1. Research Department, FINCA Microfinance Bank Limited CUSTOMER EXPERIENCE RESEARCH 2014

2. Overview Research Objectives and Methodology Coding of Quotes Best Service Quality Standards at Field Level Customer’s Overall Experience Key Recommendations and Way Forward

3. Research Objectives and Methodology

4. Research Objective The two pronged objective of this research project was to Get customer feedback pertaining to the service quality standards at the field level Gauge useful insight regarding customers’ overall experience pertaining to various touch points/ processes and procedures of FINCA Microfinance Bank’s products and services

5. Methodology TARGET RESPONDENTS Segment One Borrowers- Clean Lending Segment Three Customers Maintaining Transaction accounts Segment Two Borrowers- Gold Backed Lending Segment Four High Ticket Depositors Qualitative Research using focus groups and in depth interviews 12 Focus Groups were conducted with these segments as they allowed participants to build on each others views and express their thoughts and feelings in a friendly manner In-depth interviews were conducted with high ticket depositors to gather useful insight

6. Sample Split Branches Focus Group (Borrowers- Clean) Focus Group (Borrowers- Secured) Focus Group (Depositors Maintaining Checking Accounts) Total FGDs Ferozepur Road, Lahore 1 1 Sialkot 1113 Sahiwal 1113 Gujranwala 1113 Johar Town, Lahore 112 TOTAL 44412 Focus Groups (12) Clean Lending (4)Secured Lending (4) Depositors maintaining/transaction accounts (4)

7. Coding of Quotes All quotations have been coded as per the following criteria:  The first symbol in the code is the number of the segment (between 1 and 4);  The second is the branch name (Sialkot-SKT, Ferozepur Road-FP, Johar Town-JT, Sahiwal- SHW, Gujranwala- GJW);  The third is the gender of the participants (M—Male, F—Female) The following is an example of the coding system: (S1, FP, M) Segment 1Ferozepur Road Male

8. Best Service Quality Standards at Field Level

9. Customer Care Field Standards The tentative customer care field Standards were: 1.Courtesy and Warmth 2.Timeliness/Standard TATs 3.Offering the Appropriate/suitable Product 4.Honesty in Dealings 5.Professional Personal Attitude and Appearance 6.Ensure Customer’s Peace of Mind 7.Accuracy of Product Information

10. Borrowers Perception Regarding Service Quality Standards Active borrowers (Clean as well as Gold Backed) perceived turn around time, honesty in dealings, and respect as most important aspects of customer service “loan milney mein zyada time nahi lagta ye humare liye bohat zayada zaroori hai kyun kai aajkal har koi bohut masroof hota hai. Aur phir imaandari bohut zayada zaroori hai” (S1, SKT, M) Turnaround time of getting a loan is the most important feature for us because in today’s world everyone is extremely busy. And after turnaround time Honesty is extremely important. “loan milney mein zyada time nahi lagta, ye humare liye bohat important hai, aur doosra imaandari. zaroorat mein jab koi hota hai tou wo ye nahi itna dekh raha hota ke ye meray sey kis tarah salook ker rahay hain” (S2, SHW, M) TAT and honesty are the most important features for us, respect plays minor role when you’re in need.

11. Deposit clients maintaining transaction accounts considered honesty and turn around time as the most important attribute of customer service “ imaandari aur kaam honay ka time humari liye sab se aham cheezay hain” (S3, GRW, M) “Honesty and turnaround time are the most important aspects for us” The high ticket depositor perceived turn around time, convenience and personalized attention & respect as the most important aspects of service Depositors Perception Regarding Service Quality Standards

12. Best Service Quality Standards Borrowers (Clean) 1- Timeliness/Standard TATs 2- Honesty in Dealings 3- Courtesy and Warmth Borrowers (Gold) 1-Timeliness/Standard TATs 2- Honesty in Dealings 3- Courtesy and Warmth Regular Account Depositor 1- Honesty in Dealings 2 – Courtesy and Warmth 3- Timeliness/Standard TATs High Ticket Depositors 1- Courtesy and Warmth 2- Timeliness/Standard TATs 3- Ensure Peace of Mind Top 3 Standards

