Some of the challenges faced by Microfinance Institutions (MFIs) in India have revolved around the issues of a lack of trained labor for local level administration, resource mobilization and the cost of services. One way to tackle these problems is through the use of Management Information Systems (MIS) and this is being demonstrated by Equitas, an Indian MFI.
TC-I had previously featured an interview with the founder of Equitas and they were recently featured as a leader in implementing information systems in microfinance, by Greg Chen of CGAP. Some examples of technology being used by Equitas are,
E-Docs. Membership and loan applications are completed manually by branches but are couriered to a central processing center. The documents are then scanned and from there on out, remain paperless. Forms use a series of check boxes which can be read by scanners and coded automatically. Remaining manual entries (e.g. names) are entered by a dedicated back office processing unit.
Real Time Meeting Monitoring. Within 15 minutes of the end of a group meeting, loan officers send a text message (SMS) by cell phone with three pieces of information: meeting attendance, loan collections, and when the meeting ended. This information is picked up by Equitas’s system which then compares it with what is expected, and creates a branch-by-branch report.
Equitas also uses SMS to gather real time information on cash management and Optical Readers for back-office operations. The Equitas model shows the need for MFIs to focus not just on innovation in the lending model, but also on driving efficiency through various stages of the loan process. MIS has played an important role in the growth of traditional financial institutions over the past few decades and there is no reason it should not do the same for MFIs.
The complete article by Greg Chen can be found here.