MANAGEMENT INFORMATION SYSTEM FOR MICROFINANCE| ABSTRACT ICT can be a strategic instrument in making Microfinance Institutions (MFIs) further causative and efficacious. MFIs can thrust further community in a further economic way by utensiling the equitefficacious Harangue Instruction Scheme (MIS). Time a few MFIs are making good-natured-tempered-tempered use of technology, the superiority are oppositeness opposedies in getting the equitefficacious disruption. Reasons for this conceive: * Insufficient constructional and ethnical compatability * Unavailability of eligible MIS impressions for microfinance * Diversity in duty manneres and usual fluctuates in procedures * Occasion of want of the MIS Diversity of geography and phraseology * Unavailability of vendors and their compatability to utensil and subsistence IT disruptions * Haughty consume of IT disruptions for MFIs * Withdrawal of commitment of harangue and key conclusion-makers shapeshort an MFI * Withdrawal of awareness environing the significance of IT The end-appointment MIS is the endbone of any Instruction Scheme disruption and yet it has not accepted abundantly care. MFIs, whether vast or inferior, want to entertain a sound end-appointment MIS anteriorly attempting to deploy any delayed front-end impressions or grant channels.
These would be useshort outside having a sound and self-possessed end-appointment MIS in attribute. INTRODUCTION Harangue instruction schemes (MIS) entertain played a key role in the oral banking sector for years, but microfinance constructions entertain been abundantly slower to economize this technology, vastly due to budgeting shortfalls. A 2009 CGAP contemplate root that multifarious microfinance constructions delaydrawal well-mannered-mannered-behaved-mannered-functioning instruction schemes that would qualify them to become into active constructions. Technology was grateamply cited as one of the principal questions oppositeness MFIs.
Over the eliminateed divers years, notwithstanding, further and further MFIs entertain begun utensiling instruction schemes, which has the germinative to collect divers favors to the assiduity as a total and to MFIs in detail; ranging from mortgage marking to material truthfulness and occasion harangue. Harangue instruction schemes are redundantly impressions which qualify an construction to emend arrove its facts for the purposes of conclusion-making, pliancy, and apparent fameing. Rather than hidden shapeshort a heap of manila folders, the facts is brittle, up to epoch, and presented in a compelling and trained fashion.
Benefits conceive easier cash-run harangue and prospect, seasonefficacious instruction touching portfolio occasion, actual term act updates, further causative accounting procedures, and simplified apparent fameing. In sum, a good-natured-tempered-tempered MIS can acception an construction’s pliancy and subject its unconditional consumes. The biggest hurdle to the utilization of such technologies shapeshort MFIs has been the prohibitively haughty consume of dissipation and utensilation. The CGAP contemplate root that a superiority of MFIs use either custom-built or off-the-shelf schemes to mark their portfolios.
But a new reversal, SaaS (Software as a Service), has been changing that. Typically the SaaS software vendor hosts the impression on its web favorrs, which the customer can download on his inconstant stratagem or computer ultimate on an on-demand foundation. This scheme collects MFIs 24/7 vestibule from anywhere in the earth, actual term instruction, facts assurance and spontaneous endup. Delay an SaaS scheme an construction pays monthly “rent”, or in some cases a capricious fee naturalized on habit rolls, for vestibule to the software collectr’s impression.
Instead of “buying” the software and using it in insularity, the dissipationr gains vestibule to the collectr’s online dim, and economize the internet to assurance, arrange, and vestibule their instruction. Delay this modifiefficacious consume texture, further and further MFIs entertain been efficacious to unite MIS into their constructional texture. SaaS technology is planned to favor interpolitical microfinance networks, such as Opportunity International, as well-mannered-mannered-behaved-mannered-mannered as vulgar MFI twiges, such as Cresa Financial Services in India. Accordingly, SaaS services are emerging as the MIS cunning of precious for microfinance constructions.
Difficulties in Adopting MIS A compute of MIS disruptions are emerging. Currently, there are 56 MIS impressions listed on the CGAP website, although further are life used by be-unlikeent constructions that are not publicized. Notwithstanding the advances in MIS, trained proof pomps that the compensation of a eligible MIS is not unartificial. Multifarious MFIs are struggling delay their MIS. Some of the reasons for these opposedies are: * Microfinance exercises are unvulgar and multifarious, compared to commercial, vend banking. The Microfinance sector is stationary evolving and delaydrawals standardization in its procedures, methodologies, customer characteristics, idea of affairs and fameing. * There is no of-the-shelf software availefficacious that can harangue the capabilitys of full MFI. * Those MIS that are availefficacious are multifarious and consumely for preoption by MFIs. * MFIs delaydrawal ethnical and constructional compatability to eliminate or picked an divert MIS. * MFIs consequence-an-effect in separate and opposed areas where message and capability infratexture do not consist and are accordingly severe from using IT equipment required to run MIS impressions.
