How An Integrated Business Intelligence Can Help Your MFI

Have you ever heard of Business Intelligence (BI) software? You might have, but do you know how integrated business intelligence can help your microfinance institution reduce risk, increase efficiency and improve overall financial performance? If you have no idea how we will discuss it in detail in this blog.

In most of our blogs, we often talk about the risks associated with microfinance operations. And if you are an MFI owner, you might also agree with this. But the question is, why is it so risky?

Well, microfinance institutions provide loans to financially deprived people. And if these borrowers default on loans, MFIs do not have any deposit or asset to meet their loss, making microfinancing even riskier. Moreover, it becomes even riskier when MFIs are not able to do the risk assessment.

However, in this case, with proper risk assessment, borrower, business trend and performance analysis, any MFI could get rid of those risks. And here comes a comprehensive Business Intelligence (BI) tool.

Therefore, having an independent BI tool or an integrated tool with your core banking solution is the most important investment every microfinance should make. Don’t understand how? Let’s discuss the main topic and learn how integrated business intelligence can help your MFI!

What is Business Intelligence (BI) Tool?

How are you analyzing your MFI data right now? You must be going through thousands of documents, making charts, preparing visuals, individually checking on business trends, and doing all these manually.

What if those analyses could be done by clicking on a few buttons? Wouldn’t that be really amazing? It would be really amazing if that could be done. But today, we can literally do that with advanced technology. And we call it Business Intelligence (BI) tool.

A business intelligence tool or BI tool is a technology solution that can automatically analyze customer data, evaluate borrowers, check on business trends, and prepare reports. When other tools help you with particular tasks, Business Intelligence tools help you with research and analysis, which is very important to an institution.

Like all the other businesses, the BI tool has become very important for the Microfinance industry. It can help you make a critical decision based on the data and boost your MFI to be where you always wanted to be.

Hope you understand what is a business intelligence tool. Now let’s get to the business and learn how an integrated business intelligence tool can help your MFI.

How An Integrated Business Intelligence Can Help Your MFI

There are plenty of ways integrated business intelligence can help your MFI, and we are going to discuss a few ways. However, beyond these ways, there are many other benefits of a BI Tool, which we will not include in this blog, but if you are interested to learn about them, you can let us know through the comments.

So, let’s not waste any more time and learn how a BI tool can help your microfinance organization to grow and avoid risks.

1. Monitor Loan Performance

Do you have any idea how your loans are performing? We guess you don’t have enough knowledge. Because manually checking all the loans and individual loan portfolios are very time-consuming and hard to track. So, most MFIs don’t monitor loan performance.

However, if you have a business intelligence solution or tool integrated into your CBS, it can track the performance of the loan portfolio in real time. But the question is, what does the tool monitor?

Well, it includes analyzing data on loan repayments, defaults, and delinquencies. By monitoring these metrics, MFIs can identify potential problem loans and take proactive steps to mitigate risk.

For example, if a borrower is consistently making late payments, the MFI can contact the borrower to discuss the issue and find a solution before it becomes a larger problem.     

2. Improve Operational Efficiency

Disbursing loans and collecting repayments are not the only thing in MFI operation. There are many other things, for example, borrower evaluation, business trend analysis, new business model integration etc., which altogether increase operational efficiency.

So, regarding operational efficiency, a business intelligence tool can help MFIs automate many of their manual processes, such as data entry, reporting, borrower evaluation, loan prospect analysis, etc.

This can help save time and reduce errors, which can ultimately improve operational efficiency. Additionally, a BI solution can help MFIs identify areas where they can streamline their processes to save time and resources.

3. Identify Growth opportunities

Do you know how fast your MFI is growing? Do you have any idea how faster it could grow? If you still don’t know, you need to know them for the better future of your organization.

If you check on the big and fastest-growing microfinance organizations in your service area, you will see that they all have been tracking and identifying their growth opportunities, and they have been doing it for years.

But the question is, how can you do that, right?

If you have a proper business intelligence tool integrated into your core banking solution, it can help your MFI identify new markets and products to expand your business. By analyzing data on borrower behaviour and market trends, MFIs can identify underserved areas and develop new products that meet the needs of these customers. It can help your MFI grow its business while also increasing financial inclusion.

4. Manage Risk

Risk management remains one of the top challenges of microfinance operations. And due to the lack of proper risk management, most MFIs fail to sustain around the world. Lending squeeze, fraud, and low repayment rates are the main reasons for those MFIs to fall to their knees. And due to these, many MFIs shut down their operation.

You might be asking, is it possible to manage that type of risk? The answer is yes. But how?

A Business Intelligence solution can help your MFI identify potential risks and take proactive steps to mitigate them. For example, if the MFI sees a trend of increasing delinquencies in a particular region, it can adjust its lending practices to reduce risk in that area.

5. Improve Financial Performance

Want to improve your MFI’s financial performance? But don’t know how you can do that? An integrated Business intelligence tool can be of great help.

A Business intelligence tool provides 360-degree benefits for a microfinance organization. And help you to improve your MFI’s overall financial performance. Ask how?

Well, by providing valuable insights into loan performance, borrower behaviour, and market trends, an integrated Business Intelligence tool can help MFIs improve their overall financial performance. And the financial performance might include reducing loan defaults, increasing loan disbursements, and identifying new growth opportunities.

In short, an integrated business intelligence tool has many benefits and can help your MFI improve in many ways. In particular, a BI tool enables you to monitor loan performance, improve operational efficiency, identify growth opportunities and manage risk, which helps improve your microfinance institution’s overall performance.