Cloud Computing is way forward for smaller microfinance organization- Ekgaon

By Asma Azmi,

Microfinance Focus, Aug 9, 2010: Ekgaon Technologies is an Information and Communication Technology (ICT) provider for development organizations working at the base of the pyramid. It offers a range of financial inclusion services and has delivered projects like CAM Mobile Services Framework, Mahakalasm MIS and Indic-Computing Consortium bringing ICT to the benefit of the masses.

Ekgaon’s project, ‘Enabling financial inclusion and increasing efficiency of Self Help Groups Microcredit Federations’, was awarded Stockholm Challenge GKP awards 2007 in the Economic Development category. It was judged as the best example of the role of Multi-Stakeholder Partnerships in ICT for Development.

It was also awarded NASSCOM’s Social Innovation Honours 2010 under multi-stakeholder category for its project MERComs -Tracking Entitlements of Rural Communities for Rural Livelihood Security in Odisha. SEEP Network, Oxfam, Credit Co-operative Society Mumbai, Aga Khan Economic Planning Board and Food & Agriculture Organization are some of its partnering institutions.

Vijay Pratap Singh, Co-Founder and CEO of Ekgaon

Ekgaon’s co-founder and CEO, Mr. Vijay Pratap Singh is an Ashoka-Lemelson Fellow and has extensive experience in institution development, communication system and grassroots networking. In an interview with Microfinance Focus, he talks about the scope and challenges the development sector poses for ICT. Edited excerpts

Microfinance Focus: How in your opinion is Information and Communication Technology (ICT) bringing change in the way development organizations work?

Vijay Pratap: ICT can bring in very substantial amount of change but what we see is that till now the impact has not been good because organization have very reluctantly and half heartedly approached the implementation of technology. The implementation of technology has three areas. One is the type and quality of technology that you implement. Second is how that technology is working with the MFI model. Sometimes for technology to perform efficiently, you have to modify the operational model but if you don’t do that you have a half baked solution which doesn’t give the desired results.

The third aspect is organization’s intent of using technological solutions. What we have observed during working with development organization is that the real intention of using technology is not for increasing efficiency of the system or improving profitability. The real intention is to showcase that they are doing something exciting. It is more excitement value they treasure and seek than real utility value of the technology which is a very big problem.

While using software, organizations are not allowed to fixed accounts. There is a common practice of under reporting, over reporting and fixing accounts at regular basis. With the implementation of technology this cannot happen. What we found is that these organizations actually tend to force us to modify the software in such a way that they can modify any figure any time in the systems. That is simply against the principles of financial standards. Although we don’t do that but sometimes we do have to accommodate for requests for all the valid and invalid reasons of an organization.

In my opinion ICT has a huge potential for bringing in change and efficiency but most of the development organizations fail to utilize the full potential because they don’t invest in operational efficiency including human resource. They put money in technology but don’t put money in the human resource that run that technology. They need to work on it and then they will be able to see the impact. They need to understand the cost and implication of using technology.

For them using technology is just another way of getting more funding. It is not using technology to improve efficiency but using it to obtain new grants.

Microfinance Focus: Will you tell us about Ekgaon’s financial inclusion project which was acclaimed internationally?

Vijay Pratap: This was one of the first awards we got. It was for developing a software for SHGs working in Microfinance which we have now release as self help MIS like a free software which anybody can download and use. This project was aimed to SHGs and federation modelled microfinance organizations which we personally believe have greater community ownership on their financial services. We believe that there should be software and solutions which can allow them to manage their operations properly and be more efficient. At the same time it should allow them to interact with formal financial institution for their credit needs.

Microfinance Focus: Who were the partnering SHGs?

Vijay Pratap: SHGs of Mahakalesam federation were partnered for this software. We created a paper base accounting system. It was our first product and the software was not a program but a paper based documentation management system which allows managing SHGs account in an easy manner. Its flap-up system allows keeping account of seven books in one book. Account keeping became simple for SHGs men and women who are not literate enough to manage the accounts. So our paper based MIS, MIS Mahakalasm has been a very big success with over 400 download on our website and we have over five lakhs  individual members benefiting from it across the world.

Microfinance Focus: What challenges do microfinance and other development organizations face while adopting technology?

Vijay Pratap: The challenge is not about the cost of technology, it is about the intent. If they really have an intent to get benefitted by information technology then there is no challenge at all. When we decided to make this software we decided to make it open source because lot of organization wanted to buy it for 5 thousand rupees. We told them that they can easily get it but we’ll not be able to provide service support for it. For example if someone is working in Uttranchal and wants us to come there from Madurai in 5000 rupees, then there is no viability in the business for me. If they have the human resource capability or any local programmer who can download and install for them, they easily can do it as it is not very complicated software. But they don’t want to do that sincerely, they just want to leverage it as another project and get funding from somebody.

There is also a problem in terms of lack understanding technology. Primarily because they are not hiring people in the organization who are from technology background. A major reason behind this is the fact that development organizations pay so less that nobody wants to work with them. This is quite a big challenge.

