Microfinances institutions in Tanzania has been an important player in reduction of poverty and financial inclusion in Tanzania. These institutions have been able to reach to large population that find themselves not fit for normal banks financial services as most of the time they can not meet their requirements.
These institutions face many challenges on their mission to improve financial wellbeing of Tanzanian. Among them being credit risk and loan defaults. Microfinances takes huge risks to offer credit to the population that most of them have no collaterals for assurance. Technology has played a big role as a tool to improve how financial industry is offering its services and improving its operations. Microfiannces too can levarage this tool to ensure it support their mission.
Outlined below are some of the ways how the use of technology to Microfinances can help them to overcome this challenge.
- Easy access of information – With a core banking system, microfinance institutions will be able to manage their client and loans easily and access the information anytime. Able to know repayment behaviour of their clients and which loans are nearly due. This avaoid defaults as they will know which client not to offer loan second time or notify clients on repayments before its due.
- Analytical Reports – Core banking systems comes with analytical reports that helps Microfinances to identify easys how many loans have been issued in a given time and how are they performing, See the red flags for the non performing loans and the aging analysis help them to plan ahead to avoid loan defaults.
- Notification feature – Core banking system with a notification capability will send sms or emails to notify clients on their nearly due loans or past due loans acting as an assistance on decreasing chances of loan defaults.
- Self service mobile applications – Mobile applications that enable clients of microfinances to access the financial services thrpough their mobile phones provide conviniance for them to know when their loans are due and to make payments reducing the chances of them to default.
Inspite of the benefits of technology to Microfinances institutions, most of them have not implementated core banking systems in their operations and some are using inadequete systems that do not deliver the value they need. One reason being lack of knowledge and other being cost of acquisition, many Microfinances have continued using traditional way of doing things and hence not being able to perform to their potential.
On its mission to improve how financial institutions deliver services to its clients, Amala offeres a software as a service core banking system that support microfinances to manage well their portifolios and offer better services with affordable price, Microfinance will not have to purchase a server or pay large sum amount upfront. Both small, medium to large microfinance are able to use the core banking system and hence allow Microfinance with small budget to implement the system and leap its benefit.
For more details, you can check amala.co.tz, reach out through email huduma@amala.co.tz or call +255 766 521 258.
