Virtual Conference Recap

CGAP and Grameen Foundation would like to thank you for participating in this week’s virtual conference. There have been a lot of valuable contributions and new ideas which I hope we’ll all continue to explore at our respective organizations. While the official conference period has ended, comments will remain open and we invite you to continue sharing your thoughts on these topics.

Day 1 discussed capacity building in technology and brought up a variety of points that help to shape solutions-oriented thinking around how to improve the ability of both MFIs and vendors to implement and use back end systems more effectively.

There was some good thinking on the methods that MFIs and vendors can use to access some capacity building, such as:

- Use TA Providers to train staff when they are onsite for a project (with discussion on how better to make this happen)

- Reach out to resources in the community such as private company volunteers, academic courses in the local marketplace

- Have Tier I MFIs impart some of their knowledge and experience to smaller MFIs

Some points were raised also about the roles that investors can play:

- Provide incentives to use the technology more effectively

- Provide challenge grants to develop better software solutions and to encourage software vendors to enter the market

- Structure performance based project models

- Support technology capacity building financially at the MFI as a protection to the investment

- Cheaper and easier access to capital tied to a sound infrastructure and reporting abilities

In terms of responsibility for increasing capacity, it seems clear that it falls on all involved stakeholders: the MFIs themselves, the vendors, TA Providers, networks and investors Many contributors felt the onus relies on the MFI itself if it wishes to be competitive in the market. That said, these other stakeholders can be supportive by offering the skills, funding and tied-in incentives. It is felt that vendors to have a responsibility also to learn the business to work more effectively with the MFI needs.

On the question of funding the costs of the capacity building, there were a number of ideas.

- it should be included as part of the standard operating budget of the MFI…viewed as an investment and not expense

- vendors should contribute in providing some basic skills in IT Strategy

- CGAP and other such organizations to provide training in IT business skills

- investors – but with much greater level of oversight on how capacity building money is spent

Finally, related to this and the question of a market failure that might fail to properly incentivize vendors to engage more in the space, there was some thought that perhaps MFIs need to better understand the roles and limitations of a back-end system. If they could better understand that a system may not necessarily be equipped, cost-effective or even possible to mimic all operations tasks and that some standardization is necessary. This was a common comment made through the regional workshops – especially by vendors – and in today’s discussion.

Day 2 solicited new ideas for helping MFIs move past the technology hurdles which have hindered so many MFIs in the past. Some of the key topics discussed:

- Outsourced models, such as Software as a Service (SaaS) or “managed services.” There’s been quite a lot of discussion of these models recently and certainly the theory sounds promising as a way of reducing both cost and hassle for MFIs. However, the infrastructure in a lot of countries may not be sufficient to support hosted solutions, and in some countries there may be regulatory concerns if client data is stored in other countries. It seems that more information is needed and case studies of actual implementations would be a useful contribution.

- Other ways of bringing down cost might include some sort of group purchasing arrangement, so MFIs could collectively negotiate with vendors to get favorable licensing rates.

- Both outsourced models and a group licensing arrangement would require standardization of MFIs to some extent. This could potentially be facilitated by donors and investors who have a natural incentive to see their partners succeed. Several approaches to issuing standards were identified: conduct process mapping of a sample of MFIs and issue best practices, encourage MFIs to adopt off-the-shelf packages and adjust their processes accordingly. Any standardization effort could be coupled with research demonstrating the financial benefits of standardization vs customization.

-Certification of software solutions by an organization like CGAP could encourage compliance with standards. Similarly, donors/investors/networks could encourage the use of solutions which comply with standards or hold a certification.

Visit our website for more information on the IS workshop series.