Advantages of cloud banking software in microfinance

By February 4, 2016Blog

At Musoni we get a lot of questions about the benefits of cloud banking, and we thought it would therefore be useful to write up a short overview of why we think it’s the future, while also debunking some of the more common myths.

Source: http://tinyurl.com/abhishekghosh

Source: Abhishek Ghosh

Over the last few years the quality of internet connectivity across the globe has increased, while the costs of both connectivity and software in general have decreased. Alongside this, financial organisations have come under increasing pressure from fast-moving start-ups, banks looking to serve lower income customers, and MNOs launching financial services. It’s therefore more important than ever to keep costs low, react quickly, and leverage the latest technologies to stay ahead. Fortunately, with award-winning systems like Musoni, it is now easier than ever for microfinance institutions to use technology to enhance their operations, make the most of new innovations and accelerate entry to new markets, offering services that weren’t possible before.

A recent article in Banking Tech listed some of the reasons why so many financial institutions are making the switch:

  1. Reduced costs: Being in the cloud means banks do not have to invest heavily in dedicated hardware, software and related manpower. Updating the IT infrastructure becomes much easier and is possible to be done by skilled workers remotely, rather than having to visit each branch in person
  2. Flexible, scalable: Cloud banking gives banks the ability to respond quickly to changing market, customer and technological needs. They can scale up and scale down technology according to requirement. The ability to respond quickly provides a real competitive advantage.
  3. Improved efficiency: Using a cloud system requires your core banking applications and processes to be standardized. This ultimately means technology and business operations can be much more closely aligned.
  4. Continued innovation: A cloud based system also makes using new and bundled products and services easier to develop and launch, either on a stand-alone basis or in partnership. It eliminates procurement delays for hardware and software. Banks are also assured that their software is always of the highest quality and up to date. At Musoni for example we have been able to quickly and easily integrate mobile money transfer services, an SMS module, a tablet application for field based data capture and credit scoring. This would have been much harder to achieve if working with a legacy, hosted system.

One example of an organisation that saw huge benefits by switching to the cloud is Virl Microfinance in Zimbabwe, which has expanded by over 100% since switching to Musoni, and simultaneously reduced their PAR by 50%. Another is Hayman Capital in Myanmar, who have grown to serve over 8,000 clients in their first 6 months of opening.

As we mentioned above, by using cloud banking technology, its easy to leverage on the latest technologies to improve your product offerings. One of the advantages that the Musoni System brings is our unique SMS module, which quickly and easily enables organisations to send personalised (and automated) payment reminders to clients before payments are due. Another is the Musoni tablet application that allows loan officers to operate in the field without clumsy paperwork or an internet connection. In 2015 Accion International carried out a case study into the Musoni tablet app, and concluded that loan officer productivity increased by 68% and resulted in increased income of $86k in its first year. Read more about it here.

While the advantages of cloud banking are many, its not uncommon for organisations to have concerns about switching to the cloud. One organisation in Kenya, now using the Musoni System, reminded us that while cloud computing brings many advantages, clouds are also “where the rains come from!” Here, we explain how Musoni addresses these concerns:

  1. Security and compliance: It is important to maintain the security of data at all times. As Musoni follows the ISO 27001 Information Security Management Protocol, MFIs using the Musoni System can be confident of the safety of their information. You can read more about our extensive security measures on the ‘Security & Hosting‘ page of our website.
  2. Reliability: MFIs also have to be sure that the cloud system will be accessible when needed and at an acceptable speed. The Musoni System is hosted in the AWS datacenter in Ireland. AWS datacenters have multiple, geographically separated connections to the internet. AWS contractually guarantee Musoni an internet uptime of 99.97% which is the same guarantee we provide to customers. This means that the risk of not being able to access applications or databases is extremely small.
  3. Connectivity: The Musoni System has been designed to be fast even in areas of extremely low bandwidth (often as low as a few hundred kilobytes a second). We work with organizations in remote rural areas and do not have any negative feedback about the speed of the connection. In addition, the Musoni App works in both online and offline mode enabling field offers to continue working without any connectivity at all.
  4. Regulation: The rules governing the CBS vary from country to country. Musoni Services makes an effort to be cognizant of the prevailing laws in each of the countries in which we operate, and we also spend time presenting to the Central Banks so that they are fully onboard with our offering.

If you would like to see how the Musoni System works in practice, simply request a demo by clicking on the link below, and we’ll be in touch straight away:

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