Taking Micro Finance to the rural poor doorstep by using ICT in a creative way!

Author : V.Chandar Rao
Date added :

Brief Project Background

Large percentage of India’s population of over 1 billion lives Below the Poverty Line. Till a decade ago, rural poor were not considered in the financial domain of mainstream financial institutions. During later years, the concept of Micro Finance 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 fastest growing Micro Finance Institutions (MFI) 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 over 5000 villages for providing financial services in remotest of the places where the formal financial services are otherwise unavailable.

When the ball is set rolling for expansion in early 2000, BASIX has faced unique challenges like I) Increasing the outreach without compromising on portfolio quality ii) Maintaining same level of effective customer service as before iii) Having a foolproof system to handle increasing number of transactions at the field, iv) Introducing different loan and saving products to address the needs of different groups and v) To cater to the growing demand of TASS information requirement at the field. Addressing these challenges was important to achieve the mission of BASIX, which is to promote large number of sustainable rural livelihoods on a commercially sustainable basis. Information and Communication Technologies play a vital role in building the required support systems.

Even though BASIX has good organization wide 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 happen at the field and there was no automated process at the field, resulting in high transaction costs and non-availability of required information to the customers. 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 Micro Finance system in the eyes of rural people.

Our Customer Service Agents (CSAs) would gather at the Unit Offices (District level offices) once a week to share the information on the customers and to take the reports (portfolio), which would be useful for the next week. Lot of data entry has to be done at the Unit Offices leading to data entry issues and untimely reports. Another problem that is common in MFIs is that the operations involve huge number of 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 for BASIX are:

Ø Taking the professional Micro Finance services to the rural-poor doorstep in a cost effective manner.
Ø To build self sustainable MFI by ensuring good portfolio management tools are available to all the field staff
Ø To prepare for the rapid expansion of operations planned in future
Ø To reduce the transaction cost by minimizing duplication of work, reduce necessity of travel by field staff and building foolproof systems.
Ø To build a transparent system by providing customers’ accounts related information on demand at the field.
Ø To acknowledge the financial transactions by giving computerized receipts to minimize the frauds and to increase the loyalty towards BASIX.
Ø To provide TASS by providing quick access to the information through Internet

The current project involves the use of Mobile Computing technologies in MFI operations to facilitate transaction processing, information collection and dissemination directly at field level. Before implementing this project, the CSAs used to carry various manual records like collection statements, over due statements, different ledgers, receipt books etc. With the implementation of the project, these records were automated and now all the manual transactions can now be performed using the palmtop Computers (Palmtops or Hand Held Devices: HHDs)

The CSAs take with them an easy-to-carry kit, which contains the Palmtop computer with the required application software, Mobile Printer and Modem. The palmtop computer works on the normal alkaline pencil batteries or directly with the power. The mobile printer has re-chargeable batteries that generate more than 450 receipts once fully charged. The application software developed for this purpose is user friendly and easy to operate. The user performs all the required transactions using the kit and synchronizes the data with the unit office backend 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 CSA to perform various activities during the specified period. This text file will be transferred into Palmtop computer by using connectivity software. In order to manage the records available in the text file, it has to be converted into suitable DBMS format. User will do this conversion through the automated process. This information is used to conduct transactions and interact with the people at the field. 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 will be very interesting to note that all the details of the customers are available on the fingertips of the CSAs and they are in a position to provide much better service. Even the data is transferred using a telephone line with the click of a button! Moreover, Internet can be accessed from any location where there is a telephone line and all the information required for the benefit of the customers can be shared as and when required. In addition, the Portfolio Manager (Portfolio Manager: Application software developed for this purpose) provides extensive and exhaustive security features that help in effective monitoring of CSAs as well as in preventing errors in data entry. In short, the Mobile computing solution allows the organisation to provide all the 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 viz., the customers - rural poor people, CSAs, the Field Executives (FX) 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 CSAs behaviour etc.

