Automating MFIs

Over the last few decades Microfinance has emerged from being an experiment in poverty reduction to a proven mechanism for providing access to sustainable financing to those who have none. With increasing attention given to Microfinance Institutions (MFIs) by global thought leaders and policy makers alike, the entire sector stands under increasing scrutiny and demands for transparency. This increasing attention coupled with the intrinsic need for MFIs to be efficient in their operations, leads to more and more MFIs adopting Information Technology (IT) tools to automate and streamline their operations. Whilst automating their operations, MFIs need to be careful in keeping some of the basic tenets of sustainable microfinance operations intact – including human contact that is important in ensuring timely repayments. This chapter examines some basic business processes followed by MFIs in their lending operations and evaluates the possible impacts and implications of automating these processes. The chapter also discusses the extent to which automation is feasible for a MFI and its implications on the sustainability of the organization.