The Smart Campaign is a global effort to unite microfinance leaders around a common goal: to keep clients as the driving force of the industry.

Protecting clients is not only the right thing to do; it’s the smart thing to do. When microfinance institutions implement the Campaign’s Client Protection Principles into their operations, they build strong, lasting relationships with clients, increase client retention, and reduce financial risk. Similarly, by incorporating client protection principles into their investment criteria and due diligence, microfinance investors can build a healthier, more client‐focused industry that will foster a stronger portfolio and ensure healthy returns.

To help the microfinance industry remain both socially focused and financially sound, The Smart Campaign is working with microfinance leaders from around the world to provide microfinance institutions with the tools and resources they need to deliver transparent, respectful, and prudent financial services to all clients. By putting clients first and collaborating together, we can strengthen the microfinance industry and elevate it as a model of responsible banking around the world.

What is Smart Microfinance?

Smart Microfinance is being fully transparent in the pricing, terms, and conditions of all financial products. Smart Microfinance is working with clients so they do not borrow more money than they can repay or use products that they do not need. Smart Microfinance employs respectful collection practices and adopts high ethical standards in the treatment of clients. Smart Microfinance gives clients a way to address their complaints so they can be served more effectively. Smart Microfinance ensures client data remains private. Smart Microfinance protects clients, businesses and the industry as a whole.

Smart Microfinance encompasses core Client Protection Principles to help microfinance institutions practice good ethics and smart business:

• Appropriate product design and delivery
• Prevention of over-indebtedness
• Transparency
• Responsible pricing
• Fair and respectful treatment of clients
• Privacy of client data
• Mechanisms for complaint resolution

Why is Smart Microfinance Important Today?

The subprime meltdown in the United States that led to the global financial crisis underscores the importance of accountability, security and transparency in financial services. At the same time, the microfinance industry has evolved from its earliest roots as a social movement to a multi‐faceted financial services industry for the poor. Among the advancements of the industry are: lower interest rates and transaction costs, increased competition and efficiency, an emphasis on savings, and the rising use of technology to reach rural clients. However, many within the industry have seen an overemphasis on the supply side, which can have the effect of microfinance institutions not adequately knowing their clients’ repayment capacities.

The Smart Campaign was formed to bring people together across the microfinance industry to implement a common code of conduct that governs how clients should be treated and to help implement client protection safeguards within the industry’s operations. The Campaign is supporting the development of the tools and resources necessary to make Smart Microfinance, which embodies the core Client Protection Principles, the standard for all providers and other microfinance institutions.

By incorporating client protection into all aspects of business operations, microfinance institutions can proactively and collectively strengthen microfinance and position the industry as a leader in responsible financial services.