Microfinance Institutes or MFIs tap entrepreneurial resources at the lowest level of economic stratum and create opportunities for those with limited pocket size. They may have limited money in their pocket to execute their entrepreneurial ideas, but taken together they constitute a huge market for microfinance companies through microcredit.
They empower unbanked entrepreneurs with adequate funding and enable them to grow their business. In the last decade, the industry has experienced a significant growth and now, it is the right time to leverage mobile technology to use it to improve their operational efficiency as well as better control over the process of selection of potential customers and loan recovery.
It has been estimated that by the end of 2016, 75% of India’s population will have a mobile phone and MFIs must explore ways to use mobile technology effectively. Mobile applications can be very helpful for microfinance institutes mainly because the potential customer base is extremely fragmented geographically and it may not be possible for the field staff to carry their laptops everywhere while approaching their existing or potential customers. The wireless capabilities of mobiles like Bluetooth, GPRS/3G can be quite convenient for field officers even in the remotest corners of India. Mobile apps can streamline their operation, reduce the overall cost and can also, in turn, increase their reach apart from improving the quality of service.
The Microfinance industry in India is still largely paper-based as far as the process of customer acquisition, loan collection system, and loan disbursements are involved. This system makes the task quite tedious and also increases the overall operational cost. There is also less control over field officers who are responsible for the distribution and collection of the loan. MFIs need to rethink their traditional operating models and reevaluate their future strategy for improving their operational efficiency.
Automating the process of customer enrollment, distribution of loan and collection process, based on cutting edge, full proof and efficient mobile technology, MFI can handle a large amount of data quite conveniently. It can also overcome various challenges and limitations that the sector faces in the present paper-based loan disbursement and collection process.
With India’s large base of low-income group population and the increasing popularity of smartphones across all levels of socio-economic strata, there are some microfinance companies, which have already started adopting mobile apps for their smooth functioning. However, one of the greatest challenges that MFIs face is in this regard is to have an app that is compatible across all kinds of phones and all OS.
There are a few companies, such as Anant Computing, which are addressing this very issue in the new platform the company is building to facilitate creation of mobile apps, which work on both feature phones and smartphones, work on all kinds of OS, and there is no need to upgrade the app if the operating system is upgraded. In addition, the company has also worked on the technology to make the rich apps with size less than 1/10th of usual mobile applications. With apps running smoothly even offline and designed to run perfectly on low memory phones, these mobile apps could be the game changer for the microfinance companies in the sense that their field executives can tap and serve the market in a much better way than they used to do with a largely paper-based data system.