The PabilinKO Loan
A first-of-its-kind loan product to help rural Filipinos rebuild after Typhoon Haiyain. PablinKO was developed to allow even those without access to common paperwork required by banks to borrow money to rebuild the livelihoods they lost with the typhoon. It also prepares families for future catastrophes by building on a current saving practice: the funeral fund.
Mercy Corps partnered with BanKO, The Philippines’ first mobile-based bank, to give unconditional cash transfers to victims of Typhoon Haiyan in early 2014. These transfers—delivered by mobile phone—welcomed thousands of people into formal banking systems for the first time.
Seeing this as an opportunity, we asked, How can we use this mobile banking connection to deliver financial stability to these new clients, even after they’ve used their first cash transfers? How can we offer formal services to people who have lost all form of identification? And how can we help people begin saving again when their only savings were washed away in the storm?
WHAT WE DESIGNED
PablinKO is a loan product that can be accessed from a mobile phone, allowing a user to apply to borrow even without tax papers and other paperwork commonly required by banks. The loan leverages the positive sides of both formal and informal systems: the interest rate on the loan is well under the 20% charged by loan sharks, which are incredibly common, but it is backed by a respected bank and is much more trusted than informal loans.
Mobile banking allows banks to reach people in the furthest corners of the nation. 80% of people in The Philippines are unbanked, but the country has 101% mobile phone penetration.
Accessibility to Everyone
The main obstacle to traditional bank loans are tax papers and other formal documents. PabilinKO allows you to apply by using your "Barangay" papers––relatively informal, but highly trusted, community documents.
Door to Door Collection
Meeting people where they are increases topline costs for the bank, but it dramatically increases repayment rates—more than enough to make it worthwhile.
Stability for the Future
Once a loan is repaid, a portion of the interest rate is returned in the form of a savings account called "The Funeral Fund." This type of saving is a common practice that we adopted, and acts as life insurance in case of emergency.