Business Intelligence: A Bedrock of Successful Digitization in Microfinance

Most advanced MFIs that use digitization to generate value for their business and customers anchor such efforts in solid business intelligence. They leverage data to better understand their customers’ needs, build adequate services and monitor changes in customers’ behavior in response to those services. In a virtuous cycle, business intelligence further improves MFIs’ ability to measure customer and business value creation—a core capability of successful digital implementation. That is why CGAP calls business intelligence a bedrock of successful digitization. Yet, many MFIs use data only to a limited extent, often driven by regulatory requirements (regulatory returns) and basic risk management practices (financial performance), neglecting valuable data that offer insights about their customers.

CGAP has set to demonstrate how business intelligence can be improved through interventions requiring minimum or no investment in technology through a set of pilots. This Technical Note presents an overview of the approach and initial observations on what it reveals for MFIs implementing new digital products and channels. It explains the importance of business intelligence focused on customer behavior, which customer behavior is relevant to measure, and how to build a business intelligence practice that supports this competency.

To facilitate replication of this approach, CGAP offers the customer dashboard library with detailed instructions for data teams and a tutorial video.

Other related resources:

• CGAP Customer-Centric Guide
• Microfinance Digitization
• Micro and Small Enterprises