ACCION PortaCredit: Increasing MFI Efficiency with Technology
Efficiency is critical for microfinance institutions (MFIs) to cover the high costs of offering micro loans and make a profit. Therefore, MFIs are doing everything they can to reduce overhead expenses and streamline the loan application process, enabling them to serve the poor more cost-effectively. Technology offers significant opportunities for MFIs to achieve breakthroughs in efficiency. One of the most promising MFI technologies currently available is ACCION’s PortaCredit™, which speeds the loan application and approval process by enabling loan officers to collect applicant information on handheld personal digital assistants (PDAs) and directly upload the information into the MFI’s central database.
This document shares the achievements, challenges and lessons learned from ACCION’s PortaCredit program based on their experience at Banco Solidario in Ecuador and BanGente in Venezuela. The main goals of PortaCredit are:
- To lower the operational costs of an MFI.
- To automate and standardize the credit application process.
- To increase the productivity of loan officers and other staff.
Preliminary estimates of cost- and time-savings, gathered through retroactive interviews with management and staff of each organization are provided in this summary.
The PortaCredit software installed on the PDAs of loan officers replicates and expands on the paper-based microloan application. It allows loan officers to use their PDAs to directly input information collected from applicants, make loan calculations, and pre-approve loans while at the client’s business or home. When the loan officer returns to the branch office, he simply uploads the data to the MFI’s central database. Loan officers can also use PortaCredit to organize their schedules and track client payment status. Apparently the operational staff love it and would never choose to go back to paper-based systems.
The remainder of this edition of InSight describes the software in some detail and explains the process that the two banks went through to introduce the new system. The synchronization between the PDAs and PCs and the interface between the PCs and the institution’s central MIS has progressed as improvements have been made to the available technology. The synchronization between the PDA and the PC must be straightforward and smooth. More importantly, the complicated interface between the PC and the MFI’s central database must be programmed accurately.
Estimates suggest that loan officers are able to disburse a new loan in just half the number of cumulative hours it took using the traditional application and disbursement methodology. Loan officers also report that PortaCredit allows them to provide a new loan to a repeat client in 20% less time than it took previously. Banco Solidario’s back office staff report that they have decreased the time dedicated to the lending process by almost one quarter. Both BanGente and Banco Solidario also report impressive cost-savings in their non-salary operational costs.