Technology plays a crucial role in helping Microfinance Institutions (MFIs) to achieve financial sustainability and in making a lasting impact on the problems faced by the microfinance industry. Furthermore, technology is vital in decreasing information asymmetry between stakeholders and alleviating poverty by increasing its microfinance impact and outreach.
For the development of Microfinance institutions and their institutional strengthening, technological developments related to microfinance have to be embraced whole heartedly and ensure that the solutions devised are cost-effective and are in line with the requirements and the evolving needs of the microfinance institutions and most importantly the customers they are serving.
The greatest challenge facing microfinance institutions is how can they make themselves financially sustainable in tandem with fulfilling their desired objective of poverty alleviation? This is where technology plays its role in sorting out the internal operational issues of the MFIs and helping them increase their impact and outreach.
MFIs are mostly burdened with small size, scarce resources and time pressure to meet deadlines. MFIs problems are further compounded by the fact that with the limited resources at their disposal they have to contend with high growth rates, which their systems are not geared to cope with. In order to serve their target population MFIs usually have to interact with high number of customers in faraway places.
MFIs are on the lookout for software solutions that capture and process data providing relevant information for control, analysis and decision making at the operational and strategic level in a cost effective and timely manner. Management Information Systems (MIS) are tools that can easily serve the varied requirements. The difficulty though for MFIs is to find software or a system that not only serves their needs but is also cost effective. The problem is that the market lacks a universal option that is a fit for the major needs of MFIs. Procuring a ready-made solution is often not the best way forward as with the evolving needs of the MFIs due to its rapid growth, there is often a need to customize your software and systems accordingly. Plus, buying into a ready-made solution is also very costly as well.
So what is the best way forward? With technology at the forefront of driving growth for MFIs and other social development organizations, it is of paramount importance that your organization aligns itself with a technology partner that not only has the necessary technical expertise along with the relevant budget awareness and a dedicated customer support team looking after all your IT solutions and problems. The technology partner would not only have the capability to offer you a solution that would fit with your organizational needs but also have the capability to mold it according to the evolving needs of your organization. This would not only reduce the cost but also allow the organization to ensure that they keep up to date with the evolving technological needs of the industry.
If the MFIs and other organizations working for the uplift of the marginalized community want to achieve their goals and also ensure their own sustainability along the way they have to fully embrace technology and more importantly be prepared to regularly take on board technological changes that could not only shape the future of the organization but also countless customers the organization is serving.