Accenture volunteers enable automation of MFIs

Accenture team's Jennifer, Mia, and Alex in action.

Every microfinance practitioner knows it requires more than funds to generate an impact in poverty alleviation. Lifting lives from poverty calls for dedication and patience—you have to be selfless in sharing your talents and knowledge.

It is hence inspiring to meet people like Alexander Anden, Jennifer Meily, and Mia Taroy—Accenture Philippines volunteers who are taking time off work to contribute their expertise to make microfinance a more successful tool against poverty.

Accenture is a global company that provides consulting services in business process outsourcing. Accenture has been active in the Philippines since 1985, and now employs about 20,000 staff in the country.

Alex, Jennifer, and Mia are the first batch of Accenture staff who will serve as pro bono consultants to MFIs seeking to automate their existing operations and client information. They are currently providing technical advice to help automate accounting and collection systems and data backup and documentation processes for Bicol MFIs to achieve greater efficiency.

They also served as the resource persons for the management information system (MIS) training.  MIS is a general term for the system of organizing and managing information about one’s business operations. The training seeks to provide MFI workers with a perspective on how to apply information technology to this essential aspect of microfinance operation.

Dan Songco, president and CEO of the PinoyME Foundation, explained:  “The training gives the MFIs a perspective on what it takes to have an automated system. PinoyME has conducted trainings like this before, but without the consultant we were not able to track its effect on the operations of the MFIs.”

“This is a unique intervention because no one else is doing this. We’ve had a lot of discoveries in our past training workshops, and one of them is how important the MIS is to both the MFI and the client. If you have a weak system, you would not know if your MFI is already suffering losses. That’s critical and what’s even more critical is computerizing that system. We’ve heard a lot of horror stories of MFIs hiring consultants to design software only to find out that it does not compliment their operations.

“The course helps them understand, ‘If you want to automate this is how to do it’. If we are able to help MFIs systematize their MIS, then we can really make the industry more efficient and we can make it grow faster and reach more poor people. The big MFIs can already afford to buy software and hire consultants. But there are only a few of those. The program targets the medium-sized MFIs who would not have the resources for automation. This is a strategic partnership with Accenture. We convinced Accenture that they can really make a difference in the microfinance industry if they partner with us in this program.”

Bicol express

The Accenture team spent April 26 to May 6 in Bicolandia to conduct training and immerse themselves in the communities they would be serving so they would learn more about the challenges that microfinance practitioners confront.  “We needed to understand the issues to know how to help them,” said Alex.

The project brought them to Legazpi, Naga, and Camarines Sur to work with the Consuelo “Chito” Madrigal Foundation, Kolping Society Philippines, Inc., Simbag sa Pag-Asenso Inc., Rural Bank of Guinobatan, Inc., and the People’s Center for Sustainable Development, Inc. It was their first time to visit Bicol, and they were graciously received by the MFIs. Aside from tours to the Mayon Volcano and the lava wall, Cagsaua Ruins, and Linon Hill, they were treated to mouthwatering meals of laing, Bicol express, and grilled blue marlin.

Technology is not enough

When asked to describe the information technology problems of MFIs, Jennifer said “Technology should not be seen as the only solution. While it allows you to achieve a lot of things, proper implementation of processes is still necessary,”

She related that while some MFIs hired programmers to turn out data management systems that were customized to microfinance activities, there was “no knowledge transfer.” The programmers did not provide users manuals, and so MFIs had to call on their services even for trivial operations. This brings about a great deal of delay or disorder in the work of MFIs as the programmers only drop in on the offices once or twice a week.

Moreover, employees who have left the MFIs have not properly passed on knowledge on the customized software. The MFI workers hence do not have the same proficiency in using the data management systems. Jennifer said: “If they don’t know how to use the system, the values they compute become inaccurate.”

The Accenture team is providing the MFIs with recommendations and templates to make their processes more efficient, as well as practical solutions to glitches like sites that go offline. The team is currently monitoring the implementation of the proposals.

“The solutions go beyond automation. There must be organization policies and human intervention,” Jennifer said.

Rising to the challenge

Alex, Jennifer, and Mia revealed they became part of the project after volunteering to Accenture’s Skills to Succeed Program. According to them, the program is meant to “enhance the skills of the employees, and is also a way of sharing their experience, knowledge, and skill with others.”

Aside from providing technical support, Accenture also donated one million pesos to the PinoyME Foundation for the implementation of a microenterprise financing program for the spouses or selected beneficiaries of Accenture’s security guards and custodians. Accenture’s 20,000 employees raised P200,000 while the Accenture Foundation provided P800,000 for the program.

The volunteers said the project was “challenging, but at the same time also very rewarding,”

“This is the first time for us to do consultations as our work in Accenture mostly involves testing, programming design, and production support. This is also the first time for us to handle local clients.”

Jennifer added: “We see giving the MFIs the groundwork for automation and solution planning as challenges. So we are not doing this only for the aim of the company, but also for personal development. By providing these free consultations, we are enhancing not only our skills in testing and programming, but also in dealing with people.”

“Moreover you tend to help people,” Jennifer said: “During the immersion when we met microentrepreneurs visiting the offices, we saw that if we help microfinance practitioners, in a way we are also helping struggling Filipinos improve their lives.”

5 Responses to Accenture volunteers enable automation of MFIs

  1. Roy G. Salva says:

    This is a great program. The expertise of Accenture is really very helpful in this project. I suggest that this would rolled out to other small and medium MFIs in the country. Goodluck!

