Technology to reduce poverty by PlaNet Finance

NASSCOM Foundation "Catalysing change through ICTs”

15th February 2008

PlaNet FinanceONE MISSION :TO REDUCE WORLD POVERTY

By providing the poorest populations with access to financial services, the financialintermediaries, including banks, cooperatives, Non Governmental Organizations(NGOs) and the Microfinance Institutions (MFIs), have shown for thirty years thatmicrofinance is one of the most efficient tools to fight poverty.

The PlaNet Finance Group is an International Solidarity Organization, which develops and promotes networks of MFIs, experts and local players in order to support the development of professionalprojects for men and women who wish to get out of poverty with dignity.

Overview of Microfinance sector

Microfinance sector, a very strong potential of increase-10 000 Microfinance Institutions (MFIs) in the world: saving and loan cooperatives, local or international NGOs, village banks, programmes set-up by international intitutions etc.

- 2.5 billion people (30% of worldwide population), currently lives with less than 2 USD/day,

-150 million clients in 2006, 84% whom are women,

- potential market estimated to 3 billion people,

- 66.6 million clients of microfinance belong to the poorest of the poor,

- The total outstanding portfolio estimated at USD 30 billion in 2006,

- Annual growth of microfinance: over 30%.- The potential is estimated to 1.5 billion beneficiaries and 300 billion US dollars

Sources : CGAP, BIT, Microcredit Summit

1,000 microfinance institutions supported, 10 million micro entrepreneurs,

PlaNet FinanceONE DESIRE:TO BE CLOSE TO ENTREPRENEURS ALL OVER THE WORLD

THE ANSWER:A LEADING ORGANISATION IN MICROFINANCE

38 permanent offices, projects in 60 countries,

557 collaborators,90% in the field.

PlaNet FinanceONE COMMITMENT:6 ACTIVITIES TO DEVELOP THE MICROFINANCE SECTOR

The PlaNet Finance Group responds to all the needs of those involved in microfinance by providing them with a wide range of services.

1. TECHNICAL ASSISTANCE: AT THE CENTREOF PLANET FINANCE’S ACTIVITIES

2. PLANET FINANCE INVESTMENT SERVICES (PlaNIS): FINANCIAL SERVICES

3. PLANET RATING: THE RATING AGENCY

4. MICROCRED: THE INVESTMENT COMPANY

5. FINANCITES: THE VENTURE CAPITAL COMPANY OF SENSITIVE URBAN NEIGHBORHOODS

6. PLANET GUARANTEE: THE MICROINSURANCE EXPERT

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Railw ays Aviation Internet MobilePhones

Technology

Years to Spread Worlwide

Microfinance and Technology 2 FAST-GROWING SECTORS

The newest technologies will reach the most remote areas in max 10 years

Technology is spreading faster and faster

Promising Technologies

Increasing REACH

ATM : allows to reach people that do not have access to the traditional banking system like people from remote rural areas

Wimax : fast internet technlogy. its deployment does not need heavy, complexe or expensive infrastructures. It can provide cheap internet access for MFIs.

Increasing SECURITY

Biometrics and smart cards : Biometrics technology measures an individual's unique physical or behavioral characteristics, such as fingerprints. Coupled with a smart card it increases security and access to bank accounts.

Microfinance and Technology 2 FAST-GROWING SECTORS

Increasing EFFICENCY

PDAs : Personal Digital Assistants (PDAs) are small, handheld digital computers that can run specialized programs to manage MFI and client data and perform financial calculations. Loan officers can even fill out loan applications forms on the PDA and calculate the indicators used for loan review and approval.

Episurveyor : Free, open source tool enabling anyone to very easily create a handheld data entry form, collect data on a mobile device, and then transfer the data back to a desktop or laptop for analysis

Scoring Technology :Scoring technology analyzes historical client data, identifies links between client characteristics and behavior, and assumes those links will persist to predict how clients will act. The technology can help a microfinance institution (MFI) analyze how its clients have behaved in the past to make more reliable loan application decisions, devise more effective collections strategies, better target marketing efforts, and increase client retention.

Promising Technologies

Microfinance and Technology 2 FAST-GROWING SECTORS

Increasing EFFICENCY

Voice Recognition : Interactive Voice Response (IVR) system helps people to quickly retrieve information a short distance from her home rather than traveling to the nearest microfinance institution (MFI) branch office and waiting in line. Computer Munshi : In India, micro-finance is primarily administered through self-help groups (SHGs). To increase efficiency, the Computer Munshi program, through which a community-based computer entrepreneur provides accounting services to about 200 SHGs for a reasonable payment. the Computer Munshis are better trained in both accounting and computer skills.

