence the interest rate is higher. The interest rate involves the consideration of inflation rate as well as risk assessment (rural with a 30% fixed interest rate and urban with a 20%). Loans starting from $ 150 will be available only after 2 years of positive credit history achievement. (Maes, Foose, 2009)
Place
Rural and urban departments of CRM bank in Mexico and Mexico City. The place is selected for the great opportunities of micro-crediting development and the great amount of the target audience. (Rhyne, 2004)
Promotion
The service is mainly aimed at women, as in accordance with statistics (Rutherford, 2002) up to 90% of micro-credit borrowers in underdeveloped countries are women.
Pricing
This involves the interest rate for loan amortization 20-30%
Measurement
Analysis and measurement of success may be performed by using a system of ratios: Liquidity, Asset turnover, Financial Leverage, and Profitability. These indicators will help to assess the financial success of the organization as well as provide the necessary analysis associated with risks, social environment, and program effectiveness. (Microfinance Information Exchange, 2010)
The effectiveness of the team performance may be measured by the rate of loans provided / loans returned, the number of clients and returned clients. The technical team should be assessed by the rate of technical failures of the equipment, as well as the average speed of operations. If the speed grows, this means that the technical team is working effectively, and vice versa. (Rutherford, 2002)
Soft- and Hardware
The technical performance of the company is closely associated with the matters of financial effectiveness of the company. Hence, the hardware needs to correspond office needs: file storage (up to 150 Gb), quick search (2.0 MHz processor and higher), and sight-safe displays (flat LCD), ergonomic input devices (mouse and keyboard), printers and scanners for processing client’s data. Communication hardware such as phones, network cards, modems. UPSs for being insured against voltage leaps.
The software of the system needs to correspond with the tasks and aims of the organization in general. File management and editing, OCR systems, and data protection software are the key aspects of loaning activity. Database software should provide all the necessary aspects of data protection and data search. Communication software is required for contacting partners, clients, other departments and services listed in long-term development points.
Relevant Fields
Micro-credit loaning may be used for private business development and helping people to create additional working places. Hence, family workshop traditions may be used as the source of stable income if these traditions have the required manufacturing basis. (Dias, Morales and Sandoval, 2009) Considering the fact that the service is mainly aimed at the rural population, the loans will be used for developing farms, auto service stations, and small shops. The approximate structure of application is as follows:
Reference List
Dias, Y., Morales, J., Sandoval, R. (2009) Opportunity in diversity: Insights from McKinsey’s Latin American Payments Map. McKinsey Report
Maes, J., Foose, L. (2006) Microfinance Services for Very Poor People: Promising Approaches from the Field. Poverty Outreach Working Group SEEP Network
Microfinance Information Exchange (2010) Mexico 2009. Microfinance Analysis and Benchmarking Report. A report from Microfinance Information Exchange
Rhyne, E. (2004) Mainstreaming Microfinance: How Lending to the Poor Began, Grew. Kumarian Press.
Rutherford, S. (2002) ASA: The Biography of an NGO, Empowerment and Credit in Rural Regions. ASA, Dhaka.
The Microcredit Summit Campaign (2008). Web.