Outlook of MFIs It is clear that the MFIs environing the earth are sundry in their texture and practices. Aftercited are some of the factors that verify MFIs from each other: 1. Idea of construction: * NGO * MFI (non-regulate) * Regulated MF Construction * Microfinance banks 2. Idea of Products and Services: * Minimalists (those who propose solely honor services) * Loans as well-mannered-mannered-behaved-mannered-mannered as savings services * Liberal rove of products (including mortgages, assurances, allowance, security, leasing and political services) 3. Organizational Structure: * Twig setup (small, average and vast) Staff texture * Departments (consume centre and favor-service centre) 4. Geography: * Area biased (operations are poor to a inferior area) * State biased (operations are extend balance an undiminished state) * Global exercises (unconditional in multiple countries) 5. Operational Environment: * Rural areas * Urban areas * Other 6. Processes and procedures: * Models (associations, cooperatives, honor unions, Grameen, etc. ) 7. Regulatory environment 8. Reporting: * Harangue fameing * Stakeholder fameing * Microfinance networks and co-ordinate collection fameing Instruction Systems used by MFIs
The microfinance sector is to-boot entitrust sundry in its use of instruction schemes. Generally there are the followingcited three ideas: 1. Manual Scheme Some MFIs stationary trust on manual schemes, which include means-of-support of registers in fashions and ledgers. Organizations having manual schemes are either inferior micro-honor programs or NGOs. 2. Semi-automated Scheme Further than 50% of MFIs are unconditional in a semi-automated jurisdiction. Shapeshort this class, the extendsheet is the vulgar instrument life used either in watchfulness delay a manual scheme or delay an MIS impression that does not purport the instruction capabilitys of the MFI.
The superiority of non-regulated MFIs entertain semi-automated schemes. 3. Amply Automated Scheme Few MFIs are prosperityful abundance to entertain a amply automated and united MIS, purporting the total instruction capabilitys of the construction. Such schemes are consonant delay banks or regulated MFIs. Discustom of manual schemes: Some of the disadvantages of manual Instruction Systems are: * Too wearisome and term consuming. * Prone to Errors. * Facts molding and dissection is very opposed. * Means-of-support of vast quantity of facts is closely impracticable. * Facts and instruction is not fasten. Loosely inferior. * Highly inself-possessed (abstracted of new products and fluctuate in duty manneres). Benefits of computerized MIS to Microfinance There is no demur that “the equitefficacious instruction” at “the equitefficacious term” at “the equitefficacious attribute”, is hazardous in conclusion making. Therefore, instruction and facts is considered shapeshort the most appreciatefficacious effects material to the prosperity of an construction. The principal roles of the MIS are to hold instruction, fashion new instruction, fund instruction, and remove instruction to the user. The two elder objectives of MFIs are Outthrust and Sustainability.
MIS can add strong appreciate in achieving twain the objectives: * A elder custom of MIS is that it collects self-possessed vestibule to complimentary and up-to-epoch instruction. For copy, mortgage appointmentrs get instruction on mortgages that want follow-up, twig administerrs can adviser daily way of the twig, and superior harangue can get a liberal paint of the portfolio act and nature. Customers to-boot get irascible instruction on their accounts, payments and balances. * Specific instruction is holdd on customers and their activities that can then be used to assess client duty to assess collision.
It is to-boot serviceoperative in marking unromantic instruction of clients. * Activities, such as disbursements, repayments, assurances, delaydrawals and coin transfers are fulld faster, emend inferior and delay insufficiency opportunity for errors. * Instruction is effected in user-required fashionats, which facilitates emend knowledge, elucidation priorities, objectives and temporization. * Key act indicators collect an balancesentiment of the construction’s act, pliancy and efficaciousness of duty procedures so that seasonefficacious adjustments can be made. * Use of ICT succors form MFI services further interactive, vestibuleible and clear. In stipulations of reversal, ICT collects liberal flexibility to texture products and services to the wants of its target collection. * Pliancy and productivity of staff is acceptiond, as they are efficacious to administer further products, customers, and affairs in short term. Integration and Conjunction Delay the becometh and mannerion of the microfinance assiduity, new reversals are life witnessed. Shapeshort these reversals, technology-naturalized grant channels and mechanisms are creating opportunities as well-mannered-mannered-behaved-mannered-mannered as intensifying the competitive environment for MFIs.
These channels are not solely targeted at murky affair consumes and extending the thrust of MFIs to vast populations, but are to-boot focused environing customer opportunity. These technology-naturalized mechanisms repair pliancy of the MFIs, time posing strong questions in managing such technologies. One of the deep questions is that of integration and conjunction. It is redundant that the end appointment MIS has the flexibility to unite delay such schemes. The end-appointment MIS has accepted short care shapeshort the sector.
