Digital technology has the potential to help microfinance institutes become more effective and efficient. In today’s digital world, carrying a laptop in the field has become a passé, and the in-thing is to carry whatever you need in your mobile. There are mobile apps that can help loan officers of these companies working in the field maintain their data and help them operate efficiently.
Microfinance companies play a huge role in funding needs of the low-income population, who do not have access to the banking services. By their very definition, these companies target the customers at the micro level.
This connection is not faceless, however, as it is in the banking sector where there is often a pre-decided checklist of documents required for processing any loan application. You approach the loan officer, submit the required documents related to your paying abilities and the loan needs. The system feeds your details into a software module that decides whether you are a safe borrower or not and comes out with a credit score to assess the risk involved in bank extending credit to you. The repayment of the loan is also more or less automated and every month, a fixed amount goes out of your bank account towards repayment of the loan.
In a microfinance institution, this interaction is at a very personal level. The decision to sanction the loan depends on a lot of factors that are often not clearly defined or articulated by the head offices because ground realities at the rural level among the low-income group are vastly different from the scenario of a typical small or middle-income borrower from a regular banking institution. The loan officers often have to create an emotional connection with their borrowers before loan reaching maturity, because they get to know about borrowers’ personal life as well as family and they also demonstrate affection in different ways as a part of their strategy to generate pressure or facilitate recovery.
In such a scenario, it is not difficult to see why the loan officer in a microfinance company has to be a local man or woman, speaking the language of the people he or she is interacting with and conversant with the socio-economic milieu of the area of their operation. It is also important from the point of view of cutting cost as most microfinance companies do not have much scope for overhead expenses and they often try to minimize their cost on this account. Hiring someone from the local area is definitely much less expensive than the cost involved in retaining an English speaking field executive from an urban setting.
It is precisely this reason that makes the digital inclusion in microfinance institutes a difficult task also because these local recruits are generally not very comfortable with the English language which is the main language of the majority of the apps. A vernacular microfinance app that works in the local language that people of the region speak can be the best bet for someone recruited locally to cater to the needs of the village itself.
Making vernacular apps by Anant Computing has been a highly innovative move with the kind of language support it offers. It can provide support in all Indian languages, even if the operating system does not support them, and the app comes with personalized OnScreen Keyboards in all languages, and the audience gets to choose the language they prefer from the same app. A loan officer working on a mobile app with the local language displayed on the mobile screen has definitely a better chance of getting the confidence of the local population one is trying to connect with to generate business for the company.