Mobile Microfinance - Maximize Branchless Reach By Extending Core Banking Systems To The Field

Mobile Microfinance - Maximize Branchless Reach By Extending Core Banking Systems To The Field

Leipzig, GermanyAll, Cameroon
Organization type: 
for profit
Project Stage:
Start-Up
Budget: 
$500,000 - $1 million
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Mobile Microfinance System is a complete solution that extends existing core banking systems to the field to empower loan agents and simplify branchless banking

About Project

Problem: What problem is this project trying to address?

Most Africans have low access to financial services. This underserved market is serviced by microfinance institutions using a network of field agents & partners. This is cheaper, easier to implement and has a wider reach but is suffers from lack of affordable technology => Force some to go bankrupt & increase the costs of operation: Inefficiency: - Double entry of data on field and in office - Limited real-time reporting Misuse/Fraud - Collected money is not immediately reported to office - Agents lend collected money illegally to non-registered customers => Lost business - Drive for these quick profits results in poor screening => higher defaults and significant losses as agent cannot repay Market size: Sub-Saharan Africa, S. America. Pilot market Cameroon has over 400 MFI

Solution: What is the proposed solution? Please be specific!

A high mobile penetration in Africa, increasingly powerful and cheaper smartphones as well as the investments in existing core banking systems for MFI make a strong case for a Smart Mobile Microfinance System. Being able to work both online and offline, it provides field agents with full access to customer profile, products and history. All transactions are done using a smartphone or tablet and are transmitted seamlessly with the central core banking systems. - Customers get immediate notification (sms/ussd/mobile print) for cash transactions - MFIs manage field agents in real-time, know how much they have collected or paid out even before they get back to the office - Field agents enter data that is pre-validated only once - Field agents can sign new customers, quote - Real-time overview across multiple branches of financial situation of institution Our solution is designed to plug onto existing core banking systems => MFI can maximize investment in existing systems.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

A microfinance company e.g: AB-MFI (ABM) provides financial services to the underserved both in urban and rural areas via a network of field agents. Using our solution, ABM equips field agents with a Smartphone/tablet and optionally a mobile micro-printer. The mobile devices are managed by our central server that seamlessly integrates with their existing core banking system. At the start of the day, field agents synchronize their devices with the server and get updated portfolios for their clients. They get a list of clients to visit for the day. On the field, when they collect loan repayments or saving deposits from clients, the information is sent in real-time to the server. The client gets a confirmation SMS including account balance. In case of no internet connectivity, the system works offline, storing the data on the device till there is connectivity or when the officer returns to the office. Data is therefore entered only once. It also eliminates the possibility of manipulating data or unauthorized lending by field agents. Field agents can also sign up new clients, provide quotes, sell products as well as transaction history to customers. Upon return to the office, the treasurer knows the amount of money to be paid in. Similarly, the head office has real-time financial KPIs of each branch. ABM can now decide to extend its services to new areas by creating branchless channels with new partners by simply supplying them with a Smartphone. They can quickly deploy new products like micro-insurance that require large field networks.
Sustainability

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

Key competition: ** Craft Silicon: Provide core banking solutions to financial institutions and recently extended their offering with a mobile POS systems to address the problem. PLUS:An integrated solution. MINUS: MFIs must purchase a new system => high costs of implementation & learning; POS provide limited functionality than Smartphones ** Mambu offer a cloud based complete management solution for MFIs. Includes access via a mobile browser. PLUS: An integrated solution, no IT infrastructure needed, pay per use model. MINUS: MFIs must migrate to a new system => high costs of implementation and learning; requires constant internet connectivity. Our key differentiators are reusing existing IT infrastructure, solutions adapted to poor connectivity of rural areas & extensibility.
Team

Founding Story

We were carrying out feasibility studies on a solution for utility companies to facilitate bill payments and prevent fraud in 2010. We setup a series of workshops with the over 15 MFIs managers in Cameroon to understand the role they could play and to evaluate a prototype. During the workshop sessions, the severe inefficiency problems they were facing as well as their exposure to the risk of unauthorized lending quickly crystallized with first hand reports of significant loss of money and former employees being jailed. Worse case was of a branch in which the 30% of collected money (repayments and deposits) in a month was lost. This was the”Eureka” moment. Further discussions with MFI consultants in Ghana, Nigeria and Uganda confirmed the problem across these geographies. We then set to out to resolve this issue.
About You
Organization:
Maviance GmbH
About You
First Name

Jerry

Last Name

Cheambe

About Your Organization
Organization Name

Maviance GmbH

Organization Country

, SN, Leipzig

Country where this project is creating social impact

, XX, All

How long has your organization been operating?

1‐5 years

Has the organization received awards or honors? Please tell us about them

No

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Innovation
How long have you been in operation?

Operating for 1‐5 years

Which of the following best describes the barrier(s) your innovation addresses? Choose up to two

Access, Cost, Transparency.

Social Impact
Please describe the goal of your initiative; outline what you are trying to achieve

Our goal is to provide accessible solutions designed for emerging markets that reduce the overall providing financial services to low income areas by:
- Providing powerful affordable technology to extend the reach and functionality of existing banking systems
- Reduce unauthorized lending and therefore losses
- Increase transparency of entire operations
- Increase the speed of deploying new products or branches

The direct impact is that the cost to serve the unbanked reduces while the risks associated with the business model fall. Therefore the access to and the reach of financial services is extended.

Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)

Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,, Other (Please describe below).

