1. Using SMS Technology to Encourage
Savings and Loan Repayments
MABS Na>onal Roundtable Conference
Innova>ons for Poverty Ac>on
May 13th, 2009

2. SMS reminders to save
Mo#va#on
• Small, frequent deposits make it easy for low‐income
households to accumulate savings;
• But they oOen don’t have a habit of saving;
• In a previous study, we found that a large number of
clients in a savings program forgot that they had
savings accounts
 Reminders may help them to make more
frequent deposits

3. SMS reminders to save
• Par>cipa>ng Bank: First Valley Bank
• Target clients: New micro‐savers
• Savings product: Gihandom “Dream” Savings
– Clients choose their own savings goal amounts
and goal dates
– Clients get “lock boxes” to help them make daily
deposits

4. SMS reminders to save
Timing of messages
• Regular (monthly) reminders
• Late reminders: sent to clients who made no deposit
for more than 30 days
Framing of messages
• Posi>vely framed: highligh>ng the benefits of saving
“Frequent deposit into the Gihandom Savings account will
make your dream come true. A reminder from 1st Valley
Bank”
• Nega>vely framed: highligh>ng the downsides of
failing to save. “If you don't frequently deposit into the
Gihandom Savings account, your dream will not come true. A
reminder from 1st Valley Bank ”

5. SMS reminders to save:
Summary sta>s>cs
Opened an Did not open an
All account account
Female 67.3% 80.5% 63.3%
Age 34.079 34.170 34.052
Married 64.1% 67.5% 63.1%
Saved at formal ins#tu#ons 30.2% 40.8% 27.1%
A;ended some college 44.4% 55.7% 41.1%
Has piped water in household 57.8% 73.3% 53.2%
Income for the past 7 days 1093.30 1508.08 969.36
Does not have a cellphone 55.8% 33.1% 62.5%
Number of observa#ons 10058 2314 7744

6. SMS reminders to save: Results
# Clients
Total savings Number of 450
deposit clients 400
350
300
No SMS P 1721.38 268
250 Regular
200
Late
reminder
150
100
50
Regular text reminders 0
No SMS Posi>ve Nega>ve
PosiGve +2.9% 344 Savings Deposit
1950
NegaGve +12.1%** 382 1900
1850
Late text reminders 1800
Regular
PosiGve +9.2%* 421
1750
1700
Late
1650
NegaGve +3.1% 433 1600
No SMS Posi>ve Nega>ve

7. SMS reminders to save: Results
# Clients
Propor#on Numb 450
er of
400
350
clients
300
250 Regular
200
No SMS 19.7% 268
Late
150
100
reminder 50
0
Regular text reminders No SMS Posi>ve Nega>ve
Propor>on
Posi>ve +1.2% 344
22.50%
Nega>ve +7.6%** 382 22.00%
21.50%
21.00%
Late text reminders 20.50% Regular
20.00% Late
Posi>ve +7.6%* 421 19.50%
19.00%
Nega>ve +2.1% 433 18.50%
No SMS Posi>ve Nega>ve

8. SMS reminders to save: Results
Summary
• Nega>vely framed messages are more effec>ve
for regular reminders
• Posi>vely framed messages are more effec>ve for
reminders for dormant accounts
• The impact is greater among
– Female
– Wealthy
– Clients who have saved previously at formal financial
ins>tu>ons

9. SMS Reminders for Loan Payments
Mo#va#on
• Costly for the account officers to visit clients
many >mes to collect/remind them to repay
• Clients may not be good at planning and saving
to make loan payments
• Simple reminders could help them put aside
money for loan payments

10. SMS Reminders for loan payments
• Par>cipa>ng Bank:
– Rural Bank of Mabitac
– Green Bank
– First Valley Bank
• Target clients: Exis>ng borrowers
• Frequency of messages: weekly

11. SMS Reminders for loan payments
Framing of messages
• Posi>ve message (“to have good standingquot;)
• nega>ve message (“to avoid penaltyquot;)
Personaliza#on of messages
• Client's name
• AO's name
Timing of the text messages
• 2 days before the weekly payment
• 1 day before the weekly payment
• Day of weekly payment

12. SMS Reminders for loan payments
Results on framing
Timing
Day of 1 day 2 days
payment before before Number Percent
No SMS reminder 109 31.3%
Posi>ve, client name 15 16 19 50 14.4%
Nega>ve, client name 24 17 25 66 19.0%
Posi>ve, AO name 18 20 21 59 17.0%
Nega>ve, AO name 24 19 21 64 18.4%
Note: This analysis excludes 1) data from holy week, and 2) clients who
have 100% late payments (i.e., never repaid on >me)

13. SMS Reminders for loan payments
Results on framing
Propor#on of late weekly Number of
payments clients
No SMS reminder 17.7% 102
Posi>vely frame 13.2% 93
Nega>vely frame 17.6% 118
Summary
• Clients who receive posi>vely framed messages have lower
propor>on of late weekly payments
• The effect is not sta>s>cally significant (i.e., non‐conclusive),
and a longer observa>on may provide us more concrete
results

14. SMS Reminders for loan payments
Results on personaliza>on
Propor#on of late Number of
weekly payments clients
No SMS reminder 17.7% 102
Account Officer’s name 12.9%* 111
Client’s name 18.8% 100
Summary
• Clients who receive messages with AO’s name have a
lower propor>on of late weekly payments by 4.8
percentage points;
• The Effect is sta>s>cally significant;

15. SMS Reminders for loan payments
Results on Timing
Propor#on of late Number of
weekly payments clients
No SMS reminder 17.7% 102
2 days before 17.9% 76
1 day before 14.1% 64
Day of the payment 14.8% 71
Summary
• No effect found on messages sent 2 days before payment due;
• Clients who receive reminders 1 day before, or the day of the
payment have lower rate of late payments
• The effect is not sta>s>cally significant (a longer observa>on is
needed)

16. Summary
• Sending text messages is an easy way to
– remind clients to save/make loan payments
– help clients form a habit of saving/making loan payments
• But need to put some thoughts into what messages
to send
– Nega>vely framed regular messages are more effec>ve in
encouraging clients to save;
– Posi>vely framed messages seem to reduce late payments
– Personalizing the messages with AO’s name reduces late
payments
– Reminding clients about the payment too far in advance (2
days before) doesn’t seem to reduce the late payments