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Oradian’s Core Microfinance System- Instafin Platform

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peter ugwu
 Development Exchange Centre (DEC), Bauchi State
Development Exchange Centre (DEC), Bauchi State

SPECIAL REPORT:

Banks and Core-Systems Implementation

The core banking solution market is currently going through an exciting phase. Experts have predicted that the changes made at this point in time are going to shape the future market. Lying at the heart of the industry are customer appreciation and prediction of their needs. Banks and financial institutions using core banking systems require constant innovation - global yet localized product offering, low cost solutions, and simpler yet futuristic products to be handled by complex systems, with growing regulation and ever changing market environment.

Therefore, the challenges include building seamless product and localizing it, new features introduction on a constant basis,compliance,wide range of options (parametrization) and openness to customer’s future offerings– in short: one stop software.

These are the reasons why Oradian todayranks amongst the most forward-thinking innovators and entrepreneurs in the world of business and finance.

Enabling More, Nurturing Simplicity
Oradian,Croatian-based IT Startup is causing “disruption” at the core microfinance platforms, aslso known as MIS or management information systemmarket. Guided by aboard of advisors, distinguished team of technologists, finance experts, economic development specialists and practitioners who were busy creating a technology ecosystem to address the very real challenges facing our customers, Oradian has created Instafin- the world's first true Core Microfinance Platform.

Essentially, Instafin has turned out to be the solution to challenges-facing microfinance institutions around the globe; it was designed specifically for financial inclusion, by experienced practitioners led by Antonio Separovic, Onyeka Adibeli, Julian Oehrlein and Andrew Mainhart, the co-founders.

By virtue of being a Software-as-a-Service (SaaS) provider, Oradian team is aligning its incentives with those of the customers, creating a win-win scenario by putting the "Service" in Software-as-a-Service.‎

Oradian team is creating the ecosystem for financial inclusion based on the philosophy that technology should be a platform that nurtures both customers and a vibrant 3rd Party marketplace of solution providers. The Oradianecosystem is designed to allow management to tailor the available features according to their specific requirements. The Oradianecosystem is also about how we will grow and change for our customers - now and into the future.

It is evident that slowly, but surely, Instafin is radically lowering costs and enabling scalability for financial institutions serving the base of the economic pyramid of Microfinance institutions in Nigeria, while also penetrating other African countries.

Instafin
Drawing onthe software developers’ deep understanding of the market andcustomer’s needs, Instafin combines key functionality (such as administration, security, accounting, loan portfolio management, & deposit tracking) with state-of-the-art features in a user-centric and powerful way. With Instafin as the keystone, customers like the Development Exchange Centre (DEC) Bauchi State, Nigeria, are already reaping the full benefit of the Oradian experience in growing their businesses. A trial will convince you!

‎Which Features Distinguish Instafin from Other Financial Implementation Systems?

Nigeria CommunicationsWeek recently visited the Development Exchange Centre (DEC) Bauchi State, Nigeria, to share experiences on the Instafinimplementation, maintenance costs, level of innovation, challenges and the future plans with regards to the Centre’s relationship with Oradian.

Jubril Makka, Head of Microfinance, Development Exchange Centre (DEC), Bauchi State, recalls how the journey started. “First, I met Antonio Separovic, the founder/CEO ofOradian in Lagos. He was well prepared, probablyhe had already conducted a background check on DEC. So, after the first meeting, we arranged for Instafin presentation to DEC management. Back then we were reviewing our Management Information System (MIS). After the presentation, we became interested in the solution. We met in December 2012 and the pilot project commenced in the first quarter of 2013. We were particularly attracted to that solution because it wasn’t software we would buy off-the-shelf. We have had bad experiences in the past with other solutions. So, we contributed to the designing and development of this particular MIS in through collaborative development with Oradian”.

In summary, the choice of Instafin was necessitated by the institution’s aim at providing a robust microfinance platform to drive its expansion drive to provide suite of services and business operation as well as support the commitment of DEC to the achieve excellent service delivery in the microfinance industry.

