Microfinance products tend to be uniform across large geographic areas. For example, in Bangladesh most microfinance institutions (MFIs) offer some variant of the product pioneered by Grameen Bank—a loan with a term of about a year, repaid in frequent (usually weekly) installments, given in a group context, ostensibly for micro-enterprise use, and with a compulsory savings element.
Understanding client exit and nonparticipation can shed important light on the financial service preferences of clients and help programs learn about the limitations of their existing products and mechanisms. Such lessons can drive the development of innovative, demand-driven microfinance products and systems, benefiting both the institution and the clients.
As the microfinance industry matures, service providers are increasingly concerned with developing new and better products. This focus on new product development is a response to growing competition in the microfinance market, the search for more defined market niches, and some anxiety about dropout rates.