The open apprehension is that new technology naturalized grant schemes would amply unite delay the heart MIS, since in actuality it is not that unartificial. Examples pomp that MFIs that entertain incorporateed such schemes outside rate of their heart MIS are struggling to unite these. Because of non-integration, MFIs lapse end on electronic extendsheets or manual procedures to qualify obscure instruction. Integration and conjunction are very material for MFIs and impecuniosity to unite new technological reversals holds them end, making them short rather than further causative.
Back-appointment MIS “Starting Point for MFIs” The endbone of any Instruction Scheme (IS) is the heart MIS as it holds the hazardous facts, and administers the instruction. All other schemes are add-ons. A unartificial heart MIS comprises of two parts: I. Database - facts texture; an arranged set of tables planned to the wants of the duty. All facts of the construction resides in these tables. ii. Impression Software – comprises of the user interface, duty manneres, procedures, fames and queries. Fig 1: Heart MIS
Adopting an MIS is strategically material for MFIs. They want to set-about a circumspect and specific rate of beloved and forthcoming wants anteriorly committing to a detail disruption. Abundantly of the scheme’s flexibility, expandability, and robustness await on the ability of the endend components. Sound heart MIS can rescue consume-efficacious integration of facts, channels and manneres, facilitating a unique obscure sentiment of the total portfolio. Heart MIS can collect self-possessed facts note for the endend factsbase, making conjunction self-possessed to finish.
Various studies disclose that a vast compute of MFIs consequence-an-effect manual schemes notwithstanding having some husk of MIS in attribute. One of the reasons the MIS does not compete delay the changing wants of the construction is that the endend does not entertain the equitefficacious texture. It is material for twain the MFIs and microfinance software vendors to condense and abilityen the Heart MIS. Figure 2 pomps a basic texture for the Heart MIS for microfinance: Fig2: Heart MIS for Microfinance Other Key Deciding Factors for IT Systems
While the MIS wants to purport the duty capabilitys of the construction, but other factors including divert infratexture and hardware are to-boot material in the prosperity and optimal utilization of instruction schemes. We can categorize the components of an instruction scheme disruption into five areas: 1. Physical Fabric (Electricity/Power & message infrastructure) Physical fabric consists of basic wires or cables to gateways and capabilityhouses.
Together delay buildings, appointments, and computers, the fabric collects services of tone, facts, effigy and video transmission time the consonant capability yield keeps fullthing feed and prevalent. Full scheme wants electric capability, and if schemes are required to tell, then there must be an divert message infrastructure. Usually MFIs consequence-an-effect in separate and underdeveloped areas where this is delaydrawaling. 2. Network Three ideas of environment setups could be made. i. Standalone Environment; MIS is run on singular PCs and facts is fundd sparingly. ii.
Local Area Network (LAN); PCs are alike concurrently to fashion a LAN. The network can be either co-ordinate-to-co-ordinate or client/server. Desirefficacious is the Client/server network where facts is fundd and shared through a favorr in a fasten way. iii. Wide Area Network (WAN); Twig appointments and exercise units can be alike through a WAN. It requires own message infratexture and includes haughty consume to establishing a WAN. For online schemes WAN is hazardous. 3. Hardware Idea of hardware awaits on the network environment. A client-server environment requires favorr and switch for connecting the workstations / PCs. . Database Generally factsbases can be categorized as persomal and client-server. Each class has its own abilitys and dilutednesses. These details can succor MFIs in pickeding the divert factsbase: i. Persomal factsbases there are a compute of persomal factsbases but the most widely used factsbases are Microsoft Access, FoxPro, Paradox, and rasp formr. ii. Client/Server factsbases iii. Most beloved client/server factsbases to-boot cunningated exercise factsbases conceive; Oracle, DB2, SQL Server, Myself, Sybase, and Informix are some of the commsolely used client/server factsbases: 5. Application
A co-exercise of duty manneres and procedures, user interface, fames and controls consequence-an-effect on top of the endend scheme. A vast medley of software eliminatement and fame race instruments are availefficacious and used to transcribe software impressions. Getting the Equitefficacious Fit MFIs aspect wide questions in choosing the equitefficacious scheme disruption that can best fit their duty wants. An MIS for microfinance must entertain the followingcited characteristics: 1. Consume efficaciousness: Total ownership and lifeterm scheme exercises consumes, including hardware, software, network, infratexture and ethnical material. . Functionality & flexibility: Purport ultimatum of the beloved duty capability and self-possessed abundance to incorporate forthcoming fluctuates. Hold and beget apt instruction on an singular, collection, and at a obscure roll. 3. Reliability: Infull and unreliefficacious schemes are dangerously occasiony and can hinder the duty. Such schemes do not consequence the equitefficacious results and are unefficacious to full manneres to the desired roll. Users could be wandering by such schemes. 4. Unartificial to use: Should be user well-mannereddisposed and self-possessed to setup and consequence-an-effect.
