Information technology could cut the rates in the microfinance industry. Both online and mobile tech could boost the operational efficiency of microfinance companies and could result in lower rates of interest.
A general manager of Microsoft Services at the Development Bank of Jamaica or DBJ, Paul Chin state that information technology systems could cut the rates in microfinance. Furthermore, he stated that high administrative costs were the major actors in the soaring interest rates in the sector and the costs are high, as loans are smaller and require a similar management as bigger loans. Investments in IT services however could help boost efficiencies, which, in the long term could help lower interests and cut down on administrative expenses.
THE CONVENIENCE THAT SMART PHONES BRING
The rising usage of smart phones could help lenders in doing disbursements without having a borrower to into a bank branch and conversely, customers also could make payments and check the balances of their loans online. Thus, the use of online and mobile tech in the industry would lower operational costs and boost financial transactions cost. Furthermore, technology enables fast dissemination of best practices, thus strengthening the institutional capability of financing organizations and institutions. Chin further explained that adding micro-clients in general honored their loan commitments. Technology facilitated customers who wanted to make payments after business hours. There are also kiosks to facilitate clients who want to pay after office hours. The use of technology has helped gather relevant information about various services and products. Moreover, it also helps make businesses more efficient.
IT, A POWERFUL TOOL TO IMPROVE EFFICIENCY IN BUSINESS OPERATIONS
Information technology emerged as a powerful tool for boosting the effectiveness and efficiency of business operations, which make it viable for the microfinance industry to expand into a low-income rural area. IT value implementation became the main concern for the sector to boost organizational performance to have a competitive edge. Information technology value implementation should be at all times evaluated and improved is performance continuously to ensure that the IT app could result in the expected control, value and aligned with the strategy of the organization to have a competitive advantage, which focuses on achieving the company’s business objectives.
TECHNOLOGY RESHAPES EQUILIBRIUMS AMONG STAKEHOLDERS
To a great extent, technology, with access to social networks, the internet and cashless electronic payments reshapes the equilibriums among various stakeholders. Technology bridges the gap between the people in rural areas and the financial services sector. It could be used to improve efficiency of credit delivery and minimizing costs. IT is critical for microfinance companies because it provides opportunities to reduce delivery costs and process management, aside from bringing about operations transparency. It assumes more significance due to the manpower-intensive nature of the business. For microfinance firms to grow fast, operations should be supported by scalable and robust systems.
Information technology could be leveraged in order to achieve the following objectives:
1. Customer-centricity. Microfinance institutions no longer could adopt a one-size-fits-all approach, which restrict their offerings to a skeletal spread of microfinance for SHG or Self Help Groups as well as deposits and small loans. They should cater to the need of the market for an extensive range of insurance and banking products that arise from diverse customer groups, which range from agri-based sector, small scale and cottage industry and artisans. A main route wherein MFIS could address the requirements is to have an integrated back office environment. It provides an actionable and holistic view of the clientele, their accounts, transactions, interactions, and products from one integrated hub. This could enable microfinance companies to mine customer data and leverage information to give customers customized financial services, which fulfill their requirements. Capitalizing on currently existing data helps MFIS save money as well as take a hold of cross-sell opportunities.
2. Process-centricity. Microfinance firms should migrate to an IT environment, which comprises of an integrated suite of core function enabling systems, which make it easy for them to standardize processes for all of their services. This environment introduces the much required intelligence into the organization and empowers it to chart a sustainable and successful future road map that in turn could strengthen profitability.
3. Knowledge repository. The microfinance industry could leverage technology for building a knowledge repository through consolidating knowledge on customers, products, processes, systems, revenue and practices. This gives them a 360-degree, integrated view of the entity. The consolidated knowledge is an intellectual capital could be realized through sharing it proactively with all stakeholders, within and outside the microfinance organizations. Thus, employees would be empowered with the necessary knowledge to grow and sustain the business. Also, they would have a wide range of information to match clients with products and allow process mapping to business challenge. A data base tool provision captures rural data and technical specs of these rural data base and its architecture.
