Automation of MFIs: How Sahara Nepal Adopted Tablet BankingJanuary 24, 2020
Field staff of a Microfinance Institution (MFI) spend 40 to 60 mins in conducting one centre meeting. Most of the time is spent on manually recording the transactions (saving deposits and loan instalment) in the collection sheet and the passbook of each member. Every centre has around 20 members and in a day a field staff conducts around 4 such meetings.
All the transactions then, have to be updated in the organisation’s Core Banking System (CBS) at the branch office by staff.
The field staff of Sahara Nepal Saving and Credit Cooperative Ltd were following the same routine, as mentioned above. The time-consuming manual recording system left little or no time for the staff to discuss other product and services, conduct financial literacy or even for analysis on multiple aspects of the operation. “Primarily we were looking to reduce the paper-based operation to save time both the staff and our members were spending at the meetings,” said Mahendra Kumar Giri, CEO of Sahara.
Introducing Tablet Banking
UKaid Sakchyam Access to Finance programme, through its Financial Inclusion component, works with MFIs to strengthen their operational capacity and expand financial access through appropriate technologies. Supporting MFIs to automate their operations through tablet banking and upgrading of the CBS are major initiatives of Sakchyam’s partnerships with these financial institutions.
Sahara also introduced tablet banking with support from Sakchyam; the pilot testing was done in two branches in Jhapa – Laxmipur and Birtamod. “Automation of the transactions was the solution we required to make our operations faster and staff efficient,” stated Yub Raj Siwakoti, Project Manager at Sahara.
The centre meetings held using tablets took less time, “With a tablet, we didn’t have to use a calculator to do the calculations and make entries for the same transactions multiple times in different sheets. We realized that we saved 15 to 20 minutes of the centre meeting time,” said Benima Prasai, field staff at Laxmipur branch. The adoption of this new technology helped increase the efficiency of the staff resulting in better output.
Encouraged by this, Sahara decided to roll out tablet banking in all of its branches to make its operation cost-effective and expand its outreach and provide better and varied services to the clients.
Difficult Road Ahead
However, the expansion of tablet banking has not been an easy journey for Sahara. The incompatibility between the CBS and the software used for the tablet banking – provided by two different vendors — led to complications in the expansion process, in the initial few months. “We had two different vendors providing the two software which led to many issues,” explained Siwakoti. This led to the delay in other activities in the work plan for tablet banking expansion such as staff capacity building and client awareness on the new technology. Sahara finally assigned a single vendor and has been working closely with the vendor to ensure the smooth functioning of the tablet banking process.
Another huge challenge that lay before Sahara to make automation successful was bringing the behavioural change among the staff and the clients.
The staff who have been accustomed to the paper-based process had to learn and adapt to the functioning of the new technology.
“We conducted training to orient the staff with the different features of the tablet. Automation was adopted to smoothen the work process and increase their efficiency. Using tablet also meant they didn’t have to carry a bulk of client files to the field. The staff have understood the benefits tablet brings to them and have gradually adapted to the technology,” said Siwakoti
Prasai mentioned that the training and regular support from the vendor’s IT team has helped her become efficient at using tablets. She further talked about her experience, “Tablets have definitely made our work easy. Earlier all our time went in conducting the meeting and documenting the transaction in our core system in the office. We had very little time to discuss other products or services with our members. We usually had to rush from one meeting to another. Now we have time to interact more with our members and know about their business activities, financial needs and provide additional services.”
Behavioural Changes in Clients
The more serious concern for Sahara was to convince the clients, “we had already assessed the risk of clients being reluctant to use the new technology”, Siwakoti mentioned.
And their assessment was on point, as one of their clients, Tara Devi Karki who is also the chief of one of the centres under Laxmipur branch said, “We are not that literate and are unaware of such technology. Our initial concern was, why this change is required. Sahara was saying that they will discontinue the passbook. So, what will be the proof of our savings and loan instalments? How will we keep the record and get the information?”
Having anticipated this, Sahara had formulated a plan to change the mindset of the clients. The new technology being adapted was promoted during the centre meetings, discussions were held at the centre chiefs’ gathering and various financial literacy activities were also conducted to inform and educate the clients, guardian and community members.
To make the transition gradual, Sahara continued using passbooks with tablets. They started sending SMS and giving printed bill/statement of the transactions to the clients.
Tablet banking was introduced at Karki’s centre two years back and the members have become more confident about the new technology. “We are more confident about letting go of the paper and move to the digital platform. Madam (the field staff) from Sahara helped us understand and learn about tablet use. We need continuous support to use the services and they have been helping us. The printed slips and SMS are reliable proofs of transactions, so we are not as worried about not using passbooks.” Before the tablet integration, clients were provided manual passbook for the record of their monthly transaction details.
Recording the details of the transactions in passbooks was not only time consuming but also posed the risk of errors. “Fraudulence and error while recording transactions were only identified at the time of monitoring account balance or during the time of settlement. Now, with the prompt SMS and printed slip, the cross verification can happen immediately and corrections can be done instantly. This makes the clients trust us more,” explained Siwakoti.
About the saving of time, Karki said, “The meetings used to go for 40 to 60 mins but now we are done with the transactions related work within 20 to 30 mins. So, we now have time to discuss with the sir/madam about other issues and services. They also enquire about how we are using the loan money. We do not have to rush from the meeting to attend to other chores anymore.”
Current Status on Tablet Banking
Today, 44 out of 66 branches of Sahara have implemented tablet banking with Sakchyam’s support. A total of 165 tablets have been deployed in 3,776 centres reaching over 67,000 members. Tablets are chiefly being used to conduct the centre meeting operations – updating savings collected from the members and applications for loan demand. Sahara is also using these devices to update the Know Your Member (KYM) client profiles, identify clients through biometrics. These devices can operate in online and offline mode and have facilities such as card reader, biometric and slip printing.
However, there is a need for more features, “forms we need to complete for loan approvals and attendance of the members during the centre meetings are a few additional features we would like to have in the tablets,” informed Ghanshyam Rai, branch manager of Birtamod branch of Sahara
Sahara plans to institutionalise tablet banking and have concrete work plan to mobilize the vendor, train the staff, educate clients and adopt more innovative features of tablet banking. “We have endeavoured a lot and have been partially successful in implementing tablet banking. Our experience gave us the strength and confidence to scale up this project. Sahara believes that supportive IT policy, dedicated staff, digital financial literacy and large client base are key factors of tablet banking. We are now moving towards mobile banking services and have customised a wallet service for our clients in partnership with eSewa,” said CEO Giri.
Text by Jagdish Tiwari and Priya Tamang