Some of the unique features of the solution are

Ø Instant Loan account status - For Providing the customer accounts information on demand.
Ø Transaction acknowledgement at the field to minimize fraud and errors.
Ø Unique Receipt number generation and tamper proof print management - to maintain the uniqueness of the transactions happening at the field and build customer confidence.
Ø System will capture User name, date and time of the transaction to resolve grievances those may come latter point of time
Ø Can handle different type of transactions (Ex. Loan repayment, Loan Processing Fee, Cash Security, Penal Fee, insurance premium etc). Customers can perform different transactions with the CSA.
Ø Online help on application software and its usage. Incase of requirement, on-line Internet access to browse and download required information.
Ø Fool proof system
o Secure financial transaction handling
o Log Reports for having effective audit trails
o Hierarchical security system

Ø MIS and Portfolio Analysis Reports
Ø Graphical representation of portfolio health
Ø Supports Remote connectivity to transfer/receive the data from the field

The technology used in the mobile computing solution has three areas

1. Software: The software is developed by using Symbian operating system, one of the leading mobile computing operating systems in the world. Symbian is started by the leaders in the mobile technology-Motorola, Eriksson, Psion, and Sony. It is a real time system that can handle complex tasks on the PDA.

2. Hardware: The hardware used is Series 5MX and Revo models from Psion and OSARIS from Oregon Scientific. These are high-end models that are rugged with ease of use. It has various features like communication through RS 232 port, Infrared, email, database management system, voice recording etc. Mobile printer used for this project is CITIZEN iDP-c3111

3. Communication: Communication technology is used to synchronize the field staff’s palmtop with the unit office back end system. The data transfer is done using telephone line, FTP facilities of the Palmtop computer and the RAS feature of Windows 2000 server.

The solution is developed keeping in view the profile of the field staff that will be using the palmtop computers. The software is highly interactive and user friendly. The maintenance of the hardware is simple and easy to understand. At the end of one week of training on hardware and software, the users can become adept in using the system. The device and application maintenance training is also included in the one-week training that is given. Transfer of data from the field to the unit office using a telephone line is a complicated affair. But this was made simple and highly user friendly, with the effective use of software tools and communication protocols. Now this transfer happens with the click of button and the date at both the locations get synchronized in few minutes!

This initiative helps the poor in availing the formal financial and Technical Assistance and Support Services provided by MFI that use this mobile computing solution at their doorstep. While IT has been an integral part of Micro Finance efforts for many years, this has generally been restricted to office-based MIS’ and has necessitated long-winded and error-prone data entry procedures. The field-based mobile computing solution has the potential to be the key innovation that allows Micro Finance institutions to get over the last hump in their efforts to reach financial sustainability. This will be very significant for the clients of Micro Finance. In as much as many Micro Finance institutions count their client base in the hundreds or thousands, or even in millions, systems such as this mobile computing solution could make a significant contribution to reduce the transaction costs of providing financial services to the poor.

Results

The current project involves the use of Mobile Computing technologies in MFI operations to facilitate transaction processing, information collection and dissemination directly at field level. Before implementing this project, the CSAs used to carry various manual records like collection statements, over due statements, different ledgers, receipt books etc. With the implementation of the project, these records were automated and now all the manual transactions can now be performed using the palmtop Computers (Palmtops or Hand Held Devices: HHDs)

The CSAs take with them an easy-to-carry kit, which contains the Palmtop computer with the required application software, Mobile Printer and Modem. The palmtop computer works on the normal alkaline pencil batteries or directly with the power. The mobile printer has re-chargeable batteries that generate more than 450 receipts once fully charged. The application software developed for this purpose is user friendly and easy to operate. The user performs all the required transactions using the kit and synchronizes the data with the unit office backend 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 CSA to perform various activities during the specified period. This text file will be transferred into Palmtop computer by using connectivity software. In order to manage the records available in the text file, it has to be converted into suitable DBMS format. User will do this conversion through the automated process. This information is used to conduct transactions and interact with the people at the field. 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 will be very interesting to note that all the details of the customers are available on the fingertips of the CSAs and they are in a position to provide much better service. Even the data is transferred using a telephone line with the click of a button! Moreover, Internet can be accessed from any location where there is a telephone line and all the information required for the benefit of the customers can be shared as and when required. In addition, the Portfolio Manager (Portfolio Manager: Application software developed for this purpose) provides extensive and exhaustive security features that help in effective monitoring of CSAs as well as in preventing errors in data entry. In short, the Mobile computing solution allows the organisation to provide all the 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 viz., the customers - rural poor people, CSAs, the Field Executives (FX) 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 CSAs behaviour etc.

