ICT: A TOOL FOR MFI GROWTH Saheed Okuboyejo

Highlight To Illustrate how Information and Communications Technology (ICT) can be a key component of your Growth Strategy

To Illustrate how Information and Communications Technology (ICT) can be a key component of your Growth Strategy

ICTs can significantly improve MFIs Use of inward facing ICTs - MIS Micro banker ,Bankers Realm MFO , MBS Esusu etc . Microfinance Institutions become more competitive Reduce transaction costs. How? Increase transaction volume. Decrease of interest rates. How? Less Fraud. Reduce Risk through Better governance. Reduction in expensive premises. Increased Outreach. More Professional Look

Use of inward facing ICTs - MIS

Micro banker ,Bankers Realm MFO , MBS Esusu etc .

Microfinance Institutions become more competitive

Reduce transaction costs. How?

Increase transaction volume.

Decrease of interest rates. How?

Less Fraud.

Reduce Risk through Better governance.

Reduction in expensive premises.

Increased Outreach.

More Professional Look

ICTs can significantly improve MFIs Outward facing ICTs Mobile Phones, PDAs, ATMs, Internet Poor people are better secured and improve their life conditions- How? Have Access to better financial services Reduce their over indebtness. Faster loan processing using PDA. Gain time because: No time to wait in line. More Convenient Service; Access Anytime, Anywhere. Increase Customer Satisfaction and Loyalty

Outward facing ICTs

Mobile Phones, PDAs, ATMs, Internet

Poor people are better secured and improve their life conditions- How?

Have Access to better financial services

Reduce their over indebtness.

Faster loan processing using PDA.

Gain time because: No time to wait in line.

More Convenient Service; Access Anytime, Anywhere.

Increase Customer Satisfaction and Loyalty

ICT Program benefits an MFI

Management Information System (MIS) Provides Computerized Data Processing for Management Decision Making it is used primarily for Loan Portfolio Management. Accounting. Financial Performance Management. .

Provides Computerized Data Processing for Management Decision Making

it is used primarily for

Loan Portfolio Management.

Accounting.

Financial Performance Management. .

MIS Must Have ! MIS can be used for: Report generation and Financial Analysis (Loan Aging Report, Loan Basic Breakdown Report, Account Movement Report etc….). Access control/security (i.e. passwords, audit trail) Loan functionality (Managing your Loan portfolio, processing different types of loans with changing repayment schedules and interest rates) Deposits functionality (compute daily deposits)

MIS can be used for:

Report generation and Financial Analysis (Loan Aging Report, Loan Basic Breakdown Report, Account Movement Report etc….).

Access control/security (i.e. passwords, audit trail)

Loan functionality (Managing your Loan portfolio, processing different types of loans with changing repayment schedules and interest rates)

Deposits functionality (compute daily deposits)

MBS Navision Esusu The Esusu is a Microsoft Based Application. Customised for the Nigerian Microfinance Industry by Centre for Microenterprise Development theSOFTtribe Limited Ford Foundation

The Esusu is a Microsoft Based Application.

Customised for the Nigerian Microfinance Industry by

Centre for Microenterprise Development

theSOFTtribe Limited

Ford Foundation

MBS Navision ESusu User Friendly Interface Provides Comprehensive Report Provides interface for ATM Wireless Branching SMS Customise

User Friendly Interface

Provides Comprehensive Report

Provides interface for

ATM

Wireless Branching

SMS

Customise

ICT Technology - MIS MIS is not a substitute for good management. illusion that MIS can solve management issues insufficient checks/controls/security, low staff morale, and operational/procedural inefficiencies MIS may exacerbate problems by relying incomplete or false data, requiring staff to adapt to new systems formalising a decision-making system lacking in requisite checks and balances.

