Zidisha Bonus Savings Account

A savings product utilizing ‘the power of many’ concept to reward customers with higher interest rates on savings balances, based on the total balances held in the product.

Innovation presentation

Savings accounts in the Kenyan market reward customers based on the balances they have in their individual account(s). The offering is homogenous, with innovation mainly happening on the channel of delivery e.g. savings accounts opened and transacted via the mobile phone. As a result, customers with low balances get very low interest rates and consequently choose not to save money. Instead, they opt to pool funds together in groups commonly referred to as ‘chamas’, through which they can invest and earn higher returns in chama accounts or purchase of property etc (the power of many).

Based on this unique market behaviour, we identified an opportunity to ‘re-jig’ the savings concept in Kenya, by launching the Zidisha Bonus Savings product, which encourages small savers to come together, pool their funds and in so doing earn higher interest rates. The uniqueness and winning point of the product is that savers do not need to know one another.

Therefore, customers earn an interest rate based on the total balance in the product (all customers earn one interest rate), plus a bonus as a reward for their own individual behaviour, through the payment of the bonus interest if no withdrawal is made in a quarter.

‘Zidisha’ is a Swahilii word that means ‘increase’. We chose the name to communicate the concept of customers increasing the returns on their savings. Since launch, the product has grown to over 7,500 accounts with a book balance of over Kes 1.2bn ($14m).

Uniqueness of the project

This is the first product of its kind in the Kenyan banking industry with two unique areas; 1) payment of interest based on the total product balance rather than the individual customer’s balance 2) payment of bonus interest as a reward to the individual customer if no withdrawals is made from the account in a quarter. The latter is an ongoing unique feature of savings products provided by Barclays in Africa. We believe this is an incremental innovation well positioned to drive our focus for new customers and driving up our deposit base. The product is delivered within our existing business sales model.

The Reason Behind

Customers with high balances (Kes 1m {$12k}) and above) are typically able to earn higher interest rates on their savings. However, this leaves a wider population who may not have such balances and would wish to save and earn a good return. This has resulted in a low savings culture in the market. The Zidisha Bonus Savings product addresses this need by providing customers with the opportunity to earn high interest rates on balances as low as Kes 10k ($120). The product drives the financial inclusion agenda in the country by opening up banking solutions to a wider segment of the market typically excluded from savings solutions.

Results

The performance of the Zidisha Bonus Savings product has exceeded our business case projections by 1,192% on book balances to stand at Kes 1.2bn ($14m) with over 7,500 accounts booked (366% performance). Qualitatively, the product has increased the bank’s visibility in the highly competitive banking environment, as well as allowing us to tap into new customers. In addition, we have increased customer satisfaction with our products given that this product directly addresses a key concern our customers have had in the past around the returns they earn on their balances.