FREE ELECTRONIC LIBRARY - Dissertations, online materials

Pages:   || 2 |

«ICTMS-2013 Critical analysis of management information system of selected Indian microfinance institutions Abhishek Behl *, Manju Singh Symbiosis ...»

-- [ Page 1 ] --

Available online at www.sciencedirect.com


Procedia - Social and Behavioral Sciences 133 (2014) 20 – 27


Critical analysis of management information system of selected

Indian microfinance institutions

Abhishek Behl *, Manju Singh

Symbiosis Institute of Research and Innovation (SIRI), Symbiosis International University (SIU), Lavale, Pune, India


Management Information System (MIS) lays a strong foundation on which any institution dealing with finance as a department relies on. Expansion of business, serving their existing client base, adding new customers to their family and to generate an aura of competition amongst the market are some of the key reasons firms across globe are using MIS systems. Microfinance sector needs MIS for gearing up economic stability, increasing performances and manage flow of funds because a high outflow of funds might fluctuate the economics of loan disbursement. This research paper focuses on the current structure of MIS systems in Micro finance sector and research on the existing scenario of competition with respect to various vendors offering simi lar services. The findings of the research indicate that currently there is diversity in the services and packages offered by vendors and there is a need to build up common software for all the microfinance institutions to bring in uniformity.

© 2014 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.

© 2014 The Authors. Published by Elsevier Ltd.

Selection and peer-review under responsibility of the Organizing Committee of ICTMS-2013.

Selection and peer-review under responsibility of the Organizing Committee of ICTMS-2013.

Keywords: Microfinance Institutions; Management Information System; Technology

1. Introduction Microfinance services as defined by Microfinance Services Regulation Bill “providing financial assistance to an individual or an eligible client, either directly or through a group mechanism” The importance of this sector can be judged by the fact that this basket has people winning Nobel Prize. With the tremendous amount of efforts laid by Prof. Yunus in Bangladesh, South Asia became a hub for research and advancements in microfinance. Studies have * Corresponding author. Tel.: +91-7798250363; fax: +0-000-000-0000.

E-mail address: abhishekbehl27@gmail.com 1877-0428 © 2014 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.

Selection and peer-review under responsibility of the Organizing Committee of ICTMS-2013.

doi:10.1016/j.sbspro.2014.04.165 Abhishek Behl and Manju Singh / Procedia - Social and Behavioral Sciences 133 (2014) 20 – 27 21 depicted that there are more than 12,000 microfinance institutions having close to 700 million active borrowers.

There are still over 5 billion in the unbanked sector which thereby forms a huge chunk of people.

When compared to banks it is seen that because of high transaction of money by a large number of people the overall operations costs come down. (Ashta, 2009) Bankers were unable to offer loans with low amount and a relatively high operations cost to the people. The issues further piled up when the problem of fulfilling Know your customer (KYC) norms were not fulfilled. The customers under this head were mostly new to this system of saving money or getting a loan from a certified institution. Absence of proper information, credit history and lack of collateral became the dependent variables for increased risk. Lending at higher rates was the only option to solve this problem for which group lending was a probable solution. This idea of group lending led to weekly repayments of amounts to have a uniform track of payments (Yunus, 2003). Various models were formed with the idea revolving around group lending by various firms like BRAC, Accion, and FINCA etc.

Once the models were made many third party products were also introduced to the poor out of which insurance is one of the most successful of all. Many MFI are converting themselves into banks or finding loopholes to be able to accept deposits either from public or through clients/borrowers (Ashta, 2010). Out of the existing MFIs, less than 200 are profitable (Ashta, 2010). The transaction size of the loan is small which thereby decreases the profit margin of these MFI’s (Rosenberg et all, 2009). Technology will have to play a major role in solving this problem. Although innovation has kick started the thoughts of existing players to enter microfinance yet this research focuses on how a sector of technology can play a vital role in changing the face of microfinance in any country.

2. Review of Literature

Management Information System (MIS) is one of the key to any organization. Once any organization has laid its principles, values and has defined how are they looking forward to gain profit, MIS systems becomes an integral part of the decision making process. For any strategic decisions to be made by the firm, MIS are always referred (Edstrom, 1973). MIS therefore is a tool which can shape any raw values into meaningful and readily used data. Earlier studies show that a better and efficient implementation of MIS leads to low risk levels and better decisions. (Baura et al.,1991). Information Technology as a sector whether outsourced or developed in house is a necessity for modern era and is required for the success of any institution (Clemons & Row, 1991).

