Stakeholder Analysis of IT Applications for Microfinance

Abstract

Microfinance Institutions (MFI) currently service over 130 million clients worldwide (World Bank, 2009), while potentially 3 billion people could benefit from the services offered by this sector. This huge base of clients, and the corresponding transactions which they generate, offer a significant potential for MFI operators to utilize Information Technology (IT) based applications in order to reduce costs and expand services. At the same time, a host of factors including inadequate infrastructure, such as the low penetration of computers and limited availability of data communication services in many geographies, and illiteracy and lack of skills, present significant challenges in being able to realize such potential. The present discussion uses a framework of stakeholder analysis, in order to identify specific problems and possible solutions impacting the future of IT applications in the MFI sector. Stakeholder analysis is a well known technique which is used to design and construct large and complex systems. The present discussion looks at the MFI context which is characterized by multiple stakeholders, with a variety of often divergent goals / requirements at a systems level. Such requirements need to be identified, prioritized and quantified, in order to ensure that they are effectively addressed in the several downstream phases, such as design, development, implementation and ongoing support. The present discussion examines the key stakeholders in the MFI context and their high level requirements. These requirements, which are typically complex and abstract, are then decomposed into elementary attributes, which are amenable to quantification and measurement. While the discussion addresses multiple stakeholders, the detailed analysis is restricted to MFIs and their clients (borrowers of micro credit). Clients are the most important category of stakeholders in any proposed system and the detailed discussion looks at some of the unique characteristics of this group, challenges they pose to designers of IT applications, and some possible ideas which have the potential to make significant impact in future systems. Specific attributes discussed include accessibility, availability and unique identity. The usage of computers and Management Information Systems (MIS) in the MFI sector has been growing rapidly, with an estimated 82% of all MFIs using some form of automation (CGAP, 2009 a) as per recent surveys. However, most of the currently deployed MIS solutions address back office functions and do not engage their clients directly or through intermediaries, using technology based solutions. The present discussion examines a few specific technologies and design ideas which have the potential to improve availability and accessibility of technology based solutions to the client base of MFIs, thereby enhancing the scope of automation in this sector.