23
ICT in Microfinance Course:MFABP Indian Institute of Plantation Management, Bangalore Presented by: Bidhu Bhushan Binit(11PGDM08)

Technology in Microfinance

Embed Size (px)

DESCRIPTION

customer information system and management is one of the basic problems of microfinance sector. Technology can help to address this problem at large.

Citation preview

Page 1: Technology in Microfinance

ICT in MicrofinanceCourse:MFABP

Indian Institute of Plantation Management, Bangalore

Presented by: Bidhu Bhushan Binit(11PGDM08)

Page 2: Technology in Microfinance

Contents Transformation of Indian financial(banking)

sector Typical Information flow and genesis of

Problem Potential Answer Technology -levels of implementation -facilitating infrastructure DCCB, Bidar case Conclusion

Page 3: Technology in Microfinance

Transformation through Technology

Customer of a particular branch

Technology aided channels

Convenient serviceService to clients at a fraction of the costs incurred earlierMore reach

Page 4: Technology in Microfinance

Information flow and genesis of problem

group agent MFI head office

• Information storage

• Data analysis

• Decision making

• Cash logistics

Multiple recording & multiple data hand-offs

Information inconsistencyTough to synchronize information between centres,branch and head officeErrors due to multiple data handoffs

Decline in quality of customer information

Page 5: Technology in Microfinance

Potential Answer

Technology can address the fundamental issue constraining the growth of the microfinance sector, i.e Customer information systems and management.

Page 6: Technology in Microfinance

Levels of implementation

Central System Field level

Main computing platform for the multiple channels

Handling huge amount of customer data

Simultaneous analysis

Tracking and monitoring of a customer across multiple channels

Standardized information collection

Transmission to central location

Eliminating multiple hand offs

Agent:- as a decentralized branch, able to perform head office function

Page 7: Technology in Microfinance

MICROFINANCE AND ICT INNOVATION

Back office Management Information System

Mobile Computing

Branch Office franchise model

Card service, EFTOPS and ATMS

Internet Banking

Remittance Microfinance Outreach to International

Labour Migrants

Page 8: Technology in Microfinance

Back-Office Management Information System (MIS) The most fundamental ICT application is back-

office MIS.

Sophisticated MIS is prerequisite for MFIs to monitor the quality, sustainability, and efficiency of its loan portfolio, to monitor development impact, and manage general administrative tasks.

MFIs also track the non-financial information. So, they need modified off-the-self software package for these requirements.

Page 9: Technology in Microfinance

Mobile Computing The back-office MIS helps the MFIs to

monitor its loan portfolio, this functionality is undermined if the data analysed by the MIS is not up-to-date or contains errors.

Through mobile computing systems the Loan officer have a palmtop computer, so that the financial transaction can be recorded directly into the MIS.

It has significant implication with respect to data accuracy and integrity, there by enhancing “client confidence”.

Page 10: Technology in Microfinance

The Branch Office Franchise Model

MFIs have an overwhelming pressure to reduce transaction costs and increase profit margins.

Through branch office franchise model, the MFI links with third-party merchants in remote areas.

The rural telecentre networks are particularly suited to serving as retail outlets for MFIs.

Page 11: Technology in Microfinance

Card Service, EFTPOS and ATMs

There are many similarities between consumer credit cards and microcredit services. Both tries to reduce high cost associated with small transaction lending.

Introduction of card-based services require the roll-out of either EFTPOS functionality with third-party merchants and/or ATMs.

Card- based microfinance offers even more opportunities like allowing clients who have proven creditworthiness over time should given access to additional products and services.

Page 12: Technology in Microfinance

Internet Banking Gives client real-time information about

their account, and the ability to transfer funds between accounts.

It is an efficient tool to reduce the work of tellers and therefore reduce the labor costs.

Rural tele-centre networks can help in implementing Internet Banking for MFIs.

Page 13: Technology in Microfinance

Remittances: Microfinance Outreach to International Labour Migrants MFIs through technological innovation,

product design can tap this market by extending outreach to these migrant workers and their families at home.

For example Sri Lanka’s Hatton National Bank, whose “HNB Easy Remittance” help Sri Lankan migrant workers to remit funds directly to HNB accounts.

Page 14: Technology in Microfinance

Facilitating Infrastructure

Unique Identifier Helps to create a repository of customer

information. Availability of basic demographic data. Can be used to track customer behavior across

multiple relationship. Eg.-Smart cards in developed countries

Page 15: Technology in Microfinance

Credit information Bureau

Creation of mechanism allowing sharing of information where documented sources of information are not available.

To track repayment history for efficient client screening process.

Page 16: Technology in Microfinance

Helping Access capital

Microfinance assets will become transparent.

Information system will help attract private capital from individuals and venture capitalists.

Page 17: Technology in Microfinance

DCCB Bidar Case District Central Cooperative Bank, Bidar has 171

PACS. Average accounts a PACS handles is 800-1000. All the books are maintained by CEO of PACS manually

PACS delivers Kisan Credit Card loan, SHG and BDP loans. It also provides fertilizers and grocery items like wheat, sugar and K oil.

All the problems of manually maintained accounts – time spent in correcting, reports not ready on time etc

Page 18: Technology in Microfinance

…DCCB Bidar Case

All financial transactions

Down load dataWhen needed On dial up line SafalPACS

@ DCCB Branch

Balance sheetP&LTrail BalanceLedgerVouchers

SafalPACS@ PACS

Page 19: Technology in Microfinance

….DCCB Bidar Case SafalPACS is a package where there are two sets

of software – one installed on iStation a hand held device and the second is intalled on a PC located in the Bank branch of DCCB.

Day to day transactions are entered online on iStation and monthly balance sheet, P&L, Stock book are printed in the PACS

For SHG, Digitized Demand information (DIDI) sheet is printed and updated at PACS level

Depending on transactions, data is transferred on dial up line to DCCB branch PC.

Page 20: Technology in Microfinance

….DCCB Bidar Case Advantages of SafalPACS

Affordable solutions for automation at PACS level Low power and low maintenance requirement and

low bandwidth, Hence one need not wait for long Advantage of automation – timely reports,

elimination of human error

Page 21: Technology in Microfinance

Conclusion

Some says “it can’t be done in microfinance, electronic banking for poor will not work”.

20 years ago when microfinance was in its infancy many said “poor can’t repay, the poor will not repay, the poor can’t save.

Page 22: Technology in Microfinance

….conclusion Inclusive growth has been marked as a

necessary way of development, not just by India but by UN also. Microfinance is really giving a helping hand to poor and unbanked segment. The problem of information asymmetry facing by microfinance can be addressed today by using technology.

It has to work. Otherwise will be at a continuing disadvantage with current economies and enterprises.

Page 23: Technology in Microfinance

Thank You !References:microfinance in India(edited by K.G.Kamkar):Safal Solutions pvt.ltd:the case of correspondent banking in Brazil by

Diniz,Pozzebon,Jayo,Araujo.