If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:

Extensive fraud increases the cost to serve and reduces growth, thus preventing a wider availability of services to the poor

For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?

The underserved communities targeted are in emerging countries, specifically Sub-Saharan Africa. The initial pilot country being Cameroon, these communities are disadvantaged on three fronts:
(i) MFIs/banks currently making the effort to serve these communities in cure very high costs of operations due to operational inefficiencies as well as loss of money resulting from unauthorized lending. Therefore, the cost of the service is no longer affordable to the customers.
(ii) In some cases where these losses result in the financial institutions going bankrupt, these customers loose all their savings, further shattering livelihoods as well as their trust in such initiatives
(iii) In addition, the high risks as well as costs of serving them mean that fewer communities are reached. Less MFIs/banks want to take the risk or incur the costs => fewer people served

Overall, more people in rural areas could be served in less time at lower costs.

Could your solution work in other geographies or regions? If so, where?

Our solution is designed and developed for MFIs working in emerging countries that have either do not have a core banking solution and require basic management systems or have a core banking solution. It is flexible to adjust to different environments and infrastructural prerequisites.

If your solution is dramatically successful, how will things be different in 10 years?

In ten years the fraud resulting from inefficient technology in MFIs has dropped close to zero. As a result, MFIs/banks have additional revenue to reinvest. They actually do reinvest this revenue because the business risks are lower and it is more profitable. This is only possible either by growing their customer base or increasing their offerings to existing customers, who are therefore provided the opportunity to generate income. In addition MFIs within a country or a region would rely on compatible solutions that shall form a platform for improved rating and tracking of who has which loans where. The social impact on these communities would be far much higher as they work towards increased prosperity.

Additionally, if our solution gains traction more players would move into the space, also increasing overall availability of affordable financial services

What will have had to have changed to make this happen?

i. The trend towards cheaper and more powerful devices needs to continue
ii. The trend towards better regulatory requirements in Sub-Saharan countries in the area of real-time financial reporting and risk control to protect consumer savings
iii. The benefits of branchless banking would become more tangible and create a solid business model.
iv. A rethinking of the employees and the management in respect to responsible investments and customer service.

What has been the impact of your solution to date?

Our solution is still in the trail phase with the launch planned in Q4 2012. A quantitative analysis of the impact has not yet been done. However, during prototyping and field tests conducted in Cameroon, the some MFIs lost up to 6000 EUR per month from non-repayable unauthorized loans.

What is your projected impact over the next five years?

Having setup a branch in Cameroon, our goal is to implement our product in 6 Sub-Saharan countries with an estimated 60 MFI/bank within the first three years. Reducing their cost to serve, their avoidable losses and the easy of expansion would dramatically increase their customer base. After a period of five years, we are targeting a total of 150 financial institutions in 10 countries.

What barriers might hinder the success of your project? How do you plan to overcome them?

There are always people who profit from inefficiencies and the lack of transparency. These shall probably resist the implementation of our solution in the respective organisation. Our approach will be to directly address the Management or Board Level of the potential customer to introduce our product top down with strong management backing.

Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact

Within the next 6 months launch the product to the market, signup and deploy our solution to the first three customers

Identify three major tasks you will have to complete to reach your six-month milestone
Task 1

Finalize trials and launch the solution in Cameroon by the end of November 2012

Task 2

Recruiting a qualitfied sales director to support our sales

Task 3

Sign the first three customers

Now think bigger! Identify your 12-month impact milestone

Within the next twelve months we will have 15 customers in three different countries

Identify three major tasks you will have to complete to reach your 12-month milestone
Task 1

Launch the product in Ghana in Q1 2013 and conduct a road-show with key

Task 2

Identify, negotiate and sign a partnership agreement with a local player in the Nigerian market

Task 3

Hire and train three first level support staff in Cameroon as a hub for Central Africa

Sustainability
Tell us about your partnerships

Our focus is on developing partnerships in marketing and sales with local players in target markets to gain traction.

They include:
- In Cameroon: We founded Maviance Cameroon in July 2012 with a local partner. Aim: Distribution of solutions in local market & to act as customer service support hub for central Africa.
- In Ghana: We established a distribution partnership with VBS Ghana – a consulting and implementation partner for microfinances in Ghana.
- In Nigeria: We are working together with a German business development company to identify and select a local partner for the market.

Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?

Initially, we are targeting the African market. Specifically Sub-Saharan Africa. However, our solution is applicable to other emerging markets that share similary characteristics like S. America and SE Asia.

WHY: These regions have large underserved populations and with MFIs trying to attend to their need. However, technology and infrastructure barriers expose the MFI companies to preventable inefficiencies and misuse that significantly increase the cost to serve or the perceive risk of engagements. Simply put, the need is big, the solution is right and the impact is biggest.

What type of operating environment and internal organizational factors make your innovation successful?

Factors that favour our innovation:
- The pain from lost funds due to unauthorized lending is real as field workers try to make a quick dollar by not immediately reporting collected money. Usually, the money cannot be recovered as the field agents cannot repay.
- Significant investments have already been made to existing core banking systems that can be leveraged
- Mobile penetration is on the increase and network reach is increasing
- Handset prices fall with increased functionality
- There is a large underserved population that needs financial products
- Regulatory changes to increase transparency within MFI and reporting needs in countries push them to address these situations.
- MFIs with no Core Banking System can use our solutions to strengthen their processes.

Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list

We have specialized in developing mobile solutions that take into account the particularities (mindset, technology and infrastructure) of emerging economies and can offer support in this area.

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