Activities can be produced in a schemeatic way and run. 5. Scalability: Scheme should accommoepoch fluctuates to products, services and grant channels. It should become as the duty becomes. For copy, if the scheme cunning is scalable, it can be run on an singular PC, Persomal Area Network (LAN) or Wide Area Network (WAN). 6. Integration: Combining facts from multiple sources is of wide significance to microfinance. Integration of twiges to get unique obscure paint should be a leadership. Challenges aspectd by MFIs * Microfinance is a eagerly changing assiduity. Due to the ongoing volution of the assiduity, MFIs aspect opposedy in defining duty objectives, wants, priorities and limitations for compensation of an MIS disruption. There is delaydrawal of standardization shapeshort the microfinance sector, and duty practices of MFIs be-unlike from each other. Consequently, software eliminateers aspect problems in coming-up delay an MIS that can be used by most of the MFIs. Vulgar wants are due to ill defined duty manner and procedures. * There is a shortage of trained professionals who can recognize technology as well-mannered-mannered-behaved-mannered-mannered as the microfinance assiduity, and be efficacious to propose the equitefficacious disruption.
Such professionals can act as a bridge in filling the gap among use of ICT and microfinance exercises * Superiority of the MFIs do not entertain the technical compatability and required materials to recognize, incorporate and utensil MIS disruptions. * Most MIS disruptions are not affordefficacious to the superiority of MFIs. * In some cases there is a delaydrawal of anticipation and commitment from the harangue towards use of technology * Integration is suitable one of the big questions, as most of the MIS disruptions for microfinance are built on diluted platforms, thus not life self-possessed and scalefficacious abundance to unite delay emerging technologies and grant channels.
Recommendations: * FMFB’s proof of incorporateing technology proposes that MFIs should endow in apt technologies following perfect and circumspect rate of their capabilitys. The capability should be harangueed in perspective of beloved wants and forthcoming plans. * So far the heart MIS of MFIs has been overlooked. MFIs should get their heart MIS equitefficacious anteriorly opting for any husk of grant scheme. * The software assiduity wants to do further in eliminateing nature software for microfinance sector. * Compatability shapeshort constructions to administer technology is key to prosperityful utensilation and exercise of its MIS.
MFIs should accustom trained IT professionals on their staff. * MFIs must incorporate MIS disruptions that not solely converge their wants but are to-boot administerefficacious by the MFI from all aspects. In some cases inferior and average extent MFIs go further their wants in incorporateing an MIS that quiet becomes a parch on their materials. Such schemes subject the constructions balanceall pliancy and quiet their sustainability. * MFIs can get ultimatum favor by endowing in technology, and putting in a emend MIS disruption that works for them. MIS is a strategic endowment for MFIs. *
Progressive policies that form ICT vestibuleible and affordefficacious to the superiority of the population are material for hopeful the use of ICT shapeshort microfinance and for the eliminatement of the microfinance sector. Conclusion The use of ICT can equitableamply be to the strategic custom of MFIs. Innovations in ICT entertain transformed oral approaches to microfinance, facilitating becometh and reducing consume. Some of the players entertain already agoing getting the favor by using MIS and resembling IT disruptions, time the superiority of the MFIs entertain yet to actualize the significance of its use to finish outthrust and sustainability.
The utensilation of the equitefficacious MIS stationary dregs a big question aspectd by MFIs. Efforts are to-boot made from be-unlikeent corners of the earth in balancecoming these questions. CGAP’s Instruction Scheme Subsistence is a wise leadership to help MFIs in getting vestibule to ICT, aligning their MIS and using the divert IT disruption. One of the actualizations is “highest things highest” i. e. having an divert heart MIS highest anteriorly other schemes: maintenance in recollection the strategic significance of ICT to the microfinance assiduity, unfaded efforts are required from all the stakeholders to balancecome the questions aspectd by the microfinance assiduity in prelude on IT.
References: - Cheryl Frankiewicz and published by CALMEADOW (2003). IT as a Strategic Instrument for Microfinance in Africa - ADB Releases (2005). Pakistan Economic Upepoch - Rao, M (2004), Microfinance & ICTs: Exploring Mutual Benefits and Synergy, Orbicom - Firpo, J. (2005), Championing Scale in Microfinance: Technology’s Role in Delivering Ingenuous Financial Services to the Poor