Analytical Software Solutions in Microfinance Institutions and Banks

Research Report 2015

Sana HimayatResearch and Communications Manager

MFI Insight analytics

Jamal MbarkiLaboratory of computer science research (LARI), Faculty of Sciences, Mohamed Ier University,

Oujda, Morocco.

Sidi Yasser El JasouliCEOMFI Insight Analytics

Frederic Lepottier Business Development ManagerMFI Insight Analytics

Table of Content Introduction

Section 1:Microfinance Institutions and Business Intelligence

Section 2: Research Methodology

Section 3: Organizational Profiles

Section4: Results and Discussion

Conclusion

IntroductionRole of analytical solutions in microloan providers

Survey from microfinance institutions

Understanding there business operations and level of ICT automation

Knowing about their interest in the use of Analytical Solution

Role of analytical solutions in organizational sustainability

Microfinance Institutions and Business Intelligence

Microfinance is serving the underserved with smalls loans

Microfinance is spreading due to the increasing demand and interest towards poverty alleviation

Business intelligence in such organizations

Improves performance and operations

Reduce transactional costs

Quick decision making through consolidated and concise data

Reporting and monitoring

Quick report making

Makes organizational sustainable

Research Methodology Research Focus

The focus of this research is to find out the use of analytical solutions for microfinance services.

Approach Quantitative approach Survey with 10 closed questions

Data Collection & Time Frame Online Survey from MFIs and Banks Follow up phone calls Data collection through 4 months

Survey Design Multiple choice questions

Participant Outreach

Participant Outreach

Organizational Profiles

Organizational Profiles

Results and Discussion1- Do you use analytical solutions?

2- Are you able to track the performance of your products, branches, loan officers and vintages?

Results and Discussion3: How often are you able to track performance?

4: At what level does your organization track write-offs and recoveries?

Results and Discussion6: Do you have an accounting, banking and LPM systems?5: Are you able to identify the drivers of your operating

expense?

Results and Discussion8: Is your organization able to measure penetration ratio to consider potential opportunities for growth?

7: Do you have credit scoring system?

Results and Discussion10: If there was an analytical solution that covered all the areas of MFI operations listed above, would you purchase it for your organization?

9: Are you able to provide your donors with reports that they require about outreach, customer segmentation, customer satisfaction, retention ratio, etc?

Results and DiscussionAnalytics Tools- A Part of the MFI Roadmap Most organizations have some of of the 3 systems, Accounting System,

LPM System and Banking System Analytical solutions support organization to achieve all results by

incorporating the 3 systems, thus improving the performance and output of the organization.

LPM system is used by very few of the participating organizations LPM system is often directly linked with the accounting system allowing

to reduce the time lag for asset recognition Loan portfolio management is an essential part of the system because it

enables to control delinquencies and risks It is a key to identifying PAR ( portfolio at Risk) Stages of Delinquency

Source: Microenterprise Access to Banking Services

Results and Discussion (continued)

Business Process Efficiency of MFI: Portfolio monitoring capabilities Loan tracking systems Vintage Tracking Monitoring performance of branches and loan officers Tracking frequency

Daily tracking of the performance that is accurate and reliable Daily tracking allows the organization to recognize problem areas

immediately and take corrective actions

Results and Discussion (continued)

Business Process Efficiency of MFI: Write-off and Recovery tracking Write-offs and recoveries portray the true state of the organization Analytical solutions track the delinquency cycle and captures valuable

insights in order to create corrective actions Enabling the organization to recover their overdue amounts There is a decrease in the write-offs level consequently reducing the loss

reserve and have better cash flow management tracking the overdue amount at the lowest grain, contract level, enable

the MFI to set efficient recovery process.

Results and Discussion (continued)Business Process Efficiency of MFI: Reporting capability Reporting is an important aspect of a loan portfolio Success of the organization can be determined by reporting capability towards

donors Reporting is a powerful tool to improve the performance of MFIs and its

transparency Analytical solutions enable the organizations to provide the donors with reports Various Reports :

Loan Portfolio Data Quality Revenue, Growth and PerformanceQuality based on Client, Business and CharacteristicsLoan collection (PAR)Financial sustainability (adjusted return on assets)Client poverty levelsThe amount of funds usedThe amount of loans that were made

Results and Discussion (continued)Business Process Efficiency of MFI: Level of ICT Automation Organizations need ICT automation to run their business process successfully with analytical solutions Different organizational maturity stages depending on level of ICT automation and features of tools used

Organizational Maturity Depending on ICT Automation LevelMaturity Level 1 & 2

Conclusion Organizations that are using analytical solutions are at maturity level 3 of the industry

Microfinance organizations are willing to install this new system, thus creating a demand for analytical technology

in the industry.

Business intelligence has an impact on the performance of MFIs and banks and it plays a significant role in poverty

alleviation through MFI sustainability.

Analytical solutions improves organizational performance, accuracy an reduces errors

Analytical solutions enables better reporting allowing for improved decision making

It plays a significant role in performance of MFIs and its sustainability

Analytical solutions indirectly leads to poverty alleviation

Conclusion Features of analytical software solutions that organizations adopt gradually leading to better

performance of organization and its sustainability.

Research carried out by MFI Insight Analytics

The complete publication can be found on our website.

www.mfianalytics.comEmail: info@mfianalytics.comOr http://issuu.com/mfianalytics/docs/report_dec_2015