13. Ranking of Customer Care Field Standards BORROWERS 1.Turnaround Time 2.Honesty/ Meeting Commitments in providing product information 3.Respect, Courtesy and Warmth 4.Convenience 5.Professional Attitude and Appearance DEPOSITORS 1.Convenience and Easy Accessibility 2.Respect, Courtesy and Warmth 3.Turnaround Time 4.Honesty/ Meeting Commitments in providing product information 5.Professional Personal Attitude and Appearance 6.Offering the Appropriate/suitable Product

14. Customer’s Overall Experience with FINCA MFB

15. Expectations vs Experience Active borrowers, specially clean lending customers were very happy and surprised with the turnaround time of loan disbursement and service quality “ Loan ussi waqt mil gaya tha, process jo hai wo bohat acha hai, aik dou din tou lag hee jatay hain, humhe ussi waqt mil gaya”. (S1, FP, M) We received the loan almost immediately upon applying. It took maybe one or two days at most. The process could not be faster than it already is. -“staff bohat acha hai, aisa lag raha tha ke wo humari zarooratain poori kerna cha rahay thay aur samaj rahay thay humhe kya mushkilatain ho rahin theen”. (S1, SKT, M) Your staff is really good. They showed genuine interest and offered the guidance we needed to get all the information

16. Expectations vs Experience- Cont’d Gold Backed lending customers were also happy but they raised a few concerns over waiting in the branch for long time for gold valuator and getting irritated by regular visits of FINCA MFB’s representatives “jab gold aapke lockeron pai para hota hai tou LO ko chakar nahi laganay chahiye, na ussay dubara sey logon sey inquiry kerni chahiye hai, log baatein kerthay hain jab bank walay itnay chakar lagthay hain ke ye log pata nahi default ker rahay hain ya inn sey business nahi sahi chal raha, humhe insult mehsoos hota hai, baki bank jaisay Tameer hai, wo nahi ye kerthay, tou phir aap kyoon kerthay hain”. (S2, GJW, M) When the loan is secured against gold then LOs should not visit us or inquire about us from others, people make assumptions about us defaulting or the business not doing well, it is insulting for us, other banks like Tameer do not do this “Gold valuator ke liye humhe kafi intazar kerna parha. Aik hee banda hai field mein tou uski baag dor lagee rehti hai”. (S2, JT, M) Gold evaluation takes time because that area is understaffed. Gold valuator has to go to multiple locations and we end up waiting for him to come

17. Expectations vs Experience- Cont’d High Ticket Depositors highlighted that their experience could have been far better if FINCA MFB offered more Range of facilities like internet banking, better ATM facility and a vast branch network “Internet banking shuru kerain, phir FINCA baray banks ke saat compete ker sakay ga jab usskay paas bhi wo saray features hon gaye. (S3, SKT, M) Internet banking should be initiated, all the features of a regular bank in FINCA would make it more appealing for us” “yahan ka profit rate behtreen hai, commercial banks sey bhi behtar hai, iss liye mein apne 2 account yahan laya tha aur bhi logon ko refer kiya phir” (S3, GJW, M) -The profit rate is among the highest in all banks, better than commercial banks as well, this is why I brought my account here and I referred others here too Some depositors also highlighted that the branch staff should contact them in case there are any signature issues etc. in cheque clearing

18. Key Drivers in Selecting a Financial Institution Borrowers (Clean) 1- Turnaround time 2-Convenience and Easy Accessibility 3- Word of Mouth Borrowers (Gold) 1- Trust and Market Reputation 2- Turnaround time 3- Convenience and Easy Accessibility 4- Word of Mouth Regular Account Depositor 1 – Trust and Market Reputation 2- Convenience and Easy Accessibility 3- Branch Network High Ticket Depositors 1- Trust and Market Reputation 2- Convenience and Easy Accessibility 3- Range of facilities offered 4- Good Profit Rates Key Drivers

19. Clients’ Perceptions Regarding Service Quality Had a very good experience because of Convenience and Good Staff Behavior Clients in all the focus groups mentioned that Bank staff was very friendly, professional and honest and that they have no issues with their behavior “Aap ka amla bohat acha hai ussi waja se hum yahan pai aathay hain” (S1, SHW, M) FINCA staff is very nice and that’s why we come here Borrowers Had a good experience primarily because of respect given by staff. “ Aap logo ka Staff bohat acha aur cooperative hai, aur kisi kisam ka masla nahi honay daita”(S3, JT, M) Your staff is very good & extremely cooperative and they ensure our comfort Depositors

