How Cloud-based Core Banking Solution Help African MFIs Thrive

Have you ever imagined running your Microfinance organization digitally a few decades ago? Even we did not. However, today you can run your business easily and more effectively with the help of a cloud-based core banking solution. And we believe it can help African MFIs thrive the most.

Don’t know how? We will tell you how a cloud-based core banking solution can help African MFIs thrive in the simplest way possible.  

You already know that most Microfinance organizations worldwide have adapted to technology solutions. But many still operate with desktop software or with the manual process. Don’t you think this situation should change?

We think so because our world has come a long way from offline systems. We have entered into an era of cloud lifestyle. So, we should also integrate this amazing technology solution into microfinance organizations for hassle-free operations.  

Don’t know what a cloud-based core banking solution is? Let us tell you first.

What is a Cloud-Based Core Banking Solution?

You may already know what a core banking solution is. Simply, it is a digital solution for banks and microfinance organizations. With it, you can run your financial operations such as borrower evaluation, loan disbursement, collection sheet management, reporting etc.

But what is a cloud-based core banking solution? Well, this might sound a little unfamiliar, but let us help you with that.

In simple words, it is the online version of the software that can be accessed from anywhere, 24/7. Moreover, a cloud Core Banking Solution (CBS) allows you to manage everything centrally through a central database.

Seems confusing yet? Let us give you an example.

Suppose you have an offline or desktop CBS to manage your entire MFI operation. What can you do with it?

You can do pretty much everything within your branch. But when it comes to another branch, you are blind. You don’t have access to the full system like the online one. Besides, your field officers cannot enter any data right from where they are. Instead, they will have to enter all the information manually at the branch computers.

On the other hand, with a cloud-based core banking solution, you can access data of any branch from anywhere on any device connected to the internet. Unlike the offline system, it will allow your field officers to enter borrowers’ information on the system anywhere they want.  

Why do African MFIs Fail to Succeed?

If your MFI is based in the African region, you already know that it is tough to operate in the region for obvious reasons.

Despite having a huge untapped market, African MFIs often fails to sustain themselves because of higher operational cost.

But why is that?

Because MFIs cannot reach potential clients. Even if they can reach clients, they are unable to make a profit due to the higher outreach and operational cost.

On the other hand, proper risk management and theft are two reasons African MFIs fail.

There are also a few other challenges of microfinance operations similar to their Asian counterparts.

Don’t be discouraged; you have the option to overcome all these challenges and make your MFI profitable.

But how?

The answer is a cloud-based core banking solution!

Let us tell you how a cloud-based core banking solution can help African MFIs thrive in detail.

How Cloud-Based Core Banking Solution Helps African MFIs

There are so many ways a cloud-based core banking solution can help African MFIs thrive. It can eliminate operational challenges, reduce operational costs and help you make your decisions based on facts.

1. Better Understanding of the Market

Do you know that a cloud CBS can provide better insight into the market?

Yes, it was unthinkable before but not now. With an advanced CBS and your market data, you can easily understand the market situation better.

Moreover, it is done very simply. You just need to enter the necessary data of a client for the first time. And the software will do the rest.

It also helps you evaluate your borrower, which reduces the risk of bad debt. In addition, if you need a future projection of your business, its advanced business intelligence can help you with that.

Don’t you think this is much needed for the African market? We bet it does!

2. Hassle-free Operation

Have you ever imagined running your microfinance organization without the hassle of piles of paper? Or have you ever thought your collection process could be fully automated?

Here comes the magic of a cloud-CBS. You can do everything without papers, from borrower evaluation to loan disbursement, from repayments to annual reporting. With your automated system, you can do anything you want with just a few clicks.

Integration of mobile banking and CBS can take things one step further. You receive your repayments without sending your field officer to clients. Doesn’t it sound more convenient?

3. Prevent Risks of Theft    

African MFIs often deal with theft, but now you can imagine a world of yours without.

Theft is one of the reasons many MFIs in Africa cannot make enough profit. Besides, it damages your company’s reputation to the borrowers. And later, all those small thefts cause you greater damage.  

What theft are we talking about?

Suppose one of your field officers is collecting the repayments. But after collection, he did not include one borrower’s repayment on the book. A few months later, they try to recover that money from the borrower again. Or he may show you that the client did not pay.

But it will never happen if you digitize your MFI with an advanced cloud-based core banking solution. Your company and your borrowers both are safe.

4. Reduce the Operational Cost

Due to the high operational cost, most African MFIs fail in the market. But those who can keep the operational cost low are the ones making a profit and achieving success in this social business.

If you are one of those struggling MFIs, you must take care of your operational cost. And this is the only way your MFI can thrive.

But how would you do that?

If you are running your organization manually, you must have many employees. Besides, your operation is fully dependent on papers.

But you can easily cut operational costs from employees and paper usage.

For example, if you have 50 people to manage three branches in the manual process, you will need 25-30 employees with a CBS.

Let me ask you another question, how much do you spend on paper and stationery? We know you have been spending a lot.

So, in the digital process, your MFI can cut the cost of operation from the employees and the paper and stationery.

The list of benefits goes on and on. But let’s not stretch further. It is time to wrap up. Hope this is enough for you to understand how a cloud-based core banking solution can help African MFIs thrive in this competitive market.