India, Microfinance, and Technology

A typical day in the life of a microfinance loan officer might look something like this:

Arrive at the branch and print your agenda and reports for the day, which will typically include several group meetings at which you’ll disburse loans or collect payments, and perhaps hold meetings with prospective clients. After preparing for the day, you depart the office for a day in the field.

After spending the day traveling around to meet clients, you return to the branch and begin data entry. You enter the amount of money disbursed or collected from each client, and perhaps enter information on new clients or loan applications.

Between the morning and evening sessions at the branch, a typical loan officer might spend 25% or more of their time on data entry and other administrative tasks related to managing their portfolio.

What if you could reduce or even eliminate these tasks from the loan officer job description?

That’s exactly what one MFI in India, Sahayata, has done. Through an innovative operational model in which they strictly delineate tasks among staff, Sahayata’s loan officers, or field credit officers (FCO), are able to spend the vast majority of their time working with clients rather than on data entry and other administrative tasks.

At the center of Sahayata’s model is the central processing unit (CPU) in Jaipur where a team of about 14 data entry specialists receive scanned forms from the branches by email and duly enter the information in the MFI’s information system, BR.net by Craft Silicon. At the end of each day, they email a set of reports to each branch so the branch staff are prepared when they arrive the next morning.

Key to Sahayata’s efficient distribution of resources is both the specialization of roles and a salary structure to highly incentivize staff for performance. FCOs may make up to 100% of their base salary in incentives, which focus not only on the number of loans but also loan performance. It’s great that the FCOs no longer have to spend time doing data entry, but the real result comes from the fact that they now use that time to market Sahayata to new clients. Under this new operating model, FCOs have increased their average case load from 300-350 clients per FCO to 600. In just 2.5 years of operations, Sahayata has grown to 175,000 clients.

Sahayata’s web-based portfolio management system also contributes to their efficient operating model. The first MFI to implement Craft Silicon’s new software as a service (SaaS) offering, BR.net, Sahayata pays a fee to access to the software over the internet. The servers and database are hosted by Craft Silicon so Sahayata did not need to make a large upfront investment in hardware, or in an IT team to manage the system. Instead, Sahayata’s IT experts are able to spend time on things like a mobile phone application for loan officers, to further enhance their efficiency when they’re away from the branch.

Back office management is a source of such stress for many MFIs that it’s exciting to see MFIs trying new and innovative ways of addressing these issues. Sahayata’s back office strategy includes not only technology, but also people and processes. This has been a recurring theme in a series of workshops organized by CGAP and Grameen Foundation over the past year and it’s clear that addressing all of these aspects – people, processes, and technology - in a comprehensive manner is critical for an efficient and effective back office system.

-Lauren Braniff