20. Account Opening Process Account opening procedure is considered simpler than other banks “Aapka account opening system baaqio sai zyada assan hai, zayada documents nahi laitay bas NIC wagheira ley laya aur kaam ho gaya tha poora” (S3, SKT, M) Your account opening process is simpler than others. We brought basic documentation such as NIC etc. and we got it done “Account khulwana asaan hai aur account foran khul jata hai, Bank Al Falah main account khulwanay main mujhe 8 din lag gaye thai”. (S3, GJW, M) Account opening process was simple, opened instantly, Bank Al Falah took 8 days

21. Teller Transaction Cash Deposit and withdrawal process is fast and simple Clients (depositor clients in particular) highlighted that there should be another teller or counter to speed up the process Staff is well trained, counting skills and processing skills are good Teller staff should get training on counting notes “I’ve had no issues while withdrawing cash from your bank. The teller’s a good person. I don’t think one teller is enough though. I’ve told you that you have a big client base here so you need at least two tellers here. (S3, SKT, M)

22. ATM Facility Unavailability of ATM Service at branches (e.g. Ferozepur Branch and Gujranwala Branch) was highlighted as a big concern by clients Miscommunication by the branch staff regarding ATM facility in some branches The withdrawal limit is considered very less by deposit customers “They told me that by the end of 2013, Gujranwala would have its ATM machine. This would mean we won’t have to use 1-link machines anymore. The limit on one time withdrawal of Rs. 10k from a 1 link machine is problematic. We have to insert the card again to withdraw more money. Also the withdrawal limit on the ATM card should be reconsidered. I can withdraw Rs. 50,000 from Bank Al Falah’s ATM. But since you’re microfinance, it should be at least Rs. 20k- 25K. Also, bank should have its own ATM machine.” (S3, GJW, M)

23. Loan Disbursement Loan process is considered simple and quick “ Aap sai loan dou sai teen din ke ander ander hee mil gaya tha jis sai hamain bohut faida hua kyun kai time pe paisay milna bohut zaroori hota hai.”(S1, FP, M) I got the loan from you within 2 to 3 days and it was very helpful because I needed the money urgently and its very important to get money in short timeframe. Loan process is easy but paperwork/ signatures are too much for returning clients “loan process asaan tha koi as such issue nahi huwa, bas ye hai ke kuch paperwork aur sign kam ho jana chahiye hai khaas tor pai un clients ke jo pehley sey loan ley chukay hon”.”(S2, SKT, M) Loan application process is simple, but there is too much paper work and signatures. Applying and processing time is as fast as it can be, we are happy with it, it can be made faster if returning clients don’t have to go through as much paperwork as new ones. So, the process for repeat clients should be made simpler as you already have our documents.

24. Loan Disbursement- Cont’d Borrowers did not completely understand the terms and conditions on which they had to sign and they felt that they are signing on too many documents “Hamain moti moti condition ka tou pata hota hai jaisay loan amount ho gayi, karza wapis karnay ki raqam aur tareekh wagera. Magar kyun kai hum jaldi main hotay hain is liye hum sai jo pachaas documents pai sign karwatay hain unka nahi pata hota” (S1, GJW, M) We know about the key terms and conditions e.g. the loan amount, repayment date and amount etc. But since we are in a hurry we have no idea about the rest of the 50 plus documents that we sign. They also highlighted that Infact our name and other information is not written on those documents and we are signing blank documents which makes us feel uneasy “TAT ka unnon ney bilkul sahi bataiya magar hidden charges ka humay nahi pata tha, Rs.50,000 loan pai mujhe Rs.2,500 deina para innhi hidden charges mein cheque book, documents wagheira” (S1, SHW, M) There was no miscommitment about turnaround time, we knew all the terms and conditions, but there was hidden fees that we weren’t told about for example when I got Rs.50,000 loan almost Rs.2,500 was deducted for cheque book, documentation and processing fees.

