Digitizing Savings Groups: Evidence from Tanzania

Understanding the impact of digital ledgers on women’s savings groups (Sept. 2020)

Digital financial services reach men and women where they live, work and play—bringing banking services to customers and leaping over the last mile problem, the challenges in delivery of goods and services to the end of the supply. However, for many low-income people, particularly women, these services remain out of reach for a variety of reasons such as literacy, geography, and social norms. Without access to these services, many of these people participate in informal savings groups, which provide critical access to financial services for millions globally. They also provide a context within which to introduce digital financial inclusion tools more widely. Digitizing savings groups—that is, introducing the use of mobile technology to provide support, access to formal accounts, or information to members—holds promise to improve members’ experience and reduce group meeting times and errors in record-keeping. This research provides some of the first insights into these possibilities among savings groups. It e amines whether a digital savings ledger impacts group meeting length, financial capability of each group member, trust, and social cohesion within the group. It also offers an opportunity to explore the ways that mobile phones can be used to bring the benefits of digitization to a group as a whole, rather than to members individually, —as well as the disadvantages of this group-based strategy.