Archive for: Outsourced IT

Information technology can help microfinance institutions reduce costs, improve efficiency, and increase outreach. So why do so many MFIs either end up sinking funds into poor technology investments or simply not investing in technology at all? We’re conducting a survey to find out, and we’d like your input. The survey results will help MFIs understand their strengths and weaknesses relative to other MFIs and will identify opportunities for vendors, donors, investors, and MFIs in the microfinance technology market.

Whether you’re in a small MFI with just a few dozen clients, or a big organization, your responses will help build a picture and create greater awareness of what’s going on around information technology for the industry. To be eligible for the raffle to win up to $15,000 in free consulting services, please take part before our deadline of September 15, 2008. The survey is available both online and offline in English, French, and Spanish, and offline in Arabic. Thanks for your help.

What functions are involved in the ASP or SaaS model for microfinance IS/CBS?

We are looking into the different pieces of the value chain for delivering information and core banking systems through an application service provider (ASP) OR software as a service (SaaS) model. These functions may be performed by a microfinance institution (MFI), a national or regional microfinance association (MFI-A), a local IT service provider (ITSP), the ASP or SaaS vendor (Vendor), or another, new party.

ASP or SaaS models would seem particularly likely to fall short of customer expectations when it comes to support functions. One reason that MFIs are so dissatisfied with existing microfinance software vendors is that they provide poor quality support after the sale – and in particular that most of these vendors do not have local support providers in the countries in which their MFI customers operate. For example, a vendor from Ecuador may have customers in Peru but no on-the-ground support staff in that country.

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CGAP and its regional program CAPAF are pleased to announce that the third Technology Forum will be held in Yaoundé, Cameroon on July 1 and 2, 2008.

The Forum will bring together financial service providers and technical solutions providers for technical workshops on using new technology to increase access to financial services. In addition to the forum, the event offers an opportunity for vendors to participate in a commercial tradeshow of products and services. This year’s themes include MIS, the link between social protection and technology, and mobile banking.

The Technology Forum is free of charge and open to all those who are interested in attending. We strongly recommend that you pre-register by sending in the registration form available on http://www.capaf.org/pages/forumtechnologie_2008/Inscription.html and following the instructions.

You can also send an email to capaf@orange.sn to request the form.

Please note that the working language of the Forum is French but simultaneous interpretation in English and French will be available for the technical workshops.

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Around 45% of existing microfinance institutions still track and record their operations and accounting in excel sheets or even completely manually.  This costs a massive amount of time and resources, leaves room for error, prevents them from growing quickly, and undermines their ability to manage risk. Especially for smaller institutions the relative investment and maintenance cost is enormous compared to their size and operations.

How about completely outsourcing information systems (IS) to an external technology provider, so that the MFI can focus on its main business: handling client relationships and providing financial services?   Read the rest of this page »

Europe turns nose up at mobile banking
Mobile banking could be failing to capture the imagination of consumers, according to a
survey of 2,500 retail financial services customers across Europe. The research, conducted by TNS on behalf of Fujitsu Services, found 65 percent of respondents prefer to access banking services online. nly five percent of the sample said mobile banking is the channel of choice. Physically going to a branch is the second choice, at 53 percent. The findings differ from a UK-only survey which put face-to-face or voice interaction as the preferred method of accessing banks.

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Word today that IBM, which has been touting its foray into open source solutions, will partner with Grameen Foundation to help expand its MIFOS solution for information systems. In a joint press release, Grameen and IBM note that

…MFIs (microfinance institutions) are inhibited from extending their reach because they lack a flexible, cost-effective technology infrastructure that enables them to expand their operations to provide loans to more people and to develop new products and services. Many MFIs are still using pen and paper or simple spreadsheets to process loans. A 2004 study by the Consultative Group to Assist the Poor (CGAP) showed that just half of all MFIs around the world have automated information systems, and those that do invest in technology spend duplicative resources on custom-built systems that are extremely costly and difficult to maintain.

No doubt. We hear this all the time from MFIs - its hard, if not impossible to roll out electronic channels on the front end without improving the back end first. 

Want to know more? We’ve got lots of research…..

For some, El Salvador is famous for some of the best surf spots in Central America. For others it is the kilometer-long black-sanded beaches that come to mind. This week, for the Latin microfinance community, San Salvador will be famous for one of the largest and most reputable microfinance events of the region: The 10th Inter-American Forum on Microenterprise.

Looking at the agenda, the three day conference brings together an amazing group of around 1,500 of the region’s microfinance providers, its networks, governments, donors, and even the royals with the participation of H. M. Queen Sofia of Spain.

CGAP is organizing a panel on technology’s potential to increase outreach and depth of access to finance. Our project partners Visa Credibanco and GXI, as well as Opportunity International will share their lessons learned and challenges to implement technology projects.

Watch this space for more.

That was fun. What did we learn? 

We reaffirmed that small, including micro, enterprises have proven themselves to be reliable and sustainable ways to help people out of poverty and that, in that context, we have abundant proof that microfinance is a workable idea.

MFIs, although having reached increasingly impressive numbers of people, must nonetheless recognize that more than two-thirds of the inhabitants of developing countries remain to be touched by the MFI mission of bringing the advantages of banking to the unbanked and under-banked.

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In her opening remarks, Elizabeth Littlefield used the example of Brazil to illustrate two points. Since the government began allowing use of banking agents to deliver financial services several years ago, 98% of the municipalities now have easy access to financial services. That number is enviable by all standards. At the same time, one network manager experienced an 85% turnover in agents during the first few years.

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Since Monday, more than 300 people from 60 countries have gathered at our Next Generation Access to Finance Conference in Washington DC.

The opening sessions covered the opportunities that technology provides, but also helped identify the areas we jointly need to tackle to unleash the power of technology to deliver financial services to people who are too poor, live too far from a traditional bank branch, or do not have a formal credit history.

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