How Grameen Foundation got smarter.
To expand the reach of microlending to the people who need it, Grameen's
George Conard saw an opportunity to create the first banking systems
designed specifically for microfinance.
Helping people to help themselves out of poverty.
Conard, a 20-year technology veteran, joined Grameen because he truly believes
in the transformative capacity of microfinance. Once there,
he quickly realized that microfinance institutions (MFIs) could lend money more effectinvely
to people who need it with better tools.
Helping people to help themselves.
"We looked at the lack of systems designed specifically for the needs of microfinance as a
market failure," says Conard. "We saw it as our challenge to do something about it." His team's efforts were therefore guided by two principles:
- Support growth that extends the reach of microfinance
to a larger slice of the poor.
- Drive smarter growth through more transparent
The loans may be small, but seeing the "big picture" would
give microlenders the insight they need to formulate
faster growth strategies.
Our banks go to the customers, not the other way around.
Since traditional banking tools weren't appropriate for
micro-lenders, Conard developed his new Mifos® microfinance banking
solution especially for their unique needs.
Our banks go to the customers.
Mifos® is a suite of open-source applications designed
specifically for the requirements of microfinance institutions (MFIs). Mifos
provides MFIs with the business intelligence they need to keep their product
portfolios in sync with the needs of their clients. And it's helping the microfinance
industry usher in a new phase of its development, enabling them to roll out new branches
faster, thus expanding the reach of microlending to more of the people who need it.
Showing is better than telling.
In order to make the most compelling presentations to investors,
Conard and his team embedded data and results from and actual MFI - India-based Grameen Koota -
directly into the Mifos® design process. This also helped Conard develop a better product.
Showing is better than telling.
Like all major expenditures, developing the new banking solution required Conard to gain approval internally, but he would also need to sell it to specific donors, whose targeted funding would pay for the project. "In every instance, we need to justify those investments to our funding sources," said Conard.
Conard also knew that the MFIs that can prove their effectiveness stand a better chance of attracting the external funding needed to make more loans. "Grameen Koota functioned almost as a joint development partner."
Transparency that drives smarter growth.
Mifos® has transformed the microfinance experience for both borrowers and lenders,
and has brought core banking capabilities to hamlets and villages that had never seen it before.
Transparency drives smarter growth.
Through Mifos®, MFIs can view up-to-the-minute reports of
their cash balances, the status of individual borrowers and
other key parameters, and from that information make the
smarter lending decisions.
The transparency provided by Mifos also plays an important role in fueling growth, by facilitating the creation of new branches and access to much-needed capital in remote areas.
A different measure of success
In addition to measuring growth of loan volume, Mifos® has made it easy for MFIs
to measure themselves against poverty reduction goals, so
they can make adjustments that will help their clients succeed.
A different measure of success.
In order to quantify the impact of microlending on quality of life, Grameen Foundation
created a statistical model called the Progress out of Poverty IndexTM (PPITM).
With the PPI,
Mifos® gives MFIs the ability to "score" their clients on key poverty indications,
create profiles and track them over time.
It's all adding up
"Our bottom line is getting people out of poverty," says Conard.
"We're showing that technology can be a big part of that equation."
It's all adding up.
Grameen Foundation's microfinance banking solution is:
Financial Services Sector: FSS:
Banking Back Office Core Systems Transformation
Eclipse Toolkit Services
IBM Global Services, Global Business Services(GBS): GBS
Strategy and Change: Technology Strategy
A Smarter Planet is measured by its results. Here are the outcomes of
Grameen Foundation's Mifos® solution:
A statistical model developed by Grameen reveals opportunities to better serve clients and
their social mission
Instead of weeks or months, Grameen customers receive approvals and get their
money in a matter of days.
More visibility into current cash balances frees up capital for
expanded lending by Grameen.
The Mifos® solution has helped Grameen Koota achieve a nearly 40% growth rate
in its client base.
Grameen Koota now serves some 450,000 customers.
Grameen Koota is on track to reach its goal of two million customers
within five years.
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Continuing the Conversation
A smarter approach to lending proves that goodwill can also be good business.
See what else Smarter Lenders can do on the Smarter Planet page.