MIS is not a substitute for good management.

illusion that MIS can solve management issues

insufficient checks/controls/security, low staff morale, and operational/procedural inefficiencies

MIS may exacerbate problems by relying

incomplete or false data,

requiring staff to adapt to new systems

formalising a decision-making system lacking in requisite checks and balances.

Mobile Phone 45 million phones in Nigeria Nationwide coverage Most Adopted Technology for market segment Delivery channels include Voice / SMS / GPRS SMS Your Best Bet! GPRS (General Packet Data Service) great potential

45 million phones in Nigeria

Nationwide coverage

Most Adopted Technology for market segment

Delivery channels include

Voice / SMS / GPRS

SMS Your Best Bet!

GPRS (General Packet Data Service) great potential

Adopting Mobile phone as integral part of strategy??? SIM & phone Serves as ID Use SMS as prime delivery channel Preferential tariff from Network Revenue source Cost ICT Technology – Mobile Phone

Adopting Mobile phone as integral part of strategy???

SIM & phone

Serves as ID

Use SMS as prime delivery channel

Preferential tariff from Network

Revenue source

Cost

ICT Technology – PDA Hand held computers/ phones Save staff time entering loan transactions twice: on paper and on PC Improve Accuracy of Transaction Data Allow Outfield Officer (Marketers) to access MIS when outside the office Credit Scoring Loan processing Improved internal Control

Hand held computers/ phones

Save staff time entering loan transactions twice: on paper and on PC

Improve Accuracy of Transaction Data

Allow Outfield Officer (Marketers) to access MIS when outside the office

Credit Scoring

Loan processing

Improved internal Control

ICT Technology – Smart Cards SIM Cards, ATM Cards, Digital TV Card, Allow MFIs to build electronic database of clients’ profile and performance MFI clients carry their related loan etc. information on a microchip smart cards can act as a debit card, an account passbook and even a credit card. Fraud: Reduce possibility of fraud by eliminating cash transactions and using more secure user identity and account information. Satisfy the need of Nigerian clients for ID

SIM Cards, ATM Cards, Digital TV Card,

Allow MFIs to build electronic database of clients’ profile and performance

MFI clients carry their related loan etc. information on a microchip

smart cards can act as a debit card, an account passbook and even a credit card.

Fraud: Reduce possibility of fraud by eliminating cash transactions and using more secure user identity and account information.

Satisfy the need of Nigerian clients for ID

ICT Technology – Smart Cards High start up cost Needs to be carefully weighed vis-à-vis consumer acceptance potential utility of the consumer info automation of transactions may lead to weaker loan officer-client relationships

High start up cost

Needs to be carefully weighed vis-à-vis

consumer acceptance

potential utility of the consumer info

automation of transactions may lead to weaker loan officer-client relationships

ICT Technology – others ATM Improve access but conflict with current strategy Very High Cost Internet & VOIP (Voice Over Internet) Not adopted by target market However can be very useful as an Inward ICT. Can Reduce Internal Communication Cost Can be very Effective for Bulk SMS

ATM

Improve access but conflict with current strategy

Very High Cost

Internet & VOIP (Voice Over Internet)

Not adopted by target market

However can be very useful as an Inward ICT.

Can Reduce Internal Communication Cost

Can be very Effective for Bulk SMS

Incorporating ICT into Strategy Be Realistic About What Technology Can Do As with any tool, ICT also has limits. ICT is sometimes used as a panacea for deeper institutional problems push for technology adoption by shareholders and consultants sometimes exceeds what is in fact practical. sizable sunk cost, results in temptation to justify this through unrealistic projections

Be Realistic About What Technology Can Do

As with any tool, ICT also has limits. ICT is sometimes used as a panacea for deeper institutional problems

push for technology adoption by shareholders and consultants sometimes exceeds what is in fact practical.

sizable sunk cost, results in temptation to justify this through unrealistic projections

“ ICT is a Vehicle which you drive and does not Drive You!”

“ ICT is a Vehicle which you drive and does not Drive You!”

Thank You