SaaS Changing Microfinance MIS Paradigms

Microfinance Focus, May 24, 2010: SaaS (Software as a Service) is fast emerging as the model of choice for implementing Management Information Systems in Microfinance Organisations to help enable them to streamline their operations cost-effectively.  By enabling Real-time access to information, to provide further value addition, SaaS, is saving a lot of productive time of MFIs who have adopted it. SaaS is a model whereby a software provider provides an application to customers for use as a service on demand. It leverages the benefits of a fully integrated suite of software from the beginning without spending huge funds on in-house IT development and maintenance.

Andhra Pradesh based microfinance institution  CRESA FINANCIAL SERVICES PVT LTD is one such organization which has adopted the SaaS model to exercise better control over its entire operations. Considering itself to be on the journey of making India a poverty free nation, CRESA is serving more than 40, 000 clients and has got a loan portfolio of more than INR 25 crores. About a year ago it transformed itself from a non-governmental organization to an NBFC (Non-Banking Financial Company) and switched over from its offline model to SaaS for supporting its transition and future operations. Bangalore based IT company, Gradatim provided CRESA with this software and enabled it to streamline its operations across branches. CRESA’s Director , Mr. Prem Kiran says “With SaaS we are now able to see the status of our operations anytime and in real time. It is giving us better control, better update and better service compared to our earlier offline models.”

Information consolidation has for long been the bane of MFI’s.  A MIX/CGAP study on MIS in microfinance founds that 41% of MFIs use a manual MIS — either Excel-spreadsheets or paper-based systems to track payments. These methods are time-consuming and vulnerable to data loss, limiting the ability of MFIs to grow their client base. SaaS on the other hand enables them to maintain branch-wide control and drastically cut down the time required for tedious tasks like preparation of financial statements, interbank accounting and data generation, while maintaining a high degree of accuracy. By making data updation so easy, it has enabled MFI’s to have real-time access to data instead of fortnightly. This has enabled them to have greater degree of insight and administrative control.   It has also reduced to provide further value addition the probability of manipulation of data and increased the accuracy of reporting. The combination of standalone systems and the dispersed nature of the branches made maintenance and data backup very difficult. In case of SaaS, the service providers themselves are taking care of all such problems, and saving on MFIs productive time.  SaaS has also made bulk posting and bulk lending possible, which are phenomenal operational changes.

SaaS has proven to be a boon to MFIs in their transformational phase. Changes in operations, accounting and interest calculations have been made hassle free. It helped them maintain two different databases and systems till migration processes got completed. Auditing and transferring data into new interest calculation model, which has a huge impact in the operations and financial accounting, has also been uncomplicated.

SaaS is able to streamline traffic as high as 30-40 thousand entries a day and is able to maintain the integrity of an MFI’s operation without people’s involvement. Taking forward SaaS and MFI relationship, SaaS providers are now looking forward to providing services like operation automation and mobile solutions to provide further value addition for their clients. Many new SaaS providers are also entering into the sector, seeing the enormous potential which the industry holds.

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