Microfinance was initially created to assist the poor. It has the potential to make significant contribution in reducing the vulnerability of the poor by improving livelihoods and granting the poor opportunities to pay for basic health care and finance their children’s education. Microfinance institutions provide small loans for people without collateral. The lack of collateral is what excludes the poor from traditional financial services. Through providing small loans, savings and other financial services Microfinance institutions can assist people in obtaining the tools required to start a small business- for example, a sewing machine.
Once a niche market, the microfinance industry has expanded and evolved. Lately, this one-size-fits-all approach is being reconsidered so that it can reach larger groups of people faster and more efficiently. To make micro lending more effective, there are interconnected ideas and innovations that you as a microlender should be considering and implementing. Microfinance institutions that recognise that there is more value in retaining customers than attracting new ones are gaining a competitive edge. They are able to focus on customer satisfaction with their products in order to increase profitability
Successful microfinance institutions are moving away from product-driven focus to a more market-driven orientation. This utilises an outside-in perspective so to speak, where companies consider how they are seen by the client and act according to this perspective. Through understanding the needs of your clients, you will be able to adapt and evolve accordingly and this will achieve greater sustainability for your business.
With industry changes and growth there is always a price associated with trying to scale up. Many smaller microfinance businesses do not have the means necessary to expand and keep up with industry standards. However, there are a variety of technological innovations that can assist in expanding your business without breaking your budget. It is important to be aware of the tools and the latest trends that can benefit your business.
The right tech-implementation techniques can really help in optimising your business. This does not mean you have to purchase new equipment or get state-of-the-art internet running because there are cost-effective ways in which you can embrace technology as a part of your business strategy in order to scale and expand your microfinance business.
Get your mobile moving
The first step in embracing tech for your business is to go mobile. Africa as a whole is the fastest growing mobile market according to AfricaNews with prediction of half a billion users going mobile by 2020. Beyond this, more than 200 million people got their first mobile device in 2017, and two-thirds of the world’s population (5.135 billion) now have a mobile phone. So if your microfinance business has a website, you need to optimise it for mobile-users as most of your clientele will be precisely that. Get in touch with your website developer and ask them when you can get the responsive mobile site running.
After this, you should seriously consider developing a simple and user-friendly mobile app. It has been shown that consumers spend more time within apps than within websites, and mobile usage is fast surpassing desktop usage. A mobile app also brings about great opportunity for your microfinance business. Through the development of an app you can create great branding opportunities. As the app is separate from your site you can experiment with new branding strategies and see what your users respond to. The capabilities inherent in app design mean that you can increase user engagement and customer satisfaction by providing one centralised location for them to do all that they need. Through instant and automatic updates, you and your users will have real-time access, anywhere and anytime.
In combination with your improved mobile capabilities, it is important to focus on a digital strategy moving forward. In today’s digital age, many consumers are looking for businesses online and on social media platforms. Often times users will check your Facebook page before deciding to do business with you.
Your digital strategy should, and can, work seamlessly with your mobile strategy as the two are very interconnected. If users are predominately accessing information via mobile it makes sense to consider your digital techniques in drawing these potential customers in.
Once you have implemented your mobile and digital strategy, it is time to make use of effective software to optimise your business processes. A software system like Delfin handles all computer-related functions in your office – from managing clients and loans, right through to your daily and monthly management reports. This helps to avoid stacks of paperwork laying around that can get lost or even forgotten.
Delfin seamlessly integrates with Nupay, Allps, Compuscan, Legalsoft, and Trans Union, meaning that payment systems, credit checking, and bad debt management through Delfin is fast and easy. It is also user-friendly so your staff will be able to adopt and accept this software with relative ease.
The bottom line
Your microfinance institution has the ability to really impact the lives of the poor and show the mainstream finance industry that microcredit can be a source of potential growth, and thereby enabling entrepreneurship from the grass root level. The industry is booming, and shows no signs of stopping, especially in the developing world. In order to keep up with this expansion and get the competitive edge over your competitors you need to focus on mobile and implement effective software to optimise your business processes.
Get in touch today to find out how DelterIT can help you implement cost-effective software to help your microfinance business expand and grow.