Micro finance is a fragmented but huge industry, close to $70 billion in terms of aggregated loan, serving about 150 million people globally and consisting of not less than 10,000 micro finance institutions. These are indeed impressive figures, but ground realities are much less rosy, and the industry suffers from some fundamental problems.
The industry suffers from certain client related problems such as attracting new clients, retaining existing clients and lack of information about existing and potential clients. Then there are staff related problems such as educational level and skill development of staff.
However, the more fundamental problems faced by the industry are the system related problems such as high cost, profit performance and interest rate. Any micro finance institution lending out small loans has to keep doing a balancing exercise between the interest rate and loan repayment. To ensure a high rate of loan repayment, companies need to employ lots of field force who can work in the field doing background checks, disbursement of loan, follow-up on the clients and loan collection. But these activities cost money, which increase the interest rate that borrowers have to pay. On the other hand, there is always the pressure to keep the interest rate low because of repayment ability of borrowers who are mostly poor.
Micro finance companies often try putting more emphasis on high repayment rates, which means they recruit field staffs for all types of jobs and seem inclined to open offices in all their areas of operations. But this obviously leads to very high interest rates, and in turn affects the growth potential and profit performance of the industry.
This is where the digital solutions have the potential to revolutionize the industry. You can cut cost by a huge margin if you take everything online. There are no offices; there are minimum field staffs with all the client information stored in their portable digital devices. And the best and easiest digital device for this kind of activity is the mobile phone well supported by a robust mobile app.
The solution offered by Anant Computing has the potential to prove a game changer for this industry. ACP or the Anant Computing Platform, the company is building to facilitate creation of mobile apps can work on both feature phones and smart phones and it work on all kinds of OS. The microfinance companies can hugely benefit from this enabling technology and develop their robust microfinance app to help their field staffs carry out their usual activities, keep all the client information for loan disbursement and also for recovery of loan.
Apps once developed on Anant do not require the user to keep track of upgrades, as the platform facilitates automatic upgrade of the app without any intervention from the user end. In addition, it is possible to develop rich apps with size less than 1/10th of usual mobile applications. The apps can run smoothly even offline, and are designed to run perfectly on low memory phones. The platform also allows personalized on-screen keyboards in various Indian languages and the user gets to choose the language they prefer from the same app. Using these mobile apps, the field executives can tap and serve the market much more efficiently than with their paper-based operations.
Digital technology is transforming various traditional industry sectors in brilliant ways. Today when technology is affecting almost everything making it efficient, micro finance industry cannot remain untouched for long. However, this may not come easy; there will be hiccups, but they will certainly get eliminated eventually, just as it happens in any emerging industry.