How Branchless banking can Boost Your MFI

The collection sheet was probably the most important phrase in microfinance operations. And without it, we couldn’t imagine microfinance a few years ago. But, it will become history soon.

In recent years, technology has changed microfinance in many ways and now is the time for Branchless banking. In today’s blog, we will discuss how branchless banking boosts MFIs.

The microfinance industry is on the frontline in financial inclusion. But the journey towards success remains challenging. In particular, the lack of proximity and high operating costs are why MFIs fail to succeed.

So, in response to the challenges of microfinance operations, technology steps forward with branchless banking. And, because the magic happened, now you can operate your MFI remotely with an android mobile app.

Besides, you can disburse loans and receive repayments through mobile banking as part of branchless banking. In short, there is huge room for your MFI to expand and boost profit.

What is Branchless Banking in MFI?

Simply put, branchless banking refers to accessing financial services beyond the conventional branches.

For example, when you need a loan from MFIs, you visit the local branch to receive the amount. On the other hand, a field officer from the branch visits you when you make the repayments. They visit you with a collection sheet and collects the repayment and deposits in cash.

But when it comes to branchless banking, you are not limited to physical visits or cash repayments. Rather, you have multiple options open, including payments and repayments through mobile banking.

In branchless banking, everything is online, and MFIs often rely on agents and information technology to operate. And this way, MFIs can overcome the hurdles of proximity and operational costs.

Now it is time to learn how branchless banking can boost your MFIs in detail!

How Branchless banking Boost MFIs

Branchless banking is a blessing for MFIs since it helps you boost your company goodwill and revenue.

Though people understood earlier that fintech is a new direction for MFIs, the pandemic made it inevitable. So, let’s see how it helps your MFIs from the core.  

Reduces the Proximity

The more you stay close to your customers, the more your business grows.

But it seems really tough! Because people stay online more than they keep in touch with family and friends.

So, how is it possible?

Well, people stay online, right? So, you get to use that particular medium to stay connected.

The world is in our hands. But if you stay out of their hands, you are not with them. Therefore, you have to adapt to how they interact.

According to research, no one can stop your MFI from booming if you can deal with the proximity.   

And branchless banking is the medium to keep your customers close. Therefore, you need to improve your microfinance technology to reduce the proximity between you and your customers.

Helps Reaching More People

Do you still chase behind new customers but always behind your competitors?  

Maybe you are looking in the wrong place inefficiently!

We live in an era of information, and the right information shapes your businesses. So, you need proper information to reach more people.

What if the software with branchless banking can help? Yes, it definitely helps. But how?

In branchless banking, you can easily navigate an untapped market. For example, if your MFI is operating in rural Africa, you can reach people remotely through telecommunication.

On the other hand, customers can meet your representative from a remote location with branchless banking and conduct all the procedures online.   

Improves Repayment Rates

According to MFI field officers, it is very hard to receive repayments in person.

Why is that?

Most of the borrowers are at work during the daytime. And unfortunately, your field officer cannot visit them at night.

In the worst-case scenario, many customers give excuses saying they have the money, but they are not at home. So, they are unable to pay on the collection date.

This situation makes it hard for MFIs to collect repayments on time.

Now branchless banking can solve your problem in such a situation. So, how does it solve the problem?

You can appoint an agent in that particular area with access to your online system. And they can collect the repayments through mobile banking while your online system will support the entry.

Increases Customer Satisfaction

Let us put you in the position of a client now!

Suppose you are at work on Monday, and that is the day in the week for repayment. Similarly, your wife is also working somewhere. So, what would you do?

Would you stay at home for the field officer to come? It is not impossible, right?

Now you think the field office came looking for you.

Somehow a lot of clients have a similar situation. Besides, they also need to visit the branch office several times for the loan. And this whole situation is a customer satisfaction killer.

Here comes the branchless banking concept to save you. You can increase customer satisfaction significantly by providing easy access to financial services.

Simply put, with branchless banking, you can receive repayments through mobile banking. You can also disburse loans through mobile banking. And in this whole process, an agent or a field office can help easily.    

Reduces Operational Cost

The operational cost of MFI is very high compared to traditional banks.

But why is that?

Firstly, reaching clients in rural areas costs significant money and effort.

Secondly, you spend a large amount on papers and other stationaries.

Thirdly, conventional MFIs suffer from insufficient risk management.  

Lastly, brick and mortar branches cost your organization another large amount to operate.

Let’s say your MFI is running on a branchless banking system; would it still require the same amount to operate like the conventional one?

Absolutely not!

You will use less workforce, less stationary and fewer office spaces to operate in a location.

As a result, you can cut a significant amount of operational costs with Branchless banking.   

In short, branchless banking is the best option for your MFI. It helps you cut operational costs, reduce proximity, improve repayment rates and increase customer satisfaction. Moreover, it can help you boost your microfinance significantly. We hope this blog was helpful!