According to Makka, DEC started implementing Finance Solution in 2007 with 25 licences and by 2013 they have grown to 70 branches. “Even the 25 licences we had for 25 branches were not fully implemented. Thus far, it was not meeting up with our demand”.

What Influenced DEC’s Decision To Migrate to Instafin software?

Atiku Victor Usman, DEC’s IT manager: “One of the things was timely reporting. DEC looked at other Core Banking Systems and Instafin suits us much better because it enables us to be involved with the development of a system that provides the best fit for the organization.
Noteworthy fact is that the previous MIS adopted by the Centre could not automate all the processes, thereby complicating the situation.”

He also noted that, “In this age of aggressive competition, institutions must concentrate in their core business in microfinance, attracting new customers and retaining old ones using the tool of excellent service delivery as well as reduce their cost of operations”.

What Other Reasons Motivated The Adoption of Instafin?
Usman explains: “We had manual information system where everything was hand-written. At month end, the branch manager sends the report to the area manager, updated with information obtained by the area office, computes it in Microsoft Excel template and moves it to the district office. A Divisional MIS officer consolidates the reports before sending them to the head office. It was a very complicated process, time and resources wasting, full of errors and data misrepresentations. These are monthly reports. For instance, a report that ought to reach management at June 30, will be ready by July 12 or even 15.
“By the time these reports are delivered, some indices might have changed and it becomes awkward situation. So, that wasn’t good enough. Initially, we adopted Financial Solution because of the pool of foreign donors and partners requiring accurate reports. So, in the long run and as we expanded, it became even more difficult to apply. Then it implies we needed another system.Therefore, we had the consortium came in and did the performance analyses. At the end, the recommendation was either we re-engineer the FS or we get a core-banking system which is Software as a Service (S-a-a-S). So, we decided to go for SaaS. In this particular case, it should be cheaper and fit into our investment plans and services. That was how we ended up with Instafin.

The Risks of changing the Core System
Makka said, “There weren’t many complications. The issue was typically the cost, because we were migrating from one MIS to another. The reason why the complications were reduced was because we ran both systems in parallel in the process of migration across branches; continuing with the former system while migrating to the new one. It was only once we fully migrated that we ditched the previous system completely”.
DEC is already counting the gains following the adoption of Oradian’s Instafin. Makka added: “In terms of implementation, the biggest change we have witnessed is that it’s faster. It took us almost five years to implement the former system, and even when we were managing only 25 branches it wasn’t serving us optimally, so we had numerous other branches without automation. But with Instafin, after the pilot program, in one single year we have achieved almost 90 per cent implementation”.

What are the cost benefits?
“Yes, it does have a certain cost implication, but on the long run, it will surely pay off. Our short-term expectations for the system are to aid us in achieving our expansion plans faster. The more you grow, the more revenue you rake in, and that will minimize the costs. The focus of every organization in MIS is accurate documentation and reporting. With very reliable figures, you can scale-up your income generation and productivity level. That was the primary purpose of adopting Instafin. So, at regular intervals, we can measure the impact on productivity and income; through that you can even re-invest and re-invent your services,” Makka noted.

How accessible have your branch offices become?
“One unique selling proposition of the Instafin solution is that we do not need to buy licenses to get the other branches served. We only need to access Instafin via internet, because it’s hosted in the cloud, so all the branches of DEC cue-in their data, it’s that simple! So, from the headquarters we can access real-time transactions in branch located far away, for instance in Kebbi State. When equipped with information on performances and transactions done from each branch, the stress of waiting till month end to gather reports and take decisive actions are reduced to the barest minimum,” the Head of Microfinance said.

Are You Saying There Are No Hitches In Your Daily Operations with Instafin?
“If we can obtain data from every branch simultaneously, of coursemost of the challenge has been dealt with. The nature of our operations makes it very important to know the status of every branch without delays. Each day, as transactions are consolidated, they are moved to the next level of reporting. So, this morning when I opened the system, it was able to tell me the status of a particular branch at the close of work yesterday. That is a big relief. Subject to whatever clarification, any branch that is not living up to expectations will be notified instantly. So, the feedback mechanism is superb,” he told Nigeria CommunicationsWeek.

