MANAGEMENT INFORMATION SYSTEM FOR MICROFINANCE
ICT can be a strategic tool in making Microfinance Institutions (MFIs) more efficient and effective. MFIs can reach more people in a more economic way by implementing the right Management Information System (MIS). While a few MFIs are making good use of technology, the majority are facing difficulties in getting the right solution. Reasons for this include: * Insufficient organizational and human capacity
* Unavailability of suitable MIS applications for microfinance * Diversity in business processes and frequent changes in procedures * Risk of failure of the MIS
* Diversity of geography and language
* Unavailability of vendors and their capacity to implement and support IT solutions * High cost of IT solutions for MFIs
* Lack of commitment of management and key decision-makers within an MFI * Lack of awareness about the importance of IT
The back-office MIS is the backbone of any Information System solution and yet it has not received much attention. MFIs, whether large or small, need to have a strong back-office MIS before attempting to deploy any advanced front-end applications or delivery channels. These would be worthless without having a strong and flexible back-office MIS in place.
Management information systems (MIS) have played a key role in the traditional banking sector for years, but microfinance institutions have been much slower to utilize this technology, primarily due to budgeting shortfalls. A 2009 CGAP survey found that many microfinance institutions lack well-functioning information systems that would enable them to grow into vigorous institutions. Technology was consistently cited as one of the greatest challenges facing MFIs. Over the last several years, however, more and more MFIs have begun implementing information systems, which has the potential to provide several benefits to the industry as a whole and to MFIs in particular; ranging from loan tracking to greater transparency and risk management. Management information systems are essentially applications which enable an institution to better organize its data for the purposes of decision-making, efficiency, and external reporting. Rather than hidden within a pile of manila folders, the data is crisp, up to date, and presented in a compelling and practical form. Benefits include easier cash-flow management and forecasting, timely information regarding portfolio risk, real time performance updates, more efficient accounting procedures, and simplified external reporting. In sum, a good MIS can increase an organization’s efficiency and decrease its operating costs. The biggest hurdle to the utilization of such technologies among MFIs has been the prohibitively high cost of purchase and implementation. The CGAP survey found that a majority of MFIs use either custom-built or off-the-shelf systems to track their portfolios. But a new innovation, SaaS (Software as a Service), has been changing that. Typically the SaaS software vendor hosts the application on its web servers, which the customer can download on his mobile device or computer terminal on an on-demand basis. This system provides MFIs 24/7 access from anywhere in the world, real time information, data security and automatic backup. With an SaaS system an organization pays monthly “rent”, or in some cases a variable fee based on usage levels, for access to the software provider’s application. Instead of “buying” the software and using it in isolation, the purchaser gains access to the provider’s online cloud, and utilize the internet to deposit, organize, and access their information. With this changed cost structure, more and more MFIs have been able to integrate MIS into their organizational structure. SaaS technology is designed to serve international microfinance networks, such as Opportunity International, as well as national MFI branches, such as Cresa Financial...
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