FINCA Microfinance Holding Company LLC (FMH)
Odensa Chitambala
FINCA Microfinance Holding Company LLC (FMH) is socially responsible network
of microfinance institutions and banks spanning five continents that provide responsible
financial services that enable low-income entrepreneurs and small business owners to invest in
their future. It is a pioneer in delivering loans and offering savings among other financial
services in some of the most remote markets in the world. In that line, FMH empowers people
to start their own businesses, create jobs and improve their quality of life (FINCA, n.d.).
Among the key stakeholders of FMH are FMH’s investors, FMH employees, and the borrowers
or the so-called clients. FMH’s investors are led by FINCA International, Inc. a Washington,
D.C.-base not-for-profit organization which theoretically could be said to be the owner
(FINCA, n.d.).
The objective of FMH is to provide financial services to help encourage entrepreneurs in
impoverished nations to act on their ideas FMH. This is motivated by FMH’s mission to
alleviate poverty through lasting solutions that help people build assets, create jobs, and raise
their standard of living. FMH has put in place a number of activities to see to it that this
objective is achieved.
Critical activities that a project that must perform to meet the organization's objective(s) while
remaining solution independent are called business requirements. One of FMH’s main activities
is to provide critical financial services to exclusive populations thereby achieving financial
inclusion and improving standards of livings. Another activity is to help clients earn business
income and create jobs which in turn creates employment. Lastly, it empowers clients to achieve
their personal goals which in many countries of its operations contributes to women
empowerment and an increase in personal aspirations.
To quantify this impact, FMH uses research to rigorously monitor the social performance of its
work to ensure that it is delivering deep and meaningful impact for its microfinance clients.
FMH seeks to understand the complete customer experience. This includes the benefits its
clients are receiving and the ways in which it may improve to better serve them. FINCA’s
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customer research aligns FMH’s programs with its mission and provides useful intelligence for
enhancing our work (FINCA, n.d.).
To effectively run their business FMH has in its organization intermediaries known as Loan
collectors. As the name suggests they are responsible for the collection of loans. On behalf of
the clients acts as users and have the following user requirements; Loan collectors shall be able
to log on which is a security feature. Loan collectors shall also be able to record receipts from
clients and to check balances. The system is web based for the administrator. The system will
also be mobile phone based for the use of Loan collectors.
As it is FMH’s objective to provide financial services to communities that in most cases do not
possess tools that would enable passive data collection such as smart phones, let alone possess
knowledge that would enable them to download apps that would provide information about
their financial behaviour, FMH does not conduct any kind of passive data collection.
FMH takes business rules with optimal seriousness as they define conditions which must hold
true in specified situations. For instance, a decision-making hierarchy for loan processing is in
place, where the values of certain loans are tiered to determine which managers can approve.
Another typical example is one which indicates that a loan applicant shall not be less than 18
years old. Lastly, FMH loan application forms have a list of questions to which if the answer is
no the applicant is excluded.
As for functional requirements, an administrator shall be able to create, modify and delete user
accounts. He also shall be able to create, modify and edit information about clients.
Additionally, he shall be able to view information about clients as well as that of borrowers. He
also shall be able to view/track information about transactions. That is, receipts, and loans.
Finally, he shall be able to view reports about receipts and loans.
On the other hand, non-functional requirements state that the system cannot be used without a
database and without internet connection. Moreover, loan collectors need smart phones to use
the mobile app. For optimal performance Google chrome browser is most preferred.
To make the finance team more efficient and improve business operations the company intends
to use enterprise resource planning (ERP) systems which integrates and automates essential
financial and operational functions and provide data insights from sources. This will be
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advantageous to the company as it will prove to be cost effective based on the features that ERP
will provide the company with.
One of the features that is of huge importance is automation. This feature automates daily,
tedious tasks, including loan application, payroll, accounting, reporting and more. As a result,
it cuts down on the time that is typically spent on these processes, allowing staff to focus on
more important assignments. Optimizing the company’s employees’ time ensures more
effective workdays. Automating FMH’s processes can also reduce human error. Even small
errors can end up costing the business, so the best is to eliminate them by using automation.
Considering that the company’s customer base has been growing tremendously a necessary
feature to include is customer relationship management (CRM) software. This tool is beneficial
for a number of reasons. One reason is that it is an excellent option for FMH since its customer
base has become too large for spreadsheets. Also, CRM tools centralize customer information
within an ERP system which allows quick access when working with other system parts. For
instance, an integrated CRM will enable Loan collectors to access loan information and
borrowers’ payment date when processing loans that are due for payment. Another feature
worth integrating is the accounting feature. Financial management is one of the most critical
functions of any business. As such, strong accounting tools are a must-have. ERP systems help
manage accounts payable, accounts receivable, fixed-asset management, risk management—
which is of key importance to lenders, and tax management. These are all functions that are
vital for FMH hence the need. Additionally, an ERP system improves the accuracy and
processing time of the accounting functions.
Data is the lifeblood of any financial institution. As such, effective data management is a prerequisite. Without it, organizations can’t leverage all the data that they amass from day to day
across channels, products, and services. It is for this reason that FMH will invest in the use of
document management system (DMS), specifically Drobox business. A DMS is a system used
to create, store, manage, and track electronic documents and images of paper-based documents
through software. Dropbox has a number of features which make it suitable for use by FMH.
To mention a few, it has security features such as customizable restrictions, and has the ability
to store various file types. Additionally, it has the ability to document history for auditing and
tracking.
With the use of a content management system (CMS) content can be created, scheduled, and
managed. One major advantage of CMS is that it is collaborative in nature, allowing multiple
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edit content to be published. A CMS can be accessed from anywhere by any number of users.
A CMS which FMH will use is WordPress.
Some of the data that could help improve FMH’s business assets is client or borrower data
which can provide personalized experiences. This could enhance retention of clients with a
good credit score.
In an era of numerous technology advancements, it is vital to keep all data secure from all forms
of manipulation. The use of advanced security tools come in handy for FMH. Some of the
solutions that these tools offer are data encryption, data loss prevention, and dynamic data
masking. These tools ensure privacy, confidentiality, and prevent unauthorized use of data or
information.
As the evidence that FMH needs an ERP system is overwhelming, the company has decided to
procure an ERP system to effectively run its business activities. As the company’s goal is to
provide financial services, mainly loans to people with low-income, and has seen a drastic
growth in its customer base. It is essential to invest in a system that allows for a larger coverage
software for its customers. Another key factor is the geographical locations in which most of
the subsidiaries are placed. There is not much technology advancements in these countries as
such employees have huge manual workloads, which leave them exhausted and lead to many
inefficiencies in their output. To rectify this an ERP system which allows automation could
save them a lot of time and work thereby making them more effective in the executions of their
duties. The aforementioned features drive mission-critical business process success. These
functionalities help organizations quickly achieve strategic, compliance, and revenue
objectives.
A critical aspect of evaluating, prospecting, and shortlisting ERP solutions for a business is to
understand the total cost of ownership. Having taken that into consideration, FMH has
forecasted that it would be costly to build its own database servers. As such, the company has
opted to outsource database servers to a cloud provider. Outsourcing will require cost of
training the workforce to be able to use the ERP to the best extent as well as that of outsourcing
the function whereas building would entail more costs.
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References
(n.d.). Retrieved from FINCA: https://finca.org/why-finca/mission-vision/
(n.d.). Retrieved from FINCA: https://www.fincaimpact.com/about/investors/
(n.d.).RetrievedfromFINCA:https://results.finca.org/?_ga=2.51352044.493070807.163520475
8-2083534306.1635204758
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