Boosting efficiency and profitability through Instafin’s bulk actions

According to Microcredit Interest Rates and Their Determinants: 2004–2011, operating expenses drive approximately half of microfinance institutions’ (MFIs) and microfinance banks’ (MFBs) costs. Operating expenses add up to be more than what MFIs and MFBs are spending on the cost of capital and loan losses. While operating expenses include a variety of costss — everything from office supplies to salaries — efficiency can largely determine how much the institution spends on its daily operations.

woman with notebook on desk

Building efficient processes to serve large client bases

Efficiency is especially for financial institutions who lend small loans to a large client base of individuals. Financial institutions like MFIs and MFBs need volume —  lending to a large client base — to be profitable while still disbursing appropriate loan sizes. To build a large client base, MFIs and MFBs must also be able to process a high volume of transactions that move small amounts of money.

As summarioed by CGAP in their interest rate forum, “The point is that as loan size increases, operating cost per loan also increases but at a less than proportional rate. It usually costs more to lend and collect a given amount of money in many small loans than in fewer big loans.

Introducing bulk actions to boost efficiency

MFIs and MFBs are continuously serving their clients’ regular, day-to-day needs: creating loans, getting loans approved, disbursing loans, collecting loan repayments, allowing withdrawals and deposits. Typically, field officers or credit officers are responsible for facilitating these transactions for their clients.

One way MFIs and MFBs are streamlining these processes is through technology designed for efficiency. MFIs and MFBs are implementing modern core banking systems that allow for bulk actions. Bulk actions enable field officers to serve a group of clients more efficiently.

Take the following example: A field officer goes to a lending center to serve six individuals who are part of the same lending group. Rather than entering data into their banking system or software and transacting six times, they field officer could do this in bulk — through one transaction.

group lending center

Instafin’s robust bulk action options

Oradian’s cloud-based core banking system, Instafin, allows financial institutions to improve and speed up its daily operations through bulk actions. Instafin supports officers multiple bulk actions including:

  • Repayments  
  • Deposits
  • Withdrawals
  • Loan creations
  • Loan approvals
  • Loan disbursements
  • Import of transactions (via Excel file)

Processing loan applications and repayment in bulk

Instafin allows field officers to create, view, approve and disburse loans in bulk. All information related to the loans is visible on one single screen and can be filtered by organisational level. This makes it possible to release quickly and efficiently. Before disbursing a loan, field officers can use the loan simulator to provide the loan client with a simulated repayment schedule to provide them the information on what the schedule will look like.

After disbursement and the loan is active, all information is available and updated automatically with every transaction. The remaining amounts to be paid including the principal, interests, penalties, fees and their due dates are visible.

Instafin handles all types of repayments with flexible options for loan products:

  • Repayment in full
  • Partial repayment
  • Bullet repayment
  • Regular amortised repayment with or without interest recalculation

Bulk import of transactions can be done using import transactions feature, allowing an unlimited number of repayments taking place at once.

Work with Oradian to build more efficient processes

In addition to helping you craft a technology strategy to address your business, goals, challenges and opportunities, the Oradian team can help you review your business’ processes and operations. We identify which areas of your business and which processes can be improved and how, using global best practices.

Contact us for more information about building efficiency into your daily operations