Why SaaS & Microfinance (Microfinance & SaaS)?

Microfinance is one of the most celebrated tools for the reduction of poverty.  By providing access to financial services such as microcredit business loans, savings accounts, and insurance of crops and property, microfinance gives the poor the ability to stabilize their financial condition and ultimately carve their own path out of extreme poverty. 

One of the most important features of microfinance is its sustainability, which requires the application of rigorous business principles.  Loans are made, crops are insured, and savings are administered such that the microfinance institution (MFI) can effectively manage its exposure and ensure that its current customers pay for its ability to service future customers.  This business rigor, however, creates a critical need that is not being effectively met within today’s microfinance industry; the need for technology to collect, analyze, and manage large volumes of data.

The microfinance industry has become increasingly aware of its need for quality back-end technology solutions, but has had great difficulty accessing solutions that are appropriate to their unique context.   After many years working with MFIs, the MicroPlanet team has identified the two most critical barriers that inhibit broader adoption of technology by MFIs, shortage of and lack of access to good technology skills, lack of MFI's ability to pay for robust core banking (MIS) software and lack of process focus. 

While there are certainly other challenges relating to technology in the microfinance sector, these gaps create critical constraints that must be addressed in order to unlock the potential of microfinance to continue to grow and ultimately achieve self-sustainability.

A SaaS solution ... 

• enables the Microfinance Institution (MFI) to afford a much needed scalable and robust “core” back-office software, and it better positions them to substantially enjoy lower upfront costs (it removes the financial Capex burden, i.e. from having to incur high upfront one-time capital costs, to one of an ongoing Opex based costs) and palatable quarterly subscription-based pricing, which enables MFIs to focus on their growing demands in a cost effective way.

• lifts the technology burden (of having to support complex technology) from the Microfinance Institution onto the SaaS service provider. The Microfinance Institution  does not have to worry about how it will manage this complex technology and how it will acquire skilled IT staff locally to manage such technology. 

Hence, Microfinance + SaaS = Saas + Microfinance = is the right solution for Microfinance Institutions.