Smart Certification: The View from Azerbaijan

> Posted by Daniel Balson, Lead Specialist, The Smart Campaign

Visionfund Azercredit

Readers of this blog are likely familiar with the Smart Campaign, a global initiative to embed client protection into the institutional culture and operating principles of the microfinance industry. Smart Certification, introduced last year, awards special status to microfinance institutions (MFIs) that can demonstrate that they meet strong standards of client protection.

Getting Smart Certification is not easy. A third-party certifier conducts a thorough desk review and extensive field visit where the candidate MFI’s policies and practices are placed under a microscope. To become certified, MFIs must be in full compliance with all the Smart Campaign’s indicators, both in letter and in spirit. These indicators are derived from the seven Client Protection Principles and touch on everything from appropriate product design to the existence of effective complaint resolution mechanisms. The certification process often requires an MFI to make significant adjustments to its internal policies and practices. But once certified, an MFI can affirm its responsible practices to investors, staff, partners, regulators, and clients alike. To date, 26 organizations worldwide have received certification, covering nearly 9 million clients.

VisionFund Azercredit became the first MFI in Azerbaijan and in the Caucasus region to acheive certification. The Smart Campaign sat down with Mehriban Yusifova, VisionFund Azercredit’s Head of Marketing & Product Development, to better understand the significance of certification from the MFI’s perspective.

Smart Campaign (SC): When and why did VisionFund AzerCredit decide to get Smart Certified? What inspired you to pursue your certification?

Mehriban Yusifova (MY): We’ve followed the campaign for quite some time. We were happy to be the first endorser in Azerbaijan and we participated in several Smart Campaign initiatives in Azerbaijan previously. At the end of 2013, we became familiar with the certification program and we thought it was a great opportunity to add visibility to our client protection efforts. With certification, we’re not just claiming to have a client-centric approach on the basis of some alleged reforms we conducted behind closed doors. Rather, we are protecting our clients in a very public and visible way. Client protection was integrated in our most recent institutional strategic plan and we view certification as the culmination of that effort.

SC: How did you prepare for certification?

MY: It really was a gradual process. Because the seven client protection principles were always a core part of our work, we weren’t expecting any tremendous gaps or problems. We started off by speaking with rating companies, peers, networks, and other individuals or organizations who had gone through with client protection assessments. We built on these conversations by conducting a self-assessment. We expected that, if there were problems or drawbacks, we could quickly identify and solve them. We did find a few issues that we were able to address as a result. For example, our prices were always clearly published on our website but the certifier told us that it’s important to post them on the walls in our branch offices. Not everybody has internet, after all. We found suggestions like this to be very helpful. The interesting thing about certification is the high level of proof required. It wasn’t enough to tell the certifier that we made some reform; we had to send in pictures, list names of staff that were responsible for changes, and other documents. It took some time because we had to make updates/changes and send the proof but, in the end, we felt it was well worth it.

SC: What were the biggest benefits of certification?

MY: We’re the first organization to become certified in Azerbaijan or in the Caucasus and this really positioned us as a regional leader. It’s been great to use certification to promote ourselves on TV and in press releases. It has proven to be an effective message for even those people who are unfamiliar with the Smart Campaign – clients are always happy to hear that Azercredit got international recognition for protecting their interests. Similarly, we found that our certified status was really important for recruiting and retaining staff. Everybody wants to work for an organization that is committed to defending clients and not just pushing a financial product that can harm the vulnerable. When staff comes in to work, they’re not just driving performance goals or a bottom line but they’re supporting a very responsible type of customer treatment. Certification encouraged some of our clients to increase their financial literacy. They learned more about what client certification is and what their rights and responsibilities are. That’s critical because we want to work with an educated consumer. Finally, certification also helped us hone our message to investors. Investors are very familiar with the Campaign.

SC: Have you had any experiences where clients are better protected now than before? Any instance where reforms you made helped you serve your clients better?

MY: Yes, there are many. Let’s take the issue I mentioned with publicly displaying pricing information. Before certification, we had never articulated a clear vision of the future of our relationship with our customers. Following our recent changes, the loan amount, repayment period, cycle days, insurance price, and everything else is clearly laid out in our office and in the loan contract. Now, clients can approach our offices and see the all prices and compare them easily to our competitors’. Client data confidentiality practices also clearly improved. Before, as now, we kept our clients’ data confidential. After certification, however, we realized the importance of explaining confidentiality practices to our clients. We explain to them under what circumstances their information may be shared and when it may not be shared. As a result, the confidentiality practices also became far clearer to our loan officers and branch managers. As a final example, I’ll mention the customer complaints hotline. Before certification, branches would face complaints that were beyond their ability to resolve. Now, all loan products inform the client of their right to complain and present details on how to reach our hotline. Our branches have become the hotline’s biggest supporters. The hotline allows them to escalate systemic problems or unique queries to management in a timely fashion.

SC: What would you say to organizations about to begin the certification process?

MY: To be financially sustainable and to appropriately serve its customers, every institution needs to establish good internal systems. This certification process is a very good opportunity to do just that. It’s easy to launch growth initiatives when you have solid internal systems and practices established. If you pursue growth before inculcating effective internal systems, you’ll simply ingrain bad practices and they’ll be that much harder to change in the future. It’s about building the right practices and the right culture at the right time. Certification forces you to take a detailed look at every aspect of how you do business – information technology, management, marketing, human resources, everything. Also, I would encourage MFIs looking to get certified to think about timing carefully. We launched our major reforms during the summer. Since you’re changing institutional practices, you often need to get key stakeholders in the room together. As such, you might have to get leaders of your credit, legal, and marketing teams together and if some people are out of the office it becomes harder.

SC: Overall, are you happy you went through this process?

MY: It was absolutely the right thing to do.

SC: Thank you so much for your time.

MY: It was a pleasure.

Photo credit: Visionfund Azercredit.

Have you read?

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Microfinance in Azerbaijan: Who is Not Invited to the Party?

How Smart Assessments and Client Protection Certifications Work Harmoniously


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