Case 3: Mobile Deposit Collectors in Sumatra, Indonesia

Vital Savings Statistics: BPR VII Koto, Indonesia Type of institution Rural Bank Number of voluntary deposit accounts 1346 Demand deposits 1312 Term deposits 34 Average voluntary deposit account (for individual savers) 151 Average demand deposit account 150 Average term deposit account 964 Total value of savings($) 202,658 Demand ($) 169,888 Term($) 32,770 Total number of borrowers 406 Loan portfolio($) 242,333 Percentage of rural/urban clients 95% Number of branches (*) 1 All values in US $

Technique:
Mobile deposit collection

Takeaway:
Using deposit collectors to service small savers can extend a financial institution’s catchment area at relatively low cost

Case:
BPR VII Koto is a small cooperative rural bank serving low-income clients in mainly rural areas of West Sumatra, Indonesia. Although this BPR has just one branch, it extends its outreach by using roving deposit collectors. These bicycle- or motorcycle-mounted collectors visit about 300 clients every day, facilitating savings for customers who need to deposit money frequently but cannot make trips to the branch that often.

Clients who use deposit collectors are typically located one to 10 kilometers from the branch. Usually, they are either small depositors, for whom the cost of traveling to the bank may exceed the value of the savings to be deposited; or particularly busy customers, for whom the time needed to visit the branch would not be worthwhile. The average balance of customers served by deposit collectors is US$65. Although their balances are low, BPR VII Koto has observed that small depositors tend to stay with the bank longer than others. The BPR therefore considers them a primary market, and deposit collectors a means of cementing these valuable client relationships in the face of growing competition from other banks entering the area.

The BPR does not charge clients a fee for using deposit collectors, but offsets the cost of this service by reducing the interest rate on smaller deposits. Since most deposits through collectors are small, their total cost is nearly the same as deposits made through the branch. Further, the collectors only service basic passbook accounts; to access higher-return accounts, customers must go to the branch. Recruiting collectors from the ranks of secondary and sometimes high school graduates also keeps labor costs low. Salaries range from US$70 to $100 per month, including an incentive based on the volume of deposits mobilized.

In some countries, fear of theft and fraud has led financial authorities and financial institutions themselves to limit offsite deposit collection, but this is not the case in Indonesia. To prevent fraud, BPR VII Koto has created a system where the collector makes a carbon copy of entries to clients’ passbooks, creating a record of the date, amount of deposit, new balance, and account number for the institution. The carbon copies are attached to the deposit vouchers when collectors deposit the amount of money collected each day. The branch supervisor can then check these records against the passbook when a client comes to withdraw money, which is done only at the branch.

Collectors generally cover an area of about one square kilometer and visit 30-50 households daily. Since each family typically has four to six members, and each member may have their own BPR account, collectors can generate up to 60 deposits per day. BPR management believes that by making small, frequent saving easier, collectors can help build savings habits among their clients.