Information technology has undoubtedly transformed how microfinance entities operate. The industry has witnessed remarkable transformation with the adoption of information and communications technology.
A general manager of Microsoft Services at the Development Bank of Jamaica or DBJ, Paul Chin state that information technology systems could cut the rates in microfinance. Furthermore, he stated that high administrative costs were the major actors in the soaring interest rates in the sector and the costs are high, as loans are smaller and require a similar management as bigger loans. Investments in IT services however could help boost efficiencies, which, in the long term could help lower interests and cut down on administrative expenses.
THE CONVENIENCE THAT SMART PHONES BRING
The rising usage of smart phones could help lenders in doing disbursements without having a borrower to into a bank branch and conversely, customers also could make payments and check the balances of their loans online. Thus, the use of online and mobile tech in the industry would lower operational costs and boost financial transactions cost. Furthermore, technology enables fast dissemination of best practices, thus strengthening the institutional capability of financing organizations and institutions. Chin further explained that adding micro-clients in general honored their loan commitments. Technology facilitated customers who wanted to make payments after business hours. There are also kiosks to facilitate clients who want to pay after office hours. The use of technology has helped gather relevant information about various services and products. Moreover, it also helps make businesses more efficient.
IT, A POWERFUL TOOL TO IMPROVE EFFICIENCY IN BUSINESS OPERATIONS
Information technology emerged as a powerful tool for boosting the effectiveness and efficiency of business operations, which make it viable for the microfinance industry to expand into a low-income rural area. IT value implementation became the main concern for the sector to boost organizational performance to have a competitive edge. Information technology value implementation should be at all times evaluated and improved is performance continuously to ensure that the IT app could result in the expected control, value and aligned with the strategy of the organization to have a competitive advantage, which focuses on achieving the company’s business objectives.
TECHNOLOGY RESHAPES EQUILIBRIUMS AMONG STAKEHOLDERS
To a great extent, technology, with access to social networks, the internet and cashless electronic payments reshapes the equilibriums among various stakeholders. Technology bridges the gap between the people in rural areas and the financial services sector. It could be used to improve efficiency of credit delivery and minimizing costs. IT is critical for microfinance companies because it provides opportunities to reduce delivery costs and process management, aside from bringing about operations transparency. It assumes more significance due to the manpower-intensive nature of the business. For microfinance firms to grow fast, operations should be supported by scalable and robust systems.
Information technology could be leveraged in order to achieve the following objectives:
1. Customer-centricity. Microfinance institutions no longer could adopt a one-size-fits-all approach, which restrict their offerings to a skeletal spread of microfinance for SHG or Self Help Groups as well as deposits and small loans. They should cater to the need of the market for an extensive range of insurance and banking products that arise from diverse customer groups, which range from agri-based sector, small scale and cottage industry and artisans. A main route wherein MFIS could address the requirements is to have an integrated back office environment. It provides an actionable and holistic view of the clientele, their accounts, transactions, interactions, and products from one integrated hub. This could enable microfinance companies to mine customer data and leverage information to give customers customized financial services, which fulfill their requirements. Capitalizing on currently existing data helps MFIS save money as well as take a hold of cross-sell opportunities.
2. Process-centricity. Microfinance firms should migrate to an IT environment, which comprises of an integrated suite of core function enabling systems, which make it easy for them to standardize processes for all of their services. This environment introduces the much required intelligence into the organization and empowers it to chart a sustainable and successful future road map that in turn could strengthen profitability.
3. Knowledge repository. The microfinance industry could leverage technology for building a knowledge repository through consolidating knowledge on customers, products, processes, systems, revenue and practices. This gives them a 360-degree, integrated view of the entity. The consolidated knowledge is an intellectual capital could be realized through sharing it proactively with all stakeholders, within and outside the microfinance organizations. Thus, employees would be empowered with the necessary knowledge to grow and sustain the business. Also, they would have a wide range of information to match clients with products and allow process mapping to business challenge. A data base tool provision captures rural data and technical specs of these rural data base and its architecture.
Information technology has undoubtedly transformed how microfinance entities operate. The industry has witnessed remarkable transformation with the adoption of information and communications technology.
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