Enabling Micro Deposit – Ujjivan Small Finance Bank
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Enhancing Savings and Reducing Costs Through Micro Deposit Integration
Problem
- A significant percentage (80%) of savings accounts were becoming inoperative.
- Micro Finance customers rely mainly on loans for their financial being as they do not have means for savings.
- Consumers pay EMIs which are not round figures, leading to many transactions in small denominations.
- Loan collection staff had to handle large amounts of loose change during EMI collection, which was inefficient and cumbersome.
- There was no platform for customers to make micro deposits with the spare change from EMI amounts that are not round figures.
Solution
- Enabled micro deposits with EMI loose change to encourage regular saving.
- Implemented automated micro deposits during EMI payments to foster saving habits.
- Allowed loan staff to handle both EMI payments and micro deposits, reducing the need for loose change.
- Kept savings accounts active by integrating micro deposits, reducing inoperative accounts.
- Minimized handling of loose change with a streamlined deposit system.
Outcomes
- Over 25 lakh accounts became operative due to the micro deposit system.
- Micro deposit customers saw a 29.4% higher average balance compared to non-micro deposit customers.
- UPI transactions by micro deposit customers increased by 2% compared to non-micro deposit customers.
- Average monthly transactions by micro deposit customers were twice as high as those by non-micro deposit customers.
- Achieved savings of over ₹50 lakh in communication fees for previously dormant accounts.
SKOCH Award Nominee
Category: Banks
Sub-Category: Leadership – Financial Inclusion
Project: Enabling Micro Deposit
Start Date: 4-01-2023
Organisation: Ujjivan Small Finance Bank
Respondent: Diptarag Deb
https://www.ujjivansfb.in/
Level: BFSI – 1
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Case Study
Enhancing Savings and Reducing Costs Through Micro Deposit Integration
Summary
The project implemented a micro deposit system to activate dormant savings accounts and streamline EMI payments. It improved account activity, customer savings, and operational efficiency, while setting the stage for additional banking services.
Problems
Before the project, challenges included many inoperative savings accounts, inefficiencies in handling loose change during EMI collections, and a lack of saving habits among microfinance customers.
Solutions
The project introduced a micro deposit platform that automatically deposited loose change from EMIs, integrating it into the existing banking system, reducing physical handling, and encouraging regular savings.
Outcomes
The system reactivated over 25 lakh dormant accounts, increased transaction frequency, raised average balances by 29.4% for micro deposit customers, boosted UPI transactions, and saved ₹50 lakh in communication fees.
Challenges
During implementation, customers were hesitant to pay extra on EMIs. The app faced auto-timeout issues, and staff had to manually input data, increasing interaction time.
Innovation
The innovation allowed micro deposits during EMI payments, automating loose change transfers to savings accounts, encouraging saving habits, and eliminating the need for handling loose change. It also reactivated dormant accounts, benefiting both customers and the bank.
Opportunities
The project led to future opportunities, such as real-time balance updates, individual account posting, and the addition of FD, RD, and insurance contributions.
For more information, please contact:
Diptarag Deb at diptarag.deb@ujjivan.com
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