Read the whitepaper to know how Banking CRM solutions are benefitting Microfinance Sector and how the challenges associated with microfinance industry are resolved with these right tools i.e. CRM.

1. Banking CRM for the
microfinance industry
Thought Paper
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2. The microfinance industry
The microfinance industry is growing and has • The sheer number of customers and members
the potential to create jobs, reduce poverty and and the small ticket size of loans, deposits,
bring social and economic equality by creating insurance policies and payments combine to
wealth and woman empowerment. Microfinance make this a high volume-low value game.
is a reliable tool to eradicate debt traps,
•
Inadequate knowledge, infrastructure,
provide alternatives, and foster trust and a
specialization and tools prevent microfinance
savings culture within the local community. It is
institutions (MFIs) from offering the right products.
estimated that more than 665 million accounts
worldwide fall into the microfinance segment • Compared to conventional banking, microfinance
with a sizeable proportion belonging to regions is less profitable and less sustainable.
in Asia and Africa. There is significant correlation
• MFIs are unable to effectively cross sell and
between poverty alleviation and the state of
up sell to existing customers.
the microfinance industry, although it is hard
to substantiate this observation (source: Wikipedia). • The microfinance network is not effective at
propagating social and welfare schemes and
According to the World Bank, the industry is
messages.
not even close to meeting demand. 500 million
people living in poverty could benefit from a • MFIs lack a holistic view of the customer
small business loan, and only one-third of the including family history and needs, which
world’s population has access to any kind of is necessary in order to provide the right
bank account! suggestions and service.
While the potential is beyond debate, many
problems prevent the industry from realizing
the same:
Banking CRM
Banking CRM is a Customer Relationship • Service requests that can be configured
Management (CRM) platform that specializes to capture and track received requests,
in banking operations. It has some or all of the pre-configured service requests and workflows
below features: for common banking practices, with escalation
and routing templates. In addition, the
• A centralized customer database with
solution has an out of the box offering for
data pertaining to unique customer
recording complaints, queries and frequently
ID, segmentation, household statistics,
requested services.
demographics, preferences and overall
relationship. The customer capture system also • Sales and mass marketing management with
usually has the ability to capture regulatory out of the box offers for generic banking
compliance data including KYC, blacklist products and the ability to create templates
checks and approval by required authorities. out of them. In addition, there is an origination
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3. system linked to the sales system to onboard marketing information coupled with analytics
the customer directly into the respective on cross sell and up sell of products.
account systems.
• Accessibility over multiple channels including
• A comprehensive 360 degree customer the web, kiosks, smart devices and offline
perspective including transaction history, devices apart from traditional channels like
segment, product holdings and sales and postal mail, email, telephone, fax and chat.
How banking CRM can benefit the
microfinance sector
Customer understanding information, which is required from a
compliance, convenience and business
Identifying potential customers is of utmost
perspective. For example, a customer who
importance in the microfinance industry, as
has been with the institution for many years
is recognizing their needs in order to
and availed of several products and services
recommend the right product. A sound
need not prove identity every time he
marketing plan is required to attract the right
acquires a new product. Also, the institution
customers for different product offerings.
can offer better rates and service to him, in
Marketing campaigns can be delivered
recognition of his loyalty.
through traditional channels like email,
telephone, print, billboards, roadshows and
Advisory offers
pamphlets. The content and offers of these
campaigns can be stored in the system for The institution can also enhance routine
future reference and audit. The response to services, such as collection of loan installments
a campaign can be recorded in the system, and insurance premiums or query resolution,
which can also list out opportunities for with the help of banking CRM. A well-defined
different products. The system can store workflow with escalation rules can be put in
and track leads, and follow them up. It can place to note requests and ensure that they
also be set up with a set of standard are attended to within stipulated timelines.
questionnaires to capture important customer The customer knowledge gathered by the
information. These features minimize field system can also guide bank executives as
representative training requirements and they deliver advisory services. For example,
increase transparency. the system would prompt an executive to
offer a new loan product designed for small
Capture onboarding
businesses, to a livestock dealer when he calls
Before onboarding customers, details the bank. Or it might recommend an upgrade
including standard information establishing based on past history.
identity, social and domiciliary status, and
It is also possible to incentivize customers by
granular financial information on collaterals,
rewarding desirable behavior, such as timely
other loans, deposits, insurance products or
payment of loan installments, maintenance
remittances can be captured in the system
of minimum balance and so on, with loyalty
and a unique customer identifier assigned
points that can be redeemed for gifts, cash or
for future transactions. This process helps in
extra services.
knowing the customer, understanding his needs,
qualifying him for various products and above The reach of the microfinance network can
all, building a relationship. The unique reference be leveraged to communicate social and
number enables retrieval of all the above welfare schemes effectively. For example, the
Thought Paper 03

4. availability of a new variety of seeds can be customers” in terms of their profitability,
notified only to farmers, or a reminder to revenue generation potential, and overall
administer polio drops can be sent only to those viability. This information can be used to
with young children. fine tune offerings. For example, the loans
of habitual defaulters can be restructured in
• Growth planning order to facilitate prompt repayment. The
Banking institutions can use CRM system data CRM system can also measure the impact of
to strategize growth. For instance, they can microfinance on different sections of society
identify the products to market to different and capture customer feedback on the
customer segments, and the right time to do same issue. This information can be used to
so. Or they could measure staff productivity measure the institution’s success and define
and plan hiring requirements accordingly. future direction.
One of the biggest advantages of banking
CRM is its ability to measure “returns from
Conclusion
The microfinance industry is faced with great to use the right tools like CRM to augment the
challenges. However the changes brought about chances of success in this industry. Banking
by the industry on successful implementation CRM has a lot to offer this industry and can
and working is greater and hence it is imperative make a positive difference in enabling its success.
Shriram Parthasarathy
Principal Consultant, Infosys
04 Thought Paper

5. About Finacle
Finacle from Infosys partners with banks to transform process, product
and customer experience, arming them with ‘accelerated innovation’
that is key to building tomorrow’s bank.
For more information, contact Finacleweb@infosys.com www.infosys.com/finacle
© 2012 Infosys Limited, Bangalore, India, Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys
acknowledges the proprietary rights of the trademarks and product names of other companies mentioned in this document.
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