Microfinance Focus: Can you brief us about some of the impediments that you have to deal with while implementing your products in remote areas and with development organizations that have no prior experience of working with ICT?

Vijay Pratap: The largest impediment is our reach. Being a small company we are not able to reach to all the customers and all the places. We look for some kind of partnerships which will allow local level support for organizations using our services. But with our enterprise version or cloud based MIS solution, I think that challenge can be reduced dramatically. I believe that for smaller microfinance organizations, cloud computing is the way forward.

Microfinance Focus: What are some of the emerging needs of development organizations that you are coming across?

Vijay Pratap: Most of these organizations do need technology and solutions but they don’t have the capacity to run them on their own. They have to buy equipments, set up air conditioned rooms, hire people with background in technology who can run the computer and server. We created a platform where they can come out and create an account for their organization and start using their systems, just like we use an email or facebook account. Now we are trying to propagate that platform for microfinance organization wherein there is no registration fee. They are only charged for whatever transactions they do in the system. That comes out to be cheaper for the organization in terms of saving the cost of installing their systems for that.

Microfinance Focus: You were looking to scale up oversees as well. Can you tell us about some of these projects?

Vijay Pratap: We are already working in Sri Lanka and Nepal. We have been aggressively exploring partnerships for scaling up in Africa which is the next big market for us. In last one year we have done many partnerships in Africa where we are aiming to put our solutions. The countries we have done partnerships with are Kenya, Uganda, Nigeria, Tanzania and South Africa. In each of these countries we have done partnership with one institution each and they are now reaching microfinance organization, various kinds of co-operative banks etc.

Microfinance Focus: Remittances services were also in the offing from Ekgaon. They were to be launched in Nepal as well. Can you discuss about them?

Vijay Pratap: We have been working on this for almost a year now. We have been doing rigorous research on two areas. One is remittances services between India and Nepal and the other is internal remittances within India. Between India and Nepal we are just stuck on some legal grounds with the Reserve Bank of India (RBI).

Microfinance Focus: What are these legal issues?

Vijay Pratap: RBI expects these services to be offered through banks but the problem is that most of the Nepali migrants working in India don’t have a citizen identity, so none of them can get a KYC (Know your Customer) and without KYC you cannot send money. Because of such problems, these migrant workers don’t approach banks and use non-legal channels for sending money.

Second issue is that government doesn’t allow private individuals to offer remittance service. We don’t want to create a non-profit business correspondent (BC) to tie up with a bank for remittance service. In our opinion that is a foolish system by the RBI. We think that a non-profit entity should be allowed to do that, so that is another area where we are asking RBI to allow us to do it as for-profit entity.

Microfinance Focus: What are some of the other regulatory hindrances that are causing concern among ICT providers?

Vijay Pratap: I think the biggest hindrance is the idea that a non-profit needs to be set up to offer financial service. There is nothing in regulatory framework within which for-profit organization can also work. They are trying to change that but not doing at the pace which is required.

Some of the countries which have used path-breaking technologies like Kenya, Philippines and Mexico, have used it a very nice way and people have actually benefitted from it. India on the other hand which is a technology power house is not being able to use technology properly because of foolish regulations.

Another problem is that government does not allow virtual money to be kept anywhere. I completely understand its intent not to convert telecom operators into para-banking apparatus. But they should allow certain value of money to be converted and traded as virtual money. This will allow higher level of fluidity in the system. Otherwise cash has to move and its movement is the slowest and the most insecure way of transferring money.

The way we can use smart card for our transactions, poor people should also be allowed to do their transactions using mobile phones. I really don’t see that RBI is pro poor. It is like poor people are paying more for getting services owing to the high rates of interest and get highest technological standards to get financial service. We can do a magnetic card but they have to do a biometric. I find it as anti poor.

Microfinance Focus: One of the most important results ITC delivers is Transparency. Will you tell us how your products help to achieve that?

Vijay Pratap: One of the things that we do in our software is that we use IDBRT standard for developing a software. It doesn’t allow microfinance organization to make changes in the accounts. We try to encourage people to adopt solutions and transparency within their systems. The other part important for us is security and transparency at the field level, the manner in which the business correspondent or field officer deal with the customer. The agent might actually be corrupt. Our technology allows complete transparency in the way an agent or a BC deals with the client.

We have biometrics, mobile pins, confirmation sms going back and forth to the customer, confirmation screen on mobile phones wherein customer can read and for those who cannot read we have a voice over which reads out the content. All these create a level of transparency among the field agents and customers feel safe in using the device for their transactions.

Microfinance Focus: Are you about to launch any new product or service?

Vijay Pratap: We are going to soon launch this product ‘One Remit’ which is a technology platform for remittance service. We’ll be launching for domestic remittance first.

Microfinance Focus: What is the guiding motivation behind all the contributions that you have made in the development sector?

Vijay Pratap: For me the motivation is that whatever work I am doing or want to do creates an impact which brings big change for the people for whom it was intended. I feel proud that my work has helped so many people and that’s what motivates me. The technology or the company could be mine but the people who are benefitting are very happy so that makes me very happy.

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