6 ways financial institutions can help clients cope with crisis

June 22, 2015

What do a typhoon and a refugee crisis have in common? On paper, not much. But both emergencies can displace a massive number of people, particularly low-income people, and create emergency needs that financial institutions serving this market must help meet. How can those institutions best prepare and serve local populations in times of crisis?

Women’s World Banking recently took an in-depth look at how eight of our partner institutions are addressing local crises and how we can support them. On May 21, Women’s World Banking hosted a webinar, Rebuilding in Crisis Environments: Experiences from Financial Institutions, featuring Dolores Torres, CEO of CARD Bank in the Philippines where Typhoon Yolanda in 2013 caused more than 6,300 casualties; and Alia Farhat, Non-Financial Services Manager of Al Majmoua in Lebanon where the war in neighboring Syria has created an influx of nearly 2 million refugees since 2012.

Their experiences offer useful insights for leaders of financial institutions in how to respond and remain agile in the midst of ever-changing, unpredictable events.

How the Philippines’ CARD Bank Faced the Typhoon Yolanda Challenge

A bridge destroyed by Typhoon Yolanda (photo courtesy of CARD Bank) In November 2013, Typhoon Yolanda tore through the Visayas region of the Philippines, affecting 11 million people, according to UN estimates. CARD Bank, part of CARD MRI, a network of 14 “mutually reinforcing institutions” or MRIs with a total membership of 2.2 million, extended financial and non-financial services to 180,000 clients impacted by the disaster.

Since Yolanda (also known as Haiyan) was hardly an anomaly in a country prone to typhoons and hurricanes, Torres explained the existing systems that CARD Bank has in place to address weather-related situations as well as the new products and systems it is introducing to help clients better navigate future calamities.

The organization’s existing disaster response plans were key in coping with Yolanda. Prior to the storm, their Disaster Management Preparedness Program taught clients about disaster readiness and disease avoidance during calamities and trained staff in first aid. In the immediate aftermath, CARD’s disaster assistance program deployed staff and delivered emergency rations of rice, water, bread, and medicine. CARD also offered four-week moratoriums on loans in affected areas, in lieu of loan restructuring plans, to help clients cope with the financial impact of the typhoon.

CARD also recently introduced Family Protect, a new insurance product to provide clients with more financial security during future natural disasters, which includes life, accident, rehousing, and funeral insurance for a family of four. The organization continues to explore new products and ways of serving clients and the community in the wake of Yolanda and similar weather calamities.

3 Lessons from CARD Bank’s Experience:

  1. Deliver services to the entire affected area, not just to clients. Relief efforts for non-clients can have an added benefit for the institutions. Torres revealed that many of the non-client families receiving aid are likely to sign on as CARD members.
  2. Streamline disaster-relief operations. CARD staffers place orders online as soon as there is a typhoon warning; the suppliers deliver directly to the affected areas.
  3. Mobilize the whole community. Make sure the public is aware of the institution’s services to ensure maximum reach and to encourage volunteers.

How Lebanon’s Al Majmoua is Helping Syrian Refugees

Syrian refugees (photo courtesy of Google Images)At last count, the number of Syrian war refugees in Lebanon was approaching half the country’s population. The latest UNHCR poll puts the number at 1.5 million refugees; the Lebanese government estimates the number at closer to 2 million. For a small country like Lebanon with a population of 4.5 million, the refugee situation is causing considerable environmental stress on local resources—particularly as support from international relief organizations dwindles.

Al Majmoua is the leading microfinance institution in Lebanon with 50,000 clients, 53% of them women. Al Majmoua offers Syrian refugees a range of services, including training in technical skills, entrepreneurship, and business management, as well as help with managing tight household budgets. Due to the high percentage of women heads of household among the Syrian refugees, 85% of Al-Majmoua’s 13,000 Syrian refugee clients for these services are women.

“Since the war in Syria has no end in sight and the refugee crisis is likely to worsen,” said Farhat, “Al Majmoua is nimbly adapting itself.” They are piloting a group loan that would include both Syrian refugees and Lebanese citizens to help finance income-raising activities while enhancing social cohesion between the two populations.

As it plans ahead for future crises, the organization is creating a risk management department to assess external risks such as wars, natural disasters, and refugee crises, and is introducing a new database system to better track clients receiving non-financial services.

 Lessons from Al Majmoua’s Experience:

  1. Consider opportunities beyond the institution’s normal line of work. The refugee crisis presented an opportunity for Al Majmoua to expand beyond their usual scope to offer livelihood support and enhance their non-financial services. The organization is now actively engaged in helping Syrian refugees create sources of income for their families, providing them with training, and offering social cohesion activities to help foster relationships with the Lebanese host community.
  2. Reassure existing clients that they will not be competing with refugees for services. Al Majmoua held focus groups and community meetings with local Lebanese clients to communicate that the refugee services will not create competition.We targeted women refugees, specifically heads of household” and helped them build small, household-based activities that do not directly compete with Lebanese entrepreneurs, Farhat said. In addition, Al Majmoua has begun looking for markets outside Lebanon to expand opportunities for both Syrian and Lebanese entrepreneurs.
  3. Get buy-in from staff. Clients are not the only ones who may be unnerved by the crisis. In order for these relief services to succeed, the staff, as primary implementers, must fully understand and believe in this strategy.

Microfinance institutions are often best-placed to provide much needed relief services during crisis. While every crisis is different, we hope that these lessons will serve as a useful guidepost for any institutions supporting clients in times of desperate need.