This is the final in a publication series of three interview pieces with the three finalists for the European Microfinance Award on Financial Inclusion through Technology.
KMF is an NBFI in Kazakhstan that operates in one of the most sparsely population regions of the world, beset by unstable telecommunications networks in the remote areas where almost half the population lives. To reach clients and improve efficiencies in this challenging context, KMF uses in-house developed tablet software – called Mobile Expert – that communicates remotely with its core banking system to ensure that loan officers, management, loan recovery and internal control teams can schedule loan officers’ work, capture loan applications, make loan approval decisions, monitor and recover late loans, and conduct internal control visits in the field. Crucially in this context, this software can be used both on- and offline, allowing management to monitor field activities in close to real time even over long distances. KMF was noted for its development of its software in-house, and its response to the exceptional challenges of serving remote clients over such distances.
e-MFP: How is the technology initiative that you presented for the Award particularly innovative?
KMF: We believe the innovation comes through the opportunity to process a loan application from the beginning to the final decision, including financial analysis and getting the results of requests to the Credit Bureau and the State Center for Pension Payment immediately, and this information can be accessed while at the client's place of business. This includes the ability too of loan officers to work remotely – increasing both the convenience for clients as well as mobility and flexibility for employees. This system – called Mobile Expert – is an online version of a Customer Relationship Management (CRM) system – providing loan officers’ planning, loan application schedules, zoning and monitoring (planning of visits to clients whom a loan officer should visit) and statistical reports – including loan repayments by clients, number of clients, loan portfolio size, birthday reminders, and salary calculators.
What this all means in practice is greater convenience, easier and more reliable communication channels between branches and loan officers in the field, the opportunity to obtain a preliminary decision at the moment of writing a loan application, and if an application is approved at the level of a loan officer, then to obtain senior approval on a loan application and rapid disbursement of that loan.
Any employee wants to know how much he or she earned today, but this information is especially crucial for a loan officer, whose salary depends directly on acquisition of clients, on the size of the loan portfolio, on the quality of the loan portfolio and other factors. Therefore, the opportunity to see one’s earnings at any time is another advantage of the Mobile Expert.
e-MFP: Could you give one or two examples of challenges you’ve faced in implementing your initiative, and how you have had to change or adapt your activities as a result?
KMF: We’ve seen psychological barriers among employees to the introduction of the Mobile Expert, which have required a complete restructuring of lending processes and procedures. Loan officers and credit administration specialists initially did not trust data from the Mobile Expert, as previously all data were submitted to the Credit Administration Unit on paper, and after that Credit Administration specialists entered all data into the software. Now, all client data are entered electronically by a loan officer, which they directly migrate to the software. For some time, though, scepticism among loan officers and credit administration specialists lead to double verification of information, and inefficiencies. Automated blocks were implemented in the software to prevent this duplication, and trust and comfort with the systems has significantly increased over time.
e-MFP: Could you please give an example of something that has surprised you during the process of introducing or expanding your technology initiative?
KMF: We were pleasantly surprised by the changes that became possible due to the introduction of the Mobile Expert – especially the increase in productivity of loan officers (up 22%), the decrease in new loan application processing periods (from 2.5 days to 1 day on average), the increased number of applications processed per working day (up by 150%), and a reduction in overhead expenses by 37%.
e-MFP: What are some of the (general or specific) risks that are possible when using technology to serve clients, and what do you think the financial inclusion sector can do to protect those clients or institutions from those risks?
KMF: One in particular – the risk of information leakage. Institutions like ours are obliged to protect client information and take all necessary measures in this area.
e-MFP: What are some of your future plans to further utilise technological opportunities in serving your clients?
KMF: We are looking to establish a Mobile Credit Committee, enabling consideration of a loan application on a tablet by the credit committee members, making possible a loan decision while the loan officer is at the client’s place of business. The entire lending process client monitoring, including mobile collection, mobile credit controllers will be implemented. We also wish to expand Mobile Collection – meaning expedited analysis of the results of debt recovery activities conducted by the Collection Unit, helping us plan our approaches with problem borrowers, including restructuring repayment schedules.
The winner of the €100,000 European Microfinance Award 2018 will be announced during the ceremony which takes place on the 15th November in Luxembourg in the framework of European Microfinance Week.
For further details on the Award visit the European Microfinance Award website.