More than 70% of India's one billion population lives in villages of which about 40 million people live below the poverty line. They earn less than $1* a day and still strive to meet their both ends meet. The major hindrance in the development of the poor is not lack of opportunities, but the availability of the credit and the related support services to promote sustainable livelihood activities. Till a decade ago, rural poor were not considered in the financial domain of the mainstream financial institutions. The poor were not considered to be bankable and credit worthy. The local moneylenders had a field day by charging exorbitant interest rates and taking un-due advantage of the underprivileged and un-educated rural poor. During later years, the concept of microfinance gained popularity and the organizations like BASIX have provided innumerable services to the poor in promoting large number of sustainable livelihoods.
BASIX is one of the largest and the fastest growing microfinance institutions in India. BASIX group works with more than 100,000 rural poor households providing range of financial services including credit, savings, insurance and technical assistance and support services (TASS) in an integrated manner. BASIX operates in 10 states of India covering in excess of 10,000 villages for providing financial services in remotest of the places where the formal financial services are otherwise unavailable.
The thought process for this project has began in early 2000, when BASIX was growing rapidly and contemplating expansion into different geographic locations. When the ball was set rolling for expansion, BASIX had faced unique challenges like i) Increasing the outreach without compromising on the portfolio quality ii) Maintaining same level of effective customer service as before iii) Having a foolproof system to handle increasing number of financial transactions at the field, iv) Introducing different loan, insurance and saving products to address the needs of different groups of people and v) Catering to the growing demand of technical assistance and support services information requirement at the field. Addressing these challenges was of paramount importance to achieve the mission of BASIX, which is to promote large number of sustainable rural livelihoods on a commercially sustainable basis. To achieve this gigantic task, proper supporting systems need to be put in place. Needless to say, Information and Communication Technologies played a vital role in building the required systems.
Even though BASIX has good back-end (MIS) and decision supporting systems (DSS), we could not extend our information systems support to the field operations. More than 80% of transactions happened at the field and there was no automation of processes at the field. Hence, the mobile computing solution was planned to provide better service, reduce financial cost to the customer by reducing transaction cost and increase the credibility of whole Microfinance system in the eyes of rural people.
In our context, customer service agents are involved in direct interaction with the customers for disbursement and collection of the repayment instalment amounts. The regular tracking of the disbursements and repayments is essential for having a healthy portfolio for any microfinance institution.
The customer service agents would gather at the unit offices (offices at district levels), once a week, to share the information on the customers and to take the reports, which would be useful for the next week. Lot of data entry has to be done at the unit offices for knowing the latest status of the customer services agent portfolio and thousands of customers, leading to data entry issues and untimely reports. Another problem that is common in microfinance institutions is that the operations involve huge number of financial transactions in dispersed locations and there is scope for error and fraud.
In the backdrop of above constraints and issues, a highly automated solution using various information and communication technologies was required. It helps the organisation by having single data entry point of an “electronic transaction” that seamlessly links information flow from the villages to the unit offices and to the head office.
The specific objectives of the project are:
- Taking the professional micro financial services to the doorstep of rural-poor in a cost effective manner.
- To build self-sustainable microfinance institution by ensuring availability of good portfolio management tools to all the field staff.
- To prepare for the rapid expansion of future planned operations.
- To reduce the transaction cost by minimizing duplication of work, reducing field staff necessity for travel and building foolproof systems.
- To build a transparent system by providing customers' accounts related information on demand at the field.
- To acknowledge the financial transactions by giving computerized receipts to minimize the frauds and to increase faith in BASIX.
- To provide technical assistance and support services (TASS) by providing quick access to the information through Internet.
The current project involves the use of mobile computing technologies in microfinance institution operations. It facilitates transaction processing, information collection and dissemination, directly at field level. Before implementing this project, the customer services agent used to carry various manual records like collection statements, over due statements, different ledgers, receipt books etc.
The customer service agent takes with him an easy-to-carry kit, which contains the Palmtop computer with the required application software, mobile printer and a modem. The user performs all the required transactions using the kit and synchronizes the data with the unit office back-end system at the end of the day from any public call office using the modem.
Initially, our back-end application software generates a text file that contains relevant details about customers as required by the customer services agent to perform various activities during the specified period. This text file will be transferred into the handheld device by using connectivity software. After the transactions are completed, the data is synchronised with the backend system at the unit office through a telephone. This would ensure reduction in travel, duplication of data entry, reconciliation efforts and improve the efficiency of the field-staff.
It is interesting to note that all the details of the customers are available on the fingertips of the customer service agents and they are in a position to provide much better service. In addition, the portfolio manager (an application software developed specifically for this purpose) provides extensive and exhaustive security features that help in effective monitoring of customer services agents as well as in preventing errors in data entry.
In effect, the mobile computing solution allows the organisation to provide all financial services at the rural poor doorstep in a highly integrated and cost effective manner.
The actors involved in the project are the various user groups of the system such as the customers – rural poor people; customer services agents, the field executives and the unit head. The field executive and the unit head use the system for the MIS and data analysis purposes. They analyse the portfolio quality, product diversification, density of operations and customer services agents behaviour, etc.
Some unique features are: