The growth of Microfinance in the Philippines is noticeable. But the operational difficulties were imminent until technological help. Today, most of the large MFIs like Northern EZCredit Lending Corporation are using microfinance software to automate their operations. And the impact of microfinance software in the Philippines is great.
We are going to tell you how Microfinance organisations are leveraging technology and growing in the easiest way possible. But before that, let’s learn a few things about the microfinance industry in the Philippines.
Impact of Microfinance in the Philippines
Currently, more than 2 billion people in the world do not have access to formal financial services. And most of them live in developing countries like the Philippines. However, microfinance institutions today are the ones reducing the gap, facilitating access to financial products and services.
According to MIX Market Data, the Philippines had more than 5 million borrowers back in 2015, with a total outstanding loan of $1.3 billion. The borrowers also had $905 million in deposits.
But according to Philstar, the number went up 21% by 2019. We can guess from the statistics that till now, the Microfinance industry in the Philippines has grown more.
According to Microfinance Barometer,
“The Philippines is the 3rd highest risk area in the world with more than 60% of its land area exposed to multiple hazards and 74% of its population considered vulnerable; the Philippines is one of the countries where early attempts emerged to enhance the readiness of people and institutions to natural disasters.”
When this is the case, Microfinance institutions are the first responders. They have been helping low-income people to early prepare for further calamities.
Besides, like many other countries, MFIs in the Philippines are helping borrowers to adopt financial services. They have been lending microloans so that deprived people can improve their lifestyles. In addition, the borrowers are also saving up money through MFIs deposit schemes. And it has helped many people change their habits.
But when it comes to Microfinance institutions, it is not easy to handle everything manually. So, the technology helped them organise, monitor and control everything efficiently. And the overall impact of microfinance software in the Philippines is impeccable.
The Impact of Microfinance Software in the Philippines
The wave of technology is having a big impact on the way people interact and access products and services. These innovations can boost the reach and profits of microfinance institutions without compromising the qualities that make them what they are.
But for the greater impact, you must have a better solution that simplifies your business. Moreover, the solution must have all the functionalities required for a smooth operation.
In order to measure the impact of microfinance software in the Philippines, let us take one organisation as an example,
Back in 2020, it was tough for Northern EZCredit Lending Corporation, one of the largest MFIs in the Philippines, to monitor, report and control employees with their old MFI solution. Due to the limited functionalities and countless errors, they could not maximise their potential.
“Major problems with the old solution is that there are lots of errors. Mainly due to the limited functionality of that solution.”– Atty. John Paul G. Villaflor, Chief of Operations, Northern EZCredit Lending Corporation.
But they understood the potentiality of a comprehensive solution. In mid-2021, they choose to adapt to a new MFI solution. And finally, they are getting the benefits.
How Did EZCredit Adapt to New MFI Solution?
A new solution was a must for the company to simplify their operation. They adapted to a new solution because they understood earlier that the right technological tool can save valuable time from the process. And now they appreciate the impact of microfinance software.
The tool can even enhance interaction with clients and generate new points of contact, bringing microfinance institutions closer to new clients. Besides, they needed a medium to work efficiently during the pandemic.
In particular, with better infrastructure, the officials can use mobile applications to run their operations remotely. Besides, they can record user data faster and evaluate their borrowers easily.
So, to properly adapt a better technological tool, they did everything in a few steps.
1. Defined Priorities and Objectives
They already had a bad experience with another software solution. So, they knew that investing in technology without knowing what they are, is a waste of time and money.
On the other hand, they clearly knew that the right digital solution could reduce operating costs, expand the customer base and improve the user experience. So, they first defined their priorities and objectives to find the right tool.
2. Chose the Right Solution
It was the hardest part for Northern EZCredit because the impact of microfinance software depends on the software itself. But, after researching so many options worldwide, they found the right fit for them.
Apparently, they knew that technological systems could generate great costs as well. But they also knew if the system was used correctly, they could make their institution more efficient. And for that, they had to find a flexible platform, and they succeeded.
3. Digitised the Operation
Many microfinance institutions in the Philippines still operate on paper. But EZCredit has shifted to a digital system to secure its data. Though digitising all the data was overwhelming, it was also rewarding.
And so far, the impact of the new microfinance solution is great.
Benefits of the Microfinance Software
“By using the AFS (Ascend Financials), we have many benefits.”
Atty. John Paul G. Villaflor from Northern EZCredit expressed his view about the microfinance solution this way.
With their new solution, they can properly monitor the organisation’s activities now. But previously, they were not able to monitor so easily.
Moreover, they can have on-time reporting 24/7 even if they are not in the office. Before, they had to wait for days to get the reports done.
Business intelligence, on the other hand, can even help you evaluate borrowers. This way, the software can help prevent bad debt.
Data security is another important matter to take into consideration. And Mr Villaflor said,
“Another is that we have more trust on our data due to the many controls of AFS.”
Along with these few benefits, we can address many other benefits of microfinance software.
Now comes the impact of microfinance software in the Philippines.
Without any doubt, hundreds of microfinance solutions are helping hundreds of MFIs in the Philippines. Think about the overall impact. It is huge. In fact, Microfinance organisations couldn’t expand to this extent without any technological help. Therefore, we have to say that the impact of microfinance software in the Philippines is beyond measure.
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