In What Ways Using Instafin Curbs Financial Fraud?
Usman said, “Essentially, Instafin has helped us because we have to follow certain guidelines on the loans we give. All the configurations are backed by the organization policies; whether saving accounts, loan accounts or how the various accounts/data interact. In the past, when these were manually entered, it was difficult to control it. But now everything is controlled from the system. It automatically updates accounts upon new entries, reducing the loan balance as new payments are made. When the collection sheets are distributed, the group leaders can see their balances as at last week, last month or as the case may be. With that, the clients have means to access their information. That breeds credibility and integrity in the system”.

What Opportunities Has Instafin Presented to DEC?
“Yes, we are currently trying to make few changes by taking advantage of the solution. We are looking at infusing SMS alerts with Instafin, just like in commercial banks. For now we are starting with end of the month balances/reports. In the near future, mobile transfer capabilities will be also added to Instafin. This will enable someone to deposit cash in one branch and have it sent to someone in a different location where a DEC branch exists,” he explained.

Instafin Has Differentiated DEC From Competition
Usman continued: “In terms of the technology itself, DEC is the first organization to subscribe. In other words, we are setting pace for the others. We were the first to subscribe to Financial Solution too. However, the advantage we have now with Instafin is that the solution gives us wider horizon with embedded possibilities. DEC is looking at enhancing its products and system, because in microfinance there are two bottom-lines. First, financial sustainability is key. But we shouldn’t do that to the detriment of our customers. Secondly, we are making sure that the social impact of microfinance is achieved. We believe that with Instafin, we should be able to deliver those expectations.
“We are integrating the social impact analysis on Instafin to check how the micro-credit has actually impacted on the beneficiaries. DEC came into existence to bridge the gap where rural women are disadvantaged. They engage in a lot of manual/subsistent farming, achieving most in the background, but are not properly rewarded. We are not saying woman should take the credit while their husbands are there, however they need to have a voice in the family. And to achieve that they need education.
“So, we adopted adult education/literacy program. They need to be financially engaged, and microfinance came into equation to solve that. Because the woman is financially engaged, she can meet the medical bills, take care of the children, environment and others. On our part, we should be able to devise means of tracking that”.
Howis Your Assessment of Working With Oradian Team?
Usman added, “Oradian understands our business.  The founders of Oradian have many years of experience in various aspects of microfinance such as MIS software development, MIS implementation, banking, and so on. The difference between the Oradian team and others is Oradian endeavors to ensure their customers get value from implementing Instafin.  It is not just about providing a product, but providing a system that grows with customers and enables them to meet business objectives.

And finally, what is the future of DEC’s continued usage of Instafin?
“We are proud of this software because we contributed a lot to building the system to suit our needs. We perceive it to be our baby too, it wasn’t just picked up from a shelf somewhere. Oradians has not even tried it somewhere before we piloted it here. Initially, we just said, ‘let’s try it. If it works, OK. If not, we part ways’. They agreed, because they trust the product architecture. So, it is our product designed to serve both present and future purposes. We have a methodology and system that it already fitted-in to. We will continue to work with Oradian in using the Instafin, as far as it yields results. It is futuristic software, the way we see it,” Makka said.
“Again, a very efficient monitoring system is a means of deepening internal control and in guiding the customers aright. Also, the customers will be served as fast as possible. In other words, DEC’s days of wholly depending on manual documentations are over.
Secondly, it will help in reducing errors in maintaining clients’ accounts. That satisfaction alone will no doubt endear the clients to the Centre.
Most of these errors are not deliberate, but can be blamed on inefficient manual system. For instance, if the customer makes a payment, the collection office should be able to update his records. Shabby or fraudulent practices shall be checked, enthroning transparency and effective system.
Most inspiring is that DEC intends to reinvent its business model with Instafin implementation. According to Makka, it will impact the business model. Right now, they were limited in terms of product offerings, largely for the manual processes the Centre has been operating. But with the automation like this, it will enable diversified product offerings. For instance, it is now creating room for them to embark on mobile banking, SMS alerting, credit scoring and even other services that we have not yet envisioned.
“That will add to customer satisfaction. Therefore, the business model will be redefined to reflect the automated system,” Makka said beaming smiles to show how elated DEC’s management feel.