25. Complaint Lodgment/ Hotline Mechanism Most of the clients are unaware of FINCA’s complaint lodgment/ hotline system Staff has not communicated clients about this system. Although clients highlighted that we don’t have anything to complain, but whenever we do we can ask the branch staff. “I don’t know about FINCA’s complaint hotline’s number or anything related to it. No one told me about this either. I don’t have anything to complain now but whenever I do, I can ask them” (S3, JT, M)

26. Other Suggestions by Clients Employee Retention “meinay notice kiya tha ke yahan sey kafi employees chor ke aur banks mein kaam ker rahay hain, ye cheez aapki company ki image kharaab kerti hai” (S4, SKT, M) “Noticed a sizeable turnover of employees, this damages the reputation of the bank, noticed them at other banks, FINCA should take care of them to prevent this” Combine Loan Disbursement and Account Opening Form “asaan tareee hai apply kerna aur account kol na, form combine ho jain tou uss sey bhi zyada asaan ho jaiy ga (S1, SHW, M) “Applying for a loan and opening the account did not take long. Account opening form should be combined with the loan process so as to expedite the process”

27. Other Suggestions by Clients Increase Loan Amount “ humay sahi guide kiya gaya tha iss sey sahi product leina asaan ho jata hai mager loan amount abhi bhi kum hai” (S1, SKT, M) FINCA representative understood our needs and explained the different products to us very well, but loan amounts should be increased. Do not ask for too much Personal Information “information wo leini chahiye hai jo relevant ho business sey ya phir loan holder sey, bachon ka naam shaam poochna aur sisters ki information leina humay acha nahi lagta” (S2, SHW, M) There is too much personal information required in the documents that does not relate to the business or person applying for the loan. For example, information asked about my children, my sisters and brothers their names location etc. should not be collected.

28. Key Recommendations and Way Forward

29. Strengths of FINCA Microfinance Bank Turnaround Time Clients are very happy with Turnaround time of loan disbursement and account opening Processes Clients consider that the process of availing a loan and account opening are simpler than any other banks Clients consider the process of getting a cheque book simpler as well however they feel names should be printed on them so that that are widely acceptable by other parties Service Quality Clients feel that the staff is very courteous and helpful. Good customer service by FINCA MFB’s representatives was highlighted as one of the major reason of client satisfaction

30. Weaknesses of FINCA Microfinance Bank Loan Amount is very Less -The loan amount of PKR 150,000 is very less and its not enough to meet our business needs Limited Banking Facilities & Branch Network - Internet banking should be introduced - Unavailability of ATM machines in many branches is a concern Interest Rate is high - Clients highlighted that interest rate should be less

31. Convenience and Fast Processing Well-Mannered and Trained Staff FINCA Microfinance Bank Reasons for Consideration Loan Amount is Less Limited Services for Deposit Clients High Interest Rate FINCA Microfinance Bank Reasons for Non Consideration Understanding Considerations

32. Key Findings and Recommendations The Loan amount should be increased Gold valuator should be present at the branch and should not make clients wait Customers sign too many documents without knowing what's in those documents. All conditions should be read to the customers and documentation should be further decreased in case of repeat clients. Home visits and business visits in case of Gold customers should be decreased Introduce Credit Cards Bank should ensure that SMS is delivered after installment has been deposited. In some cases it was highlighted by the clients that they did not get the message. The process of complaint lodgment should be communicated to the clients at the time of loan disbursement because some clients were not aware of this process. Borrowers - Less Loan Amount - Absence of Gold valuator - Less Documentation for Repeat Clients We need to address the gaps in using FINCA MFB ATM facility We should make internet banking available for depositors FINCA MFB should not misquote anything regarding the launch of any service/ activity(e.g. ATM facility miscommunication in some branches) Cheque books should have names printed on them The process of complaint lodgment should be communicated to the clients at the time of loan disbursement because some clients were not aware of this process. Regular Depositors -Limited banking facility -Limited branch network -Miscommunication regarding launching of certain banking facilities

33. Key Findings and Recommendations Introduce internet banking, credit card facility and a better ATM service Launching an effective marketing campaign catering especially to this segment The process of complaint lodgment should be communicated to the clients at the time of loan disbursement because some clients were not aware of this process. High Ticket Depositor -Limited Banking Facilities - Not aware of FINCA MFB

34. DISCUSSION