Personal Finance

Technology Seen to Boost Microfinance Service Delivery

It’s a no brainer that technology is bound to create advantages to almost anything it gets integrated with. This is emphatically exemplified in developing countries that are new to employing modern technologies. One good example of this is the recent move of a microfinance organization in Rwanda to adopt technology to improve service delivery as well as consumer protection practices.

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The Association of Microfinance Institutions in Rwanda (AMIR) is reportedly planning to adopt technology to improve services. This move is expected to address customer complaints more efficiently and reduce the challenges confronting the microfinance sector.

AMIR senior programs manager Jean Pierre Uwizeye, in a report on The New Times (English daily in Rwanda), said that they are set to make use of a grievance resolution mechanism software. This plan is intended to improve customer protection and enhance customer experience in all of Rwanda.

Grievance Resolution Software

Grievance resolution software is used in various sectors or industries. Various software developers have created grievance resolution systems for specific industries or for general applications. These software can be local or web-based. They can also used on desktop/laptop computers and on mobile devices. The grievance resolution that is to be implemented for AMIR is expected to be web-based and can be used on desktop and mobile devices.

AMIR’s planned grievance resolution platform works by providing an interface for customers through which they can enter their information (name, contact details, SACCO branch, etc) and their complaints. SACCO is an acronym for Savings and Credit Co-Operative.

The platform will include a toll free number that will allow customers to make a call to register their complaints. Additionally, The it will include the contact details of different SACCO managers. As soon as complaints are received, the system will inform the concerned SACCO managers about them. A request will then be made for them to find the proper solution or to take the right course of action to promptly address grievances.

If customers’ complaints are not addressed as how they should be addressed, AMIR will forward them to the central bank as well as to the Rwanda Cooperative Agency for appropriate action.

Implementation and Expectations

The software will be set up in conjunction with the Small Enterprise Education and Promotion Network (SEEP). It is expected to go live or become fully functional on March 22. Straton Habyalimana, SEEP senior program manager, said that the planned grievance platform will be useful for the collection, storage, analysis, and feedback functions of microfinance companies.

AMIR membership and communications officer Felibien Hirwa expressed optimism over the implementation of the software. Citing the growing number of customer grievances at the different SACCOs, he said there’s a need for an effective and efficient mechanism to deal with the challenges. Hirwa said that they conducted a field survey a year ago, wherein their learned that it is important to set up a well-established mechanism to handle the different issues encountered in the microfinance sector. This is why they (AMIR) decided to adopt a technological system.

Microfinance companies in Rwanda are largely still using traditional systems in collecting and responding to customer complaints. This is mainly through suggestion boxes, complaints raised during general meetings, and letters to authorities. The decision to use modern technology to supplant traditional systems is but a welcome development.

Other Technologies to Be Implemented

AMIR has not mentioned other technologies they are planning to make use of. However, the web-based grievance resolution system is most likely not going to be the only technology AMIR and microfinance companies in Rwanda are going to adopt.

There’s a compelling need to make financial services more accessible to people in Rwanda. It’s an excellent start making the microfinance sector more efficient with the help of technology. This is in line with what is happening in other developing countries.

The Bottomline

Microfinance-advocating entrepreneur Sharone Perlstein explains that microfinance helps low incomeindividuals in becoming successful business owners. Even though the amount microfinance can lend to a client in a rural area is lower than the amount extended to city dwellers, the impacts of these loaned amounts are comparable. Microfinance loans may be relatively small but they are designed to adequately address the funding needs of a specific group of prospective borrowers.

These prospective borrowers who usually live in rural areas mostly don’t have access to conventional financial services. This is because they are physically far from the providers of conventional financial services and also because they usually don’t easily qualify or are unable to comply with the requirements set by financial service companies. Microfinance fill this need and with the help of technology, microfinance services become better and more accessible.

The grievance resolution software mentioned above is just one of the many technologies that can improve microfinance. It is an excellent way to help potential microfinance clients in better understanding and accessing microfinance services. Likewise, it helps relieve the hesitation of those who find it difficult, complicated, and cumbersome dealing with financial service providers.