Recent studies in Microfinance sector indicate that in order to implement a better, efficient MIS in microfinance arena, we need to understand the basic requirements of the sector. In addition to the basic requirements previous researches (Iyenger et all, 2010) has also shown that IT support and Standardization are equally important if microfinance models have to compete with the existing models of bank. Due to lack of proper legal documents and laws in place, financial institutions are not categorized. This has also led to downscaling of banks. Banks have even opened subsidiaries to take care of microfinance and generate profits keeping them under the tag of Non Profit organizations (Iyenger et all, 2010). As microfinance deals with below poverty line people, capturing data through business correspondents (BC’s) and Business Facilitators (BF’s) are difficult. Census database depicts that India with a literacy rate of approx. 74% has its 80% illiterate population in the villages falls below poverty line bracket.

Thus, centralization in MF is not linked to become conservative (Tavakolian, 1989) but due to a major part of illiterate decentralized users. Secondly, the problem of infrastructure in rural areas is also a major area of concern.

Any MFI which sets up a centre in these areas face problems of infrastructure support from the neighboring area and this in turn kills the motivation of doing business and surviving there( Iyenger et al., 2010).

Thirdly a dedicated IT support and a proper structure for disbursement of loans and recovery thereafter are also important. Recovery seems to a major issue for any MFI.

3. Objectives

The above issues reflect that there is a scope of various questions related to MFI and implementation of MIS in MFIs. This research paper aims at:To understand the state of Management Information System used by MFI To study the diversified software support and its linkage to specificities of Microfinance market.

To study the relationship between the drivers of MIS used by MFI 22 Abhishek Behl and Manju Singh / Procedia - Social and Behavioral Sciences 133 (2014) 20 – 27 The latter questions is a part of Shared Information System (Barret & Konsynski, 1982) where a high quality MIS is shared by various organization depending on their usage. Thus the cost can be saved and eventually distributed amongst all the end users, thereby reducing the operations cost for MFI.

4. Theoretical Framework

The comparison of the software will therefore bring out the complicated diversity of the Microfinance Market as well as the wide variety of the software in the market to address this diversity. The comparison will not help in choosing any particular software, because after understanding the diversity and the segmentation, this would be the next step: which particular software to choose among the ones competing for that niche.

A second area of research will highlighted earlier is to establish whether some microfinance global networks use the same software and whether the software is controlled by the microfinance institution, such as the control of Mifos by Grameen. The answer is not obvious because recently one large microfinance agency decided that it should not be in the software business because the software industry was very different from the Microfinance sector.

This paper could help the research go more into the details of the Software as A Service Offering which seems to be an answer to the needs of the sector. If this is so, why are the other software’s doing as well? Can the services be outsourced to a third party software company so that experts can tackle the problem of maintaining standards across MFIs?

5. Research Methodology

The research methodology starts from database from CGAP (Consultative Group to Assist the Poor) which gives reviews on the software used by MFI to manage their information systems. More than 100 softwares have been reviewed by the organization across various geographical boundaries. Our research is based on South Asian Microfinance organizations i.e. from countries like India, Bangladesh, Sri Lanka etc. and thus the target technology providers boil down our number to 24. We have taken 25% of the service providers as our sample size, therefore 6 technology partners are used for our research.

A brief description of software and its manufacturer is provided in Table 1. The software release dates indicate that some of them have been in the market for more than 5 years while others are relatively new to this arena of competition. The first column denotes the currently used version of the software in the market by the provider and therefore it also signifies the need for updates in the current version. Management Information Systems are directly proportional to organizational growth, thus advancements and changes in software systems would definitely be values add for any MFI. (Brancheau et al., 1996) denotes that a responsive IT is one of the major concerns of managers.

–  –  –

Some of the major areas where MIS systems are practically useful are customer relationship management (CRM), shares management, tracking loan and deposits, Payroll etc. Table 2 signifies that almost all perform the basic functions like Accounting, CRM, Tracking loans and deposits. Payroll is one of the neglected areas which often technology providers miss out. Checking out their support in different regions, English is found to be used as a Abhishek Behl and Manju Singh / Procedia - Social and Behavioral Sciences 133 (2014) 20 – 27 23 global language for interaction, while a few of them even used French and Spanish to cater their clients across other countries as well. Research also found that every technology partner has a different area of building clients i.e. some of them have for-profit organizations as their client base while others have non-profit organizations as their client base. The pattern of lending can also be traced and can be sub divided into individual lending and group lending.