    • Jonatan says:

      Ben, I feel that the special ntmangerears Kiva has with LAPO, Xac Bank and possibly others raise more questions than they answer. The Kiva website makes it clear where and when the funds flow, but we have no information about the conditionality you’re discussing. A few questions that jump to mind:What exactly is the relationship between the Kiva funding and the loan terms? When a donor sends $X interest-free to LAPO, LAPO must then make $X in more-flexible loans to people who would otherwise not qualify?How was this arrangement settled on? What is the expected loss to LAPO from making these more-flexible loans and is that commensurate with the size of the benefit it’s getting from Kiva? (For the arrangement I guessed at above, with an annualized interest rate of 30%, the expected default rate would have to be ~20% on the more-flexible loan to make this a break-even deal for LAPO; at a lower default rate the interest-free loan would, it seems, be partially padding LAPO’s profits.)How does LAPO demonstrate compliance?I have to say that I think the LAPO/Xac arrangement is very different from the arrangement implied on the Kiva site. Instead of Loan $X to someone it’s really Pay [some amount in subsidy] so that this person can get a more flexible loan than they could otherwise. I wonder how many more of these ntmangerears there are, and I think Kiva could be much clearer about what loans to the various partners actually mean.Note to outsiders reading this comment: please bear in mind that none of these questions would even come up if Kiva didn’t publish its list of partners, and that .

  2. DIck Pajarillo says:

    This program is a big leap for microfinance. Many MFIs will certainly benefit from this is expanded. This merits the support from various sources.

    • Yefrey says:

      This comment is on lhbaef of who emailed me his comment. He wasn’t able to post the comment himself. (If anyone else has trouble posting a comment, please let us know.) -Ben can probably answer this much better than me, but a few thoughts on the points of concern:A 49% dropout rate sounds high, but I would want a better sense of both context in the field and what it actually means. What’s the average dropout rate among MFIs, especially good MFIs? Is that even a sensible metric to use in evaluating MFIs? I’d want to see some data on this since I’m not an expert. My additional concern is that the reality is probably more complicated than are clients voting with their feet because they’re unhappy vs. are they moving up to access more formal sources of credit. Recent research has made it a lot more clear that the financial lives of the poor (who are LAPO’s clients based on their data) are complicated and involve juggling many financial products to meet their needs, mostly informal. See from the book Portfolios of the Poor. What MFIs offer is just one piece to the puzzle and the book paints a picture that shows how in many ways, informal products serve the needs of the poor much more effectively than what MFIs currently offer (often standardized products that have rigid payment schedules). In that light, it may not be so surprising that half of clients are transitory and it may not be the role or expectation that a good MFI attracts clients and keeps them forever. I think you also miss the nuance of how the poor may be using financial products. Flexible savings products are super useful in some circumstances since they can allow people to deposit and withdraw for daily purposes, but there’s a ton of literature on the value of compulsory savings products (think 401k) which help the poor save money for a lump sum such as school fees, weddings, or holidays. Restrictions may be inconvenient at some points, but they protect savings designated for a specific purpose from the needs of the daily grind. This might be why area managers are investigating the reason for withdrawal (e.g., is there really an emergency such as a health crisis that should override the client’s previously expressed desire to build up to $X to be withdrawn on Y date). Ben can provide more clarity on this, but I’d hesitate before assuming that this is a worrying factor.As always, I’m super appreciative of all the detail you include, making it very easy to follow the thinking. Page numbers for citations are so much better than just linking to a 30 page document!

  3. Katoko says:

    Having worked in the MF soectr for some years, including in Nigeria, I can confirm the NYT article is largely correct. The rates are as stated. The bank does continue to operate without a legal banking license and intermediates savings. The drop-out rate is chronic. It is highly profitable.The investors/donors to LAPO recently established a taskforce to address these issues, resulting in an independent rating by Planet Rating (www.planetrating.com). The rating resulted in a 3-point downgrage of LAPO from B+ to C+, one of the largest downgrades in MF history. MicroRate, who did the previous rating in 2007, withdrew the rating in a press release in August last year after discovering anomalies in the data provided to them by LAPO (www.microrate.com).The recent rating highlights a number of deeply concerning new discoveries. A lack of governance and internal control; the external auditor is a brother of a board member; there is no functioning back-office IT system; they provide a specific warning as to the integrity of data; high profitability with low productivity fuelled by high interest rates . the list continues. The rating is very sobering reading for anyone remotely involved with this bank.In the meantime LAPO decided to increase the interest rates. The creditor taskforce is now considering its actions.Perhaps the more disturbing aspect to this is that all this information was well known many years ago. It was published on the front page of rating reports, it was widely known by practitioners, it is not actually news at all. However, the intermediaries somehow managed to miss this data in their due diligence and reporting to their investors. Kiva recently updated its website to reflect the actual cost of capital, and yet this was known perhaps a year ago. ASN Bank were directly questioned about this in their AGM last year in Amsterdam, when a shareholder directly asked the board about evidence using the Deutsche Bank interest rate calculator suggested the interest rates charged by their client LAPO were well over 100%. They denied this flatly and published an article in their next newsletter stating rates could reach as high as 30% . The NYT, Microfinance Transparency, Planet Rating and many practitioners know this to be entirely false.Calvert Foundation and MicroPlace (SEC regulated) quickly removed LAPO from their websites. Grameen Foundation is yet to comment on how they are able to reconcile these discoveries, but particularly the discovery of interest rates of 126%, with Muhammed Yunus’s usual stance on exploitatitve interest rates. We await a formal comment from Yunus.There is little need to comment on the wisdom of investing or donating funds to LAPO. What is more concerning is whether we, the general public, can trust the intermediaries, such as Kiva, Calvert Foundation, ASN Bank etc. to invest our funds according to our goals in the best interests of the poor and report transparently. The call for formal regulation of the microfinance soectr in developed as well as developing countries is growing louder and more credible. I applaud the recent Congressional hearing in DC on microfinance, and hope the next hearing will result in tangible improvements in this regard.

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