Financial Landscape Baseline: Service Innovations of Pro Mujer Peru
The purpose of the Financial Landscape research is to understand access to financial institutions and services in areas to be covered by Pro Mujer Peru’s (PMP) service innovations. This study focused on two innovations funded by BMGF: 1) the Premium Product, a large group loan for relatively successful microentrepreneurs; and 2) the Feria Product, a small group loan targeting petty traders at traditional markets in more rural areas. Research at the pilot/launch sites for these products revealed intense competition for PMP, from formal to informal sources of credit. PMP is regarded as a leader in the provision of credit in these areas, but these innovations mostly do not improve on the offerings of its competition in terms of highly valued credit features (e.g. interest rate). Instead, the value proposition for the Premium product is found in its potential to help PMP retain relatively successful clients, while rewarding those clients with a bigger loan. It also may become a niche product for successful microentrepreneurs interested in large group loans over individual loans. Feria’s value proposition pertains primarily to the service-delivery model. PMP’s consistent presence in the rural launch areas brings the potential to educate clients about the product and credit in general, thereby activating a mostly dormant market. The delivery model also presents real advantages over nearly all competitors in terms of transaction costs, which will drive down the net expenditures for accessing credit.