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Fintech solutions – microfinance institutions vs. microfinance agencies

Updated: Nov 3, 2020


I sat down with Praseeda Kunam for a Zoom scoping session on the Samhita’s Development Network Microfinance Initiative fintech solutions.


One of the examples of the microfinance institution in India that uses fintech solutions is ESAF Small Finance Bank that won European Microfinance Award in 2019. It is a bank concentrated in Kerala and Tamil Nadu, India. ESAF digitized a wide range of its lending processes, in particular customer on-boarding, electronic applications, customer financial training, credit appraisal, in-field verification, mandatory customer identity and address verification. It also digitized opening of accounts, disbursement of funds collections of loan repayments. The field officers use tablets that are connected to Internet and biometric identification system for automatic credit bureau identification. Loan receivers are also given ATM cards to withdraw money tranches from any ATM.


Does Samhita’s technology platform operates in the same way?

Praseeda: The Samhita’s Microfinance Initiative operates as a loan agency, not a bank. In that respect, it is limited in the way it operates, and what kind of information and services it can provide to its customers. Our field agents have tablets that are connected to Internet and they put the information gathered from customers on the tablet. The information is than aggregated for basic data analytics across channel, aggregated portfolio info etc. Field agents can also look up credit history of the client on the tablet: the size of the loan, repayment scheme etc.


The network's technology partner eCubeH created the Microfinance StreamsTM suite of enterprise applications which run on servers, netbooks and smartphones, and are available for free to Samhita.Current technology platform allows for the possibility to roll-out bio-metric identification for automated credit bureau. However, it has not been implemented so far.


Can customers also access their basic accounts on the tablets of agents? For instance, can customers access balance enquiries, loan applications and customer referrals?

Praseeda: As the Initiative is not a bank itself, field agents cannot provide customers with the direct access to their bank accounts. They also cannot issue ATM cards.

Is the solution integrated with the Credit Reference Bureau and relies on credit scoring for automated loan decisions based on digital data collected from clients over the years?

Praseeda: Field agents have access to credit history gathered over years. On this basis, loan officers can make a recommendation to the bank whether the loan should be granted or not. Bank itself checks the credit score with the Credit Reference Bureau and issues final loan decision within 1-2 days. However, we do not share credit history gathered through our field agents with the bank. Bank relies on its own information.

Can your tablet be used both on- and offline, allowing management to monitor field activities in close to real time even over long distances?

Praseeda: Yes. Tablet has a sim card connects automatically to Internet.

How many agents are using the tablet? How many tablets are in place?


Praseeda: Close to 300. And they can all access the same information through the main server.

What other sort of information about your clients do you gather?

Praseeda: Information such as, economic profile of the family, progress indicators, social economic indicators. Loan officer collects info on community standing. All information is gathered through a standardized form.

How do clients repay loans?

Praseeda: Field officers collect loans in person during bi-monthly meetings in the villages. Not many women have access to online accounts as a lot of them is not literate.

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