Kristin R. MoyerAlistair Newton here. I was struck yet again as I watched an interview last night with Professor Muhammed Yunus, the Nobel Peace Prize winning founder of Grameen bank, that the key to successful banking is really quite simple. Know and understand your customer, and deliver products and services to support their needs.
“The Banker to the Poor”, Professor Yunus was responding to a recent World Bank report which highlighted threats that the overspill from the financial crisis could trap 53 million more people in poverty. The good news was that, whilst calling for action to support the burgeoning microcredit industry to help avoid such a tragedy, he was admirably upbeat about the prospects for an industry in which he has played such a pivotal role.
He also made some interesting points. In doing so he reiterated that the success of lending money and ensuring all or most of it is repaid, is still based on the fundamentals of getting close to customers and understanding their requirements. He felt that this connection with customers engendered the trust and loyalty which results in the low default rates on loans, and which in turn allows the industry to continue flourishing. He also raised the possibility of a fundamental shift in banking as some of these core facets of microlending start to seep back into mainstream lending. Banks really understanding their customers! Seems like a great idea to me.
In Gartner we’ve been researching extensively about the opportunities for banks to better interact with their customers – get closer to them and understand their needs. We’ve also undertaken a stream of research around microlending and its impact and opportunities for mainstream banking, including an interview with the CEO of the Grameen Foundation Grameen Foundation CEO Interview: Microfinance Battles Poverty and Also Is Profitable for Banks and a number of other research notes and presentations (including The Biggest Threats to the Bank Franchise: What Banks Should Do About Them Now and Social Lending Will Challenge Bank Customer Relationships ). Our conclusions – well lets just say that we’d agree – the Professor is onto something.
By the way – that US bank I mentioned in the title? That’s Grameen America an offshoot of Bangladeshi based Grameen Bank. OK, so they only have 500 customers at present, most of them women and all of them poor and living in the New York metropolis. But with a repayment rate of nearly 99.6% of all loans made, there will be more than one or two envious glances cast in their direction from bankers across the globe.
Category: Customer Tags: bad debt, banking, customers, grameen, innovation, microcredit, microlending
4 responses so far ↓
1 Josh Weinberger February 27, 2009 at 11:53 am
Kristin:
Do you have a link to the Yunus interview Alistair referred to in his opening lines of the post? (“…as I watched an interview last night with Professor Muhammed Yunus…”)
Thanks.
2 Alistair Newton February 27, 2009 at 12:40 pm
Josh, hi there
It was a BBC interview on 26th February on the Newsnight program.I do have a link for the interview – about 24 minutes into this program
http://www.bbc.co.uk/iplayer/episode/b00hxv1s/Newsnight_26_02_2009/
However I’m not sure that this link will work outside of the UK. It will also die in a week or so.
You might also try this link. which links through to the program website http://news.bbc.co.uk/1/hi/programmes/newsnight/7914970.stm
Again I can’t guarantee that this will work outside of the UK, but worth a go.
Regards
Alistair Newton
3 Kristin Moyer February 27, 2009 at 3:12 pm
Alistair, I find this very interesting. It reminds me of an inquiry I had with a client a few weeks ago. The client was a bank in an emerging economy. They currently do loan approval at the branch level. They feel they get to know the customer better that way and can therefore make better decisions. However, they would like to centralize their credit scoring and loan approval to reduce costs and speed approval time. Their concern is loss of connection with the customer.
Maybe this is not just an approach for microlending.
4 Artikel und Sätze, die mich kürzlich beeindruckten « Electro Uncle March 1, 2009 at 1:05 pm
[...] Comment! Sätze, die mich kürzlich inspirierten und beeindruckten Aus dem Blog von Kristin Meyer von Gartner: „Alistair Newton here. I was struck yet again as I watched an interview last night with Professor Muhammed Yunus, the Nobel Peace Prize winning founder of Grameen bank, that the key to successful banking is really quite simple. Know and understand your customer, and deliver products and services to support their needs.” Hier der gesamte Beitrag http://blogs.gartner.com/kristin_moyer [...]