Microfinance and financial technology
THE Microfinance Council of the Philippines reports million active clients, with four million borrowers taking average loans ofP10,000. A typical loan is given face-to-face by the whose optimum case load is 500 clients. Traditional loan processing is labor- intensive, because banking services are brought to the doorsteps of the clients. It to reach its critical scale, with a remarkable collection rate of at least 99 percent. On the other technology ( fintech) innovations, which is gaining traction for its cost- effectiveness and faster service delivery in terms of scaling up.
practitioner like me for the reason that through the use of data analytics, micro loan processing can be completed within minutes even without meeting the client. This deviates from the usual - and unit manager prior to loan solve issues of labor intensiveness and can effect tremendous scale faster.
In my internship in Boston for a start- up company doing credit analytics using call data records, my regular research work brought to my attention a successful case in Kenya where a bank and a telecommunication company partnership was able to one year with impressive borrower ratio and these are manned by less than 50 personnel. So, if this is the case, why don’t - ally, there were similar attempts made here in the Philippines but they need further improvements. So, what did I learn and observe
In Kenya, almost everybody is accustomed to using e- wallet/ cellphone in paying for almost
- ippines, we like using cash. So, familiarity in e-commerce/mobile money is still lacking among the majority of Filipinos.
In our situation, a properly designed system wherein there is a proper blend of human touch and technology must come into play. We can argue that in terms of loan origination, data analytics will support client assessment, making the process faster while mobile banking tapping sari- sari stores will ease out manual collection. However, it would be too early to conclude for now that it will replace account officers. Becoming purely automated and technology-reliant will cause operational problems simply clients are above 40 years old, who in general value relationship and face- to- face transactions. Hence, the key challenge is the proper blend and design of products and services, focusing on what can be aided by technology and which one should be done face-to-face.
A centralized credit bureau, which is underway via Credit Information Corp. (CIC), will strengthen data analysis but will require inte- Information Data Sharing System), a credit bureau formed by the seven country in 2012. MiDAS collects clients’ information that are not present in the regular credit bureau.
- tech as a long-term investment and A robust technology for mobile banking and e-commerce requires hundreds of millions of pesos to establish, which can be boxed out its uncertain return on investment. Huge investment issues can be - tution through partnership with a for the dynamics in partnerships. Fintech providers are commonly bound by aggressive targets which a
- to its organizational culture. Reaching critical scale, whether social impact, is a must in this kind of business. Otherwise, the cost of technology cannot be sustained. Training non-millennial clients and designing the right kind of product and service take time and resources, hence choosing the right partner which is willing to wait for its investment to bear fruit is also critical.
Business development services than bills payment, loan collection, remittance and micro insurance
- merce trading, and supplemental apps for training, which I will further discuss in my next write-up, will be a key component to success and service differentiator. necessity. The digital infrastructure has contributed greatly towards today’s globalization—people are able to conveniently obtain data from far-off places in a matter of - penings are being broadcast through the entire globe as they happen. It has also provided humankind with great comfort and convenience, allowing people of different abilities