Microfinance – Serving the Underserved in Southeast Asia

By
INFOPRO

Microfinance has grown at a remarkable pace in recent years. To date, more than 130 million people around the globe have directly benefitted from microfinance-related operations. Microfinance markets are most mature in emerging regions such as Africa, Latin America, South Asia, East Asia, and the Pacific.

However, these operations are only available to some of the world’s poor, while an estimated 1.7 billion people are still inaccessible to basic financial accounts. In Southeast Asia, more than 70% of adults currently lack sufficient access to financial services and millions of small and medium-sized enterprises (SMEs) in the region still face large funding gaps.

On the bright side, governments in the region are becoming more aware that microlenders play an essential part in providing capital to unbanked and underserved segments of the population. Analysts expect governments will look into regulating the microfinance industry to ensure economic stability within the region once countries recuperate from the pandemic.

Southeast Asia

The Indonesian government has put an emphasis on microfinance as one of the potential strategies for poverty reduction. The country is renowned for its large scale microfinance sector, with a range of commercial banks and over 60,000 MFIs reaching more than 50 million people (CGAP).

Access to microfinance services enables the underprivileged to increase their income and assets. It also reduces vulnerability to external shocks and creates jobs. This is evident in Cambodia, where microfinance acts as a banking system for many people, with around 160,000 branches across Cambodia in 2016. The relative importance of microfinance maybe most significant here where priority is given to managing systemic risk, ensure profitability and growth of microfinance institutions (MFI).

Meanwhile, in the Philippines, a lot of research has been carried out to examine the impact of microfinance on poverty reduction. The pandemic has given new immediacy and put a much-deserved spotlight on the primacy of financial inclusion in the government’s crisis containment and recovery efforts.

With its large, socio-economically diverse population spread across more than 7,000 islands, Philippines faces understandable and persistent barriers to accessing financial services, ranging from the geographic to the institutional.

The Duterte administration’s Philippine Development Plan 2017-22, includes key objectives related to financial inclusion, such as more effective delivery of microfinance and micro-insurance products, and financial literacy education for micro, small and medium-sized enterprises (MSMEs).

Emerging Innovation

On the subject of effective delivery, emerging innovations in microfinance within the Southeast Asian markets has made it possible for MFIs to reach a greater number of poor households on a sustainable basis.

The uprising of new technologies brought into play with the entry of new-age players or Fintechs, empowers the microfinance sector to fast-track its transition to a more efficient digital model to serve a larger population at lower costs.

Fintech companies are becoming more significant within the MFI ecosystem with different technology stacks enabling the microfinance sector to carry out more than their basic operations through collaboration and development. Fintech offerings such as core systems (LMS/LOS) enable MFIs to manage routine operations, while advanced ones empower them to leverage data from multiple sources and handle complex analytics to facilitate efficient sales and collection.

The Future-Ready SYNERGi Loans Platform

Microlending businesses require a platform that is robust, scalable, and support multiple channels. But at the same time, it should make lending operations more efficient through automation solutions and a collaborative environment.

Here is where INFOPRO’s innovative solution comes in. We help to revolutionize your microfinancing business with the latest and most advanced lending platform in the market. The SYNERGi Loans Platform covers the full loans journey, customer onboarding, financing origination, management, debt collection, settlement, analytics and reporting.

In an era where digital savvy customers expect hassle and human error-free digital services, MFIs must be fully equipped to provide loans online and automate their processes, right from loan applications to disbursal and everything else in between.

Nowadays, everything is powered by Artificial Intelligence (AI) and the most significant impact can be seen in the microfinance industry. Not to mention that using AI in any financial business can reduce losses by 23%.

SYNERGi Loans solution comes with AI, leveraging on machine learning and deep learning to revolutionize the way loan origination, servicing, and collection is done. It facilitates lenders with intelligent lending, smart credit, and advanced scoring – thus giving access to quality credit and acceptance rates.

Gone are the days where lenders and borrowers spend hours on physical and time-consuming KYC, now microlending platform users can do quick eKYC at the comfort of their homes with SYNERGi digital driven solution. By using automatic ID verification, it becomes easier to process the loan application.

Compared to traditional loan approval, AI can process any loan application quickly. Instead of waiting for several days to get the amount credited into the borrowers account, their application can be approved instantly. This is another advantage of using AI-based microfinance platforms. Both parties will be automatically notified whenever the due date arrives. It will help to maintain customers’ credit score as well as trustworthiness with your lending business.

Microlenders also face endless competition and in order to compete in a digitally dynamic landscape, it is critical to deploy new products and services at a rapid pace. By leveraging DevOps, CI/CD, and automation tools, we can help speed up that release timeline significantly.

Our agile and flexible product factory allows MFIs to reach wider markets with lending products of any type. This will in turn increase their reliability; improve security and compliance thanks to better-documented development and testing processes, plus clear frameworks for application governance and risk management.

Best of all, SYNERGi Loans Platform offers a complete business overview via analytical dashboards. Lenders need not depend on spreadsheet-based reports any longer. Using built-in reporting tools that provide interactive and visual reports, lenders can delve into the finer details.

This way, operators can make better decisions with advanced analytics which allows them to understand their performances and existing bottlenecks. Managers can use this information to devise strategies to keep operations efficient. With analytical metrics, MFIs can remain flexible and orient themselves according to the market needs.

For more information about SYNERGi Loans Platform, visit https://www.infopro.com.my/digital-financing/ or contact us for free consultation.

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