HISAAB : group-level microfinance software designed for illiterate and uneducated users.

Ekgaon CAM : Mobile information services framework for rural areas in the developing world. Reads orally the information written on paper. Facilitate information exchanges between MFIs and Customers.

Microfinance and Technology 2 FAST-GROWING SECTORS

Promising Technologies

Information and Communication Technology can bring significant improvements in Microfinance

Microfinance Institutions become more competitive

decrease of interest rates reduce the risk reduce transaction costs

Poor people are better secured and improve their life conditions

reduce their over indebtness have better acces to financial services decrease their credit expenses gain time

Microfinance and Technology 2 COMPLEMENTARY SECTORS

PlaNet Finance Information & Communication Technology Program’

1) Mission : Bringing significant improvements in microfinance technology to

enhance microfinance service to poor people.

2) Vision :

Develop Information and Communication Technology systems to reach 5 million

micro entrepreneurs in 2011 in 10 countries

3) Strategy and aims: Develop a global IT program in 3 main domains :

Mobile Banking: mobile phone payments will climb from $3.2 billion to $37 billion in 2008

Management of Information System: to reduce risks for MFIs and costs for population

Credit Bureaus: to decrease the indebtness of borrowers

PlaNet FinanceInformation & Communication Technology ProgramMobile BankingDifficulties encountered by poor people:

They have small amounts of money, providing them financial services is quite expensive

They live in sparsely populated areas,

They rarely have documented credit histories.

Mobile Banking help:

Supporting MFIs to reduce transaction costs,

streamline control procedures, improve delivery

process and increase transaction volume,

Enabling microentrepreneurs to process credit

reimbursement, routine deposits and withdrawals,

fund transfers and balance enquiry transactions at

a nearby outlet.

Our ambition:10 countries, 30 MFIs equipped with mobile banking solutions in 2011

PlaNet Finance is already successfully leading Mobile Banking projects in Egypt and Senegal with its partner, a Global Telecom Leader : Orange

Focus on Mobile banking in Egypt

In Egypt, the microfinance sector reached an active base of 1 000 000 clients, most of them being part of the informal economy

Mission to overcome many regulatory constraints as the cost and outreach benefits and seek local partners/allies as necessary.

Partners : Mobinil, ASBA, Orange

PlaNet FinanceInformation & Communication Technology ProgramManagement of Information System (MIS)

MFIs have difficulties in managing their portfolio,

industrializing their process, following their

growth

PlaNet Finance is already successfully implementing

its Management of Information System for

Microfinance Institutions: MicroFit

One of the best Management Information

System for mid-range MFIs 12 MFIs have MicroFit for more than 1 million

clients 50 MFIs have shown their interest in implementing

MicroFit

Our ambition:  10 countries and 30 MFIs equipped with Microfit solutions in 2011

A good Management of Information System can:

• Reduce risk for Microfinance Institutions by improving good governance,• Reduce cost for customer by decreasing time to process loans.

PlaNet FinanceInformation & Communication Technology ProgramCredit Bureaus

PlaNet Finance has developed its own software for Credit Bureaus :

• PF has already lead 2 credit bureau projects in Benin and Morocco

• PF is currently leading a credit bureau project in Egypt

Credit Bureaus software permits to provide a better security to MFI’s clients :

• Improving MFI’s coordination

• Finding quickly borrowers’ insolvency

• Reducing Interest rates by reducing risk

• Facilitating the loan grants by better controlling the risk

• Reducing over indebtness or cross indebtness of 3 millions microentrepreneurs

Our ambition : 4 countries equipped in 2011

PlaNet Finance Information & Communication Technology Program’Can bring significant improvements in Microfinance

Make informed decisions

Lower operating costs

Streamlining reporting

Speed up access

Reach new customers

Benefits

Increase Good Governance

Decrease Interest rates

Increase Transparency

Increase Customer Convenience

Increase Outreach

Consequences

Partners of the PlaNet Finance’s IT Program

They already help us in terms of:

Financing PlaNet Finance’s projects

Giving to us their technology expertise

Offering us their own solutions

Sharing their network

PlaNet Finance13, rue Dieumegard

93 400 Paris Saint-Ouen France

Tel : + 33 (0)1 49 21 26 26Fax: + 33 (0)1 49 21 26 27

PlaNet Finance India and South AsiaDLF phase III, T22/10

Gurgaon, HaryanaIndia

Tel : + 91 99 71 16 45 23 Contact: Regional director Delphine Thizy

dthizy@planetfinance.org