–  –  –

Table 3 indicates the outreach of each technology. The customer base is not very high for any of the technology providers. Globalization has not occurred much for them. It is evident from table 3 that they neither made a high impact in their respective country and nor have they tried to have a global presence.

One hypothesis which may explain global strategies of some software manufactures and which may influence customer adoption of the software is that other similar companies, belonging to the same MFI network, across the world are using the same software (Ashta, 2011). Thus if in some country a model is being replicated, a similar software or the exact software vendor should be used in order to easen up things but it’s not happening. This in turn give chances for new software developer to even replicate the existing model with little bit alterations to suit the needs to this tailor made model from the already existing one.

–  –  –

leads to charging of high interest rates by MFIs. The findings from the research reveals that there is a variation in the aggregate fees accumulated from various divisions viz licensing fees, maintenance fees, general consulting fees and training fees. Maintenance cost is basically a percentage of licensing cost and its expressed in terms of dollars when licensing costs is negligible which happens for fresh and relatively new technology partners. MOSTFIT is an exception in the entire study. The data in Table 4 for the same reveal that 10 cents per borrower becomes 1000 dollars for 10,000 borrowers. Its general consulting fees is relatively higher when compared to others who offer same services at $1-2 per day.

–  –  –

Looking at Table 5 we cannot compare the pricing strategies to judge which software is doing well and which is underperforming. Also, every software might be made with different kind of customers or clients is mind thus the pricing strategies are bound to vary due to different technology and different features imparted by the same.

Abhishek Behl and Manju Singh / Procedia - Social and Behavioral Sciences 133 (2014) 20 – 27 25

–  –  –

6. Results and Discussion Using the above data for our sample of six software packages, we calculated for correlation coefficients and tested for significance. These are presented in a correlation matrix in Appendix. To understand this, a few adjustments have to be kept in mind. The years in use to date is calculated based on the release date till 2010. For number of languages, two softwares are multilingual Unicode and we have taken a figure of 100. A lower number does not make any material difference to correlation coefficients as long as it is above 4 (the highest number of languages in our sample).

Pages:   || 2 |

Similar works:

«i PROJECT MANAGEMENT QCF Level 6 Unit Contents Chapter Title Page Introduction to the Study Manual iii Unit Specification (Syllabus) v Coverage of the Syllabus by the Manual ix 1 Project Initiation 1 Introduction 2 From Business Objectives to Project Description 3 Project Feasibility and Risk Analysis 7 Project Planning – towards a Life Cycle Model 11 The Project Manager Role 18 2 Project Analysis 27 Introduction 28 Hierarchical Division of Work 28 Risk Assessment and Management 35 Cost...»

«Institute for International Integration Studies IIIS Discussion Paper No.243/ February 2008 Indicators of regional financial integration Agustín S. Bénétrix Dept. of Economics and IIIS, Trinity College Dublin Sébastien Wälti Swiss National Bank and IIIS, Trinity College Dublin IIIS Discussion Paper No. 243 Indicators of regional financial integration Agustín S. Bénétrix Sébastien Wälti Disclaimer Any opinions expressed here are those of the author(s) and not those of the IIIS. All...»

«IJBIM IJBIM, Volume 4 ◆ Number 1 ◆ (January-June, 2012) DIGITAL ECONOMY IN RURAL INDIA AND UIN RFAN SAMDANI* IRFANA SAMDANI* ANA AMDANI With growing population and resource mobilization, digital economy is not limited to business trading and services only but, it encompasses every aspect of life from health to education and from business to banking. Further everything is happening on electronic devices then why not communication with government. E Government is already playing its part in...»

«Adam S. Yore Department of Finance Home Address: 425 Cornell Hall 3100 Wisteria Ln. University of Missouri Columbia, MO 65203 Columbia, MO 65211 (813) 786-1966 (573) 884-1446 yorea@missouri.edu Research Interests: Corporate Governance, Mergers & Acquisitions, Corporate Investment Teaching Interests: Corporate Finance Education: LeBow College of Business, Drexel University Ph.D., Finance, 2009 Dissertation Title: Three Essays in Corporate Governance Dissertation Advisor: Dr. Ralph A. Walkling...»

«NBER WORKING PAPER SERIES DOES FINANCE BENEFIT SOCIETY? Luigi Zingales Working Paper 20894 http://www.nber.org/papers/w20894 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 2015 Prepared for the 2015 AFA Presidential Address. While a consultant to the PCAOB, the opinions expressed in this paper are my own and do not necessarily reflect those of the Board or the PCAOB as a whole. I wish to thank Sarah Niemann for research assistantship and Nava Ashraf,...»

«Management Letter for the FY 2005 DHS Financial Statement Audit Office of Inspector General U.S. Department of Homeland Security Washington, DC 20528 Homeland Security July 24,2006 Preface The Department of Homeland Security (DHS) Office of Inspector General (OIG) was established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment to the Inspector General Act of 1978. This is one of a series of audit, inspection, and special reports published by our office as part of our...»

«At a meeting of the Town Council holden in and for the Town of Glocester on January 15, 2015: I. Call to Order The meeting was called to order at 7:30 p.m. II. Roll Call Members Present: Walter M. O. Steere, III, President; George O. (Buster) Steere, VicePresident; William E. Reichert; Edward C. Burlingame; and Steven A. Sette. Also present: Jean Fecteau, Town Clerk; Tim Kane, Assistant Town Solicitor; Joseph DelPrete, Chief of Police; Susan Harris, Deputy Town Clerk; Diane Brennan, Finance...»

«WHO Ministry of Health RECOMANDATIONS ON HEALTHY NUTRITION IN ALBANIA Department of Public Health Tirana, December 2008 Acknowledgments Dietetic manual was drafted out by the Work Group comprised of experts of the field of various institutions (Ministry of Health, Ministry of Agriculture, Food and Consumer Protection, Ministry of Education and Science, Economic Center for Children Education and Growth in Tirana Municipality, Institute Public Health, and Tirana Regional Public Health...»

«Contents Chapter 1: What is business activity? 1 SeCtion 1: Chapter 2: Business objectives 3 Business and the Chapter 3: Sole traders, partnerships and franchises 5 environment in Chapter 4: Limited liability companies 7 which it operates Chapter 5: Multinational companies 9 Chapter 6: Factors influencing the choice of organisation 10 Chapter 7: Factors of production 12 Chapter 8: Primary, secondary and tertiary activity 14 Chapter 9: Business location 15 Chapter 10: Government influence on...»

«PAGE INTENTIONALLY LEFT BLANK PEACE CORPS OFFICE OF INSPECTOR GENERAL Vision: Provide high impact work products that agency management acts upon to increase the Peace Corps’ efficiency and effectiveness.Mission: Through audits, evaluations, and investigations, the Office of Inspector General (OIG) provides independent oversight of agency programs and operations in support of the goals set forth in the Peace Corps Act while making the best use of taxpayer dollars. OIG: Promotes integrity,...»

«KICK INTERNATIONAL ALL MARTIAL ARTS OFFICIAL RULES INDIANA AMATEUR MIXED MARTIAL ARTS RULES AND REGULATIONS Copyright 2011© All Rights Reserved. Reproduction in any manner is prohibited. AMATEUR & PROFESSIONAL STATUS & RULE DIFFERENCES Amateurs are not allowed to be paid a Fighter’s Purse or win Money to exceed one hundred dollars ($100) in an Indiana State Amateur MMA Bout. If you have EVER been Paid a fighter’s PURSE or won any Prize Money in ANY Striking Sport (such as: Kickboxing, MMA,...»

«SAP Financial Services Forum – Detailed Agenda October 21-22, 2014 New York City, New York Financial Services Forum | Day 1 – October 21 Registration Opens 8:00 am 9:00 am – 9:10 am Introduction and Welcome Mike Cowles, SVP and General Manager, Financial Services, SAP 9:10 am – 9:30 am SAP Vision Jen Morgan, President, SAP North America 9:30 am – 10:30 am Future of Financial Services Ross Wainwright, Global Head of Financial Services, SAP including Guest Speaker Willie Stegmann, CIO...»

<<  HOME   |    CONTACTS
2016 www.dissertation.xlibx.info - Dissertations, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.