Innovations for Poverty Action

Wednesday, October 19, 2016

As an event partner for “Financial Inclusion Week 2016”, VisionFund responded to the theme of ‘Putting clients first in a digital world’ by presenting a webinar to consider the question: What’s next for digital financial services?

The session discussed how VisionFund is developing and using technology to provide microfinance services to smallholder farmers in Africa and beyond. The concept of offering microfinance to smallholder farmers is not new, however, traditionally this service has been cumbersome and expensive due to the remote location of clients, the risk of agricultural output and the volatility of agriculture as a source of income for clients.

VisionFund is focused on developing digital systems to reach rural clients efficiently, making processes easier for staff and clients alike and ultimately increasing financial inclusion of this vulnerable group. Efficiencies provided by technology mean loan officers are able to serve more clients, and as a result these clients don’t have to spend precious time away from their farms and businesses visiting branches to conduct repayment transactions. It also means that staff have more quality face-to-face time with clients, as opposed to being buried in manual paperwork.

This year, VisionFund is taking rural digital financial services one step further and piloting a Loan Customisation app that automates the loan calculation process for a smallholder farmer. Loan officers simply input the key information about a client’s financial cycle, and an algorithm draws data from over 80 data points to calculate the ideal loan cycle for that client based on key elements like their crop type, location, land size and household expenses. This approach and evaluation helps to prevent over-indebtedness while ensuring healthier repayment rates and client satisfaction. Early testing has shown this system also leads to improved Social Performance measurement, because information is captured in one system, and loan officers can spend more time discussing impact measures as opposed to calculating appropriate loan size.

To listen to the full session explaining the approach, follow the below links (please note, both sessions are the same but were hosted at different times to accommodate time zones):

Webinar One - 9am UK time Play recording (1 hr 2 min 29 sec)
Webinar Two - 5pm UK time Play recording (1 hr 8 min 48 sec)

Over 100 people attended the VisionFund webinar, including representatives from Kiva and the World Bank. Healthy discussion followed each presentation, making it clear that Digital Financial Services is an area rife with industry interest and enthusiasm. The challenges are significant, however the opportunity to address the needs of this vulnerable group is even greater.

VisionFund will continue to keep the industry informed of developments as the pilot rolls out in Tanzania.