Based on a report by Â CRISIL on the top 25 Micro Finance Institutions (MFIs) in India in 2015, the critical points of impact for the MFIs have been identified as the following:
- Increasing profitability
- Reduction in Operating expenses
- Improvement in operational efficiencies
- Improvement of branch efficiency
- Enhanced stakeholder confidence
- Healthy asset quality
- Maintenance of borrower discipline
- Awareness of borrower credit during the complete lifecycle
In view of the above-mentioned factors, a key enabler for efficient and effective execution and monitoring for MFIs would be the use of technology. This technology would not be an extension of a core banking solution used by commercial banks but something unique and specific to MFIs to ensure efficient monitoring of real-time collection, customer performance, both at the branch and main office levels.
Thinking aloud, here are some of the features such a technology solution could showcase:
- A cloud-based product that can be integrated with the MFIs core banking system to provide real-time reports of various types of transactions at the various levels of hierarchy.
- Business Intelligence/Analytics to help improve efficiencies and understand the end-customer better. This could eventually include opening up the facility to offer other products to the same consumer on basis of patterns.
- Comprehensive audit system allowing increase of transparency of operations to enhance stakeholder confidence.
- Availability of an integrated LMS platform, enabling the learning gathered in the organization to be made available to the relevant personnel in a structured form to ensure uniformity and efficiency.
This would ensure scalability and repeatability of business by MFIs leading to larger penetration in the rural sector, thereby facilitating participation by a larger section of the people.
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