• Guidance and evaluation

Guidance and evaluation

This MicroNote is written primarily for USAID staff and others who may consider approaching banks to develop microfinance programmes. It is intended to help donors, bank advisors, and other strategic partners to make better-informed decisions about whether and how to approach a bank to offer support for implementing or expanding a microfinance programme, and how to ensure success for such an endeavour.

The note makes the key point that, given their business priorities and organisational culture, banks present a unique set of challenges and needs for donors and development professionals and that approaches must be tailored accordingly. It stresses that donors need to encourage banks planning to introduce these services to:

• define their target market: conduct a client and product segmentation process to define microfinance and avoid unnecessary internal competition for the same clients with other products or departments in the bank
• understand the market prices for microfinance, as well as the microfinance product's cost structure
• decide on an operating model for microfinance, and a clear organisational structure
• decentralise microfinance operations for greater efficiency; and build staff capacity, including assisigning a strong team leader

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