 

Instafin Boosts DEC’s Microfinance Opportunity to Integrate Payment -Yakubu
Titi Yakubu is the executive director for the Development Exchange Center (DEC), Bauchi State, a membership, non-governmental, non-religious, non-political organization that is providing social and micro financial services to women groups, communities and NGOS in Nigeria to enhance their capacity for sustainable development. An indigene of Borno State and obtained Masters Degree in Sustainability Development, she worked with the Bauchi State Government, and voluntarily retired in 1999 to join the social (development) work. Titi’s decision was inspired by the desire for different perspective about change in the society, and she was not getting the satisfaction while in Public Service. Now, DEC has implemented Instafin Software as core-system for its micro-finance business. In an interview with peter ugwu at the Centre in Bauchi State, Titi tells more about the experience saying, “I am very happy with what I am doing”. Excerpt.

The Vision For The Establishment Of DEC
The establishment of DEC dates back to the then Bauchi State, a combination of present Bauchi and Gombe States. If we flashback, in the ‘80s Nigeria was getting support from the AidCorps. Members of the Corp were in Nigeria supporting the teaching profession, while others engaged in the support for Government services. DEC was established in November 1987 as a result of a joint research conducted by the Canadian university services Oversea (CUSO) and the Adult and Non Formal Education Agency (ANFEA) Bauchi State. Through the research it became apparent that women especially those in the rural areas are greatly disadvantaged in both social and economic terms- usually resulting from cultural, religious and some harmful traditional practices, this is coupled with degree of material poverty among women have combined to make them highly dependent on men. So, it behooves on CUSO and ANFEA to establish a programme to respond and address this in balances in more sustainable way.

What Are The Activities Of DEC?
DEC started as a resource centre for sharing and exchange of developmental information with women in groups. From November 1987 we have evolved, especially by responding to the changing environment and developmental issues at the national and international levels. We have continued to pursue the Centre’s broad objective of empowering women through the provision of micro finance services and entrepreneurial skills development, training/capacity building workshops, water supply, sanitation and hygiene promotion, reproductive health, gender, education, governance and peace building and Information sharing. We also have a hospitality arm that provides support services to guests to feel at home while on assignment to the Centre.

How Was DEC Able To Attract Such Level Of Partners/Donors?
Well, our partners at the moment include Oradian, Rural Finance Institution Building Program (RUFIN), USAID Markets 2, Growing Business Foundation (GBF), Mercy Corp, Entrepreneurship Development Centre (EDC), Stanbic IBTC Bank (North East in collaboration with EDC and Central Bank of Nigeria. There is no magic about it instead, if you maintain good relationship overtime, it keeps you going. There are cases where partners give references for other partners to join hands with us. Secondly, we have experienced and competent staff, who have put in a lot of years to what we are doing. Thirdly, our commitment to the core objectives of the Centre has remained unchanged, which is revealed in our track records. Fourthly, we serve the communities. We are grateful to God that the image of DEC is quite high before the people. Also, the Government is aware of what we do. So the relationship has been cordial which has led to the conducive environment for our operations. With the increasing number of clients we have no reason not to be inspired to do more.

Why Mostly Foreign Partners?
We should understand in the Nigerian and African context it is a developing phenomenon. It requires education. It was in the early year 2000 that foundations started springing up and donor institutions are taking note too. So, people are yet to realize that this is another means to serve their constituencies and add value to their people. One of the challenges too is that DEC happens to be situated at the Northern part of the country. If you look at the Southern and Eastern parts, there are a lot of such foundations in existence. But some of them are restricted to either State or regional-wise. So they are not having national outlook. For instance, the TY Danjuma Foundation has a State focus. So, there are instructions restricting such foundations from expanding, probably, in line with the visions of the