Some of the unique features of the solution are

Ø Instant Loan account status - For Providing the customer accounts information on demand.
Ø Transaction acknowledgement at the field to minimize fraud and errors.
Ø Unique Receipt number generation and tamper proof print management - to maintain the uniqueness of the transactions happening at the field and build customer confidence.
Ø System will capture User name, date and time of the transaction to resolve grievances those may come latter point of time
Ø Can handle different type of transactions (Ex. Loan repayment, Loan Processing Fee, Cash Security, Penal Fee, insurance premium etc). Customers can perform different transactions with the CSA.
Ø Online help on application software and its usage. Incase of requirement, on-line Internet access to browse and download required information.
Ø Fool proof system
o Secure financial transaction handling
o Log Reports for having effective audit trails
o Hierarchical security system

Ø MIS and Portfolio Analysis Reports
Ø Graphical representation of portfolio health
Ø Supports Remote connectivity to transfer/receive the data from the field

The technology used in the mobile computing solution has three areas

1. Software: The software is developed by using Symbian operating system, one of the leading mobile computing operating systems in the world. Symbian is started by the leaders in the mobile technology-Motorola, Eriksson, Psion, and Sony. It is a real time system that can handle complex tasks on the PDA.

2. Hardware: The hardware used is Series 5MX and Revo models from Psion and OSARIS from Oregon Scientific. These are high-end models that are rugged with ease of use. It has various features like communication through RS 232 port, Infrared, email, database management system, voice recording etc. Mobile printer used for this project is CITIZEN iDP-c3111

3. Communication: Communication technology is used to synchronize the field staff’s palmtop with the unit office back end system. The data transfer is done using telephone line, FTP facilities of the Palmtop computer and the RAS feature of Windows 2000 server.

The solution is developed keeping in view the profile of the field staff that will be using the palmtop computers. The software is highly interactive and user friendly. The maintenance of the hardware is simple and easy to understand. At the end of one week of training on hardware and software, the users can become adept in using the system. The device and application maintenance training is also included in the one-week training that is given. Transfer of data from the field to the unit office using a telephone line is a complicated affair. But this was made simple and highly user friendly, with the effective use of software tools and communication protocols. Now this transfer happens with the click of button and the date at both the locations get synchronized in few minutes!

This initiative helps the poor in availing the formal financial and Technical Assistance and Support Services provided by MFI that use this mobile computing solution at their doorstep. While IT has been an integral part of Micro Finance efforts for many years, this has generally been restricted to office-based MIS’ and has necessitated long-winded and error-prone data entry procedures. The field-based mobile computing solution has the potential to be the key innovation that allows Micro Finance institutions to get over the last hump in their efforts to reach financial sustainability. This will be very significant for the clients of Micro Finance. In as much as many Micro Finance institutions count their client base in the hundreds or thousands, or even in millions, systems such as this mobile computing solution could make a significant contribution to reduce the transaction costs of providing financial services to the poor.

Project Information

Organisation : BASIX
URL : http://www.basixindia.com
Total budget in US$ : 217,800
Country of activity: India [IN]

Are there any partners involved : Saven Technologies Limited
What is partners role?: Saven Technologies started in 1994, is a leading IT solutions provider on the mobile computing domain. Saven has been involved in providing mobile computing solutions for the MFI industry for over 2 years. Saven’s expertise on mobile sphere spreads over Insurance, Healthcare, Micro Finance and service sector. Saven has partnered with BASIX in developing the portfolio manager solution to address the field operations problems in the Micro Finance industry.

Saven’s core business philosophy is ensuring the triple advantage of maintenance cost reduction, reusability and scalability. Saven is also a JV partner in Penrillian Inc., a UK based company with its focus on Symbian Operating System development. With overseas employee training sessions, Saven’s wireless and Mobile Computing division has all the necessary know-how, experience and capabilities to develop applications on the Symbian and PALM OS platform for Palmtops, mobile phones and communicators. Please visit www.saventech.co.in

Contact Information

V.Chandar Rao
chandar@basixindia.com
501-502, Nirmal Towers, Dwarakapuri colony, Punjagutta, 500082, HYDERABAD, +91 -40-23350171

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