| | June 20178CIOReview IN MY OPINIONDigital Inclusion and MFIsBy Manoj Kumar Nambiar, Managing Director, Arohan Financial Services (P) LimitedThe ChallengeIndia is home to about 21 percent of the world's unbanked population. In recent years, the Government and the RBI have focused on financial inclusion and inclusive financing, including the delivery of financial services at affordable costs to sections of disadvantaged and low-income sections of society. This is the space where Micro-Finance Institutions (MFIs) operate. MFIs cater to women primarily in the rural and semi urban areas where mainstream banking is inadequate. In the efforts to mainstream financial inclusion in India, MFIs provide loans and distribute insurance and pension products as well as other non financial products. These small ticket sized loans do not require collateral; prospective customers are identified based on neighbourhoods and needs. However managing microfinance business without using enterprise management systems, automation, measurement and optimization of the day-to-day operational process is both inefficient and resource consuming. MFIs were thus quick to understand the potential for digitization of operations and have taken the much needed step to facilitate digitization. The Solution MFIs are uniquely positioned to go digital to expedite their processes and ensure smooth and efficient operations through the implementation of mobile applications. The purpose of a mobility application is to capture operational transactions in the field on a real time basis, using mobile applications and hardware such as tablets. We have been one of the first NBFC MFIs to move beyond a pilot and in our organization, all our 2000 odd customers service representatives have been equipped with a hand held device in the form of a tab. We have utilized mobile application to onboard members, track their training, disburse loans and use it to collect repayments. All the transactions are routed through the mobile application and get uploaded to the main server on a real time basis. Hence the front end of the loan process has been made fully paperlessScope of the Solution This ability to provide financial services via digital channels, improves efficiencies, cuts down expenses, improves credit quality and hence creates new opportunities to reach segment of the population that previously were under-served. With the use of digitization, we have rationalized the use of cash and enhanced operational efficiencies. The prevailing micro-finance model of group lending is highly cash intensive where both loan disbursement and repayment is generally done in cash and at the customers' doorstep. This is a
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