National Microfinance Study of Sri Lanka: Survey of Practices and ...

The introduction of mobile Field Officers will bring any formal bank closer to its
clients. This is very important in view of closing the information gap with the
MSME sector. Field Officers are specially trained for the interaction with the
small business community.
They perform marketing, loan enforcement and general liaison functions. Do they
pay off? Data from RBIP suggests so: the additional bank revenues generated
through improved financial linkages with the MSME sector both, in terms of
volume and quality, largely exceed the bank’s costs for field officers in terms of
salaries.
With the launching of a Multi-purpose Small Business Loan called "People's
Fast", transaction costs for borrowers and the Bank could be reduced. The
innovative features of the loan product are: (a) Field Officers do most of the loan
processing themselves, (b) borrowers can also be new customers, (c) the loan
application procedure is simplified. Since the loan application is quick and easy,
MSME demand for the product is substantial, even though the loan is offered at a
market related interest rate.
The conventional tools of a Management Information System (MIS) provide
information on a bank's performance. RBIP has adjusted the MIS and combined it
with GIS and Impact Monitoring to extend its usefulness.
RBIP is the pioneer of Geographic Information System (GIS) applications for
Microfinance. With a unique database the Bank is now enabled to target its
services to defined customer groups. This Customer Approach Strategy should
not only be interesting to bank management but also to development donors since
it allows to draw detail conclusions on bank outreach.
There are also a number of other applications such as defining service areas and
directing resource allocation (e.g. location for ATMs). All in all, the use of GIS in
Financial Systems Development is just in the beginning. This instrument is
certainly more applicable in relatively advanced financial markets where banks
have to compete for the best customer satisfaction. Issues like high introduction
and maintenance costs, data availability and reliability still have to be addressed.
Impact Monitoring has become somewhat fashionable with development
specialists recently. However, there is a lack of experience with this tool in the
"field". RBIP is looking for new practicable ways and means to integrate impact
monitoring into the mainstream banking operations.
By combining MIS, GIS and Field Officer reports, the RBIP is aiming at cost
effective monitoring of lending impacts on MSME customers and the Bank itself.
It will depend on the Bank's perception of the usefulness of this monitoring
information whether it will eventually completely take over the impact
monitoring function from the project.