Lehigh University
Lehigh University


Constructing a roadmap to ensure future microfinance successes

Of the 22 million people who populate the Republic of Ghana, only three million people have a bank account. By contrast, five million people in Ghana own a mobile phone. For Okyei Gyeabour, CEO of Women’s World Banking Ghana, this is indicative of the major obstacles his institution encounters in providing financial services and resources to people in this West African nation.

But Gyeabour is not alone in the challenges he faces. For institutions working in the world of microfinance, a practice that provides financial services for the economically active poor, a dearth of bank accounts amid a wealth of mobile phones is a startling reality.

Gyeabour and representatives from a wide variety of microfinance institutions from as far as Kenya, the Philippines, Bangladesh, and Peru, travelled to Lehigh University June 24 and 25 for the first in a series of workshops designed to foster discussion and spark collaboration on the challenges confronting microfinance.

Hosted by Lehigh’s Martindale Center in the College of Business and Economics, and sponsored by IBM, the inaugural Innovation Roadmapping Workshop focused on management information systems (MIS), a vital but challenging segment of the industry. Microfinance technology allows institutions to carry out data collection, storage and processing. But for many, finding the means to develop, support and offer the necessary technology has put them at a crossroads. Even human resource issues arise as institutions find themselves competing for qualified technology employees.

An evolving industry

The two-day conference provided participants with a chance to collectively identify opportunities for technology advances, examine the challenges facing the industry and create a roadmap for MIS within the industry for both the short and long term. Participants from institutions such as Accion, Grameen Technology Center, Negros Women for Tomorrow Foundation-Philippines and Pro Mujer joined forces to envision the possibilities for this evolving industry.

“Microfinance is growing relatively rapidly. A lot of these institutions started as NGOs and don’t have a lot of background in technology,” said Todd Watkins, associate professor of economics and faculty director of the microfinance program. “There are not a lot of well-established standards for how to do microfinance management information systems in terms of workflow processes, architecture, reporting requirements, and the like. The technology is expensive and the diversity of the things people are doing in this business is wide. It’s an immature industry in that sense.”

Much of the panel discussions’ focus was on back-end issues for MIS, which Watkins says has not received as much attention within the industry, but is vital for continued growth. Other panels examined topics such as emerging technologies and business models—branchless and cashless banking, the use of mobile phones, smartcards and PDAs.

For Gyeabour, these innovations may be the key to microfinance in Ghana, where much of the population is uncomfortable using traditional bank branches. Using mobile phones for everything from basic banking to approving loans could radically transform the impact of microfinance, both in Ghana and elsewhere.

“One of our challenges is how you get people into the banking system,” says Gyeabour. “We have to find alternatives. This gives me an opportunity to talk to people who are also looking for solutions and who understand the challenges.”

A biannual series of workshops is planned

The conference is the first in a planned biannual series of Microfinance Roadmapping Workshops. The Martindale Center’s Microfinance Program is a natural fit to host such a series. Established in 2005, the program aims to foster and promote understanding of the development and impact of microfinance locally and globally by supporting faculty research and curriculum development and working closely with microfinance practitioners and with faculty from departments across the university.

Students in the College’s undergraduate and graduate programs were also able to take part in the event, gaining firsthand insight into opportunities in microfinance. Graduate student Ashwath Muralidharan, a native of Mumbai, India, first took an interest in the industry when he worked with a multidisciplinary team of Lehigh students designing a handheld remote field data entry device for a microfinance institution in Honduras.

The multidisciplinary nature of the program allowed Muralidharan to merge the knowledge he gained through his undergraduate degrees in computer science and business with his graduate work in economics.

From here, Watkins hopes to build consensus about how the industry needs to progress in the next five to 10 years by examining the key hurdles and collaboratively developing possible solutions. A document will be compiled outlining the key points of discussion.

“Given day-to-day demands, information technology folks in this industry have had little opportunity to talk to their peers about these back-end data system issues,” said Watkins. “If microfinance is to grow five-to-10 fold over the next decade or two, as many hope, then the data management systems have to keep pace. If that is to happen, broader and deeper collaboration across sectors and organizations will be central going forward to begin to form consensus, identify best practices, get standards in place and guide technical development.”

--Tricia Long

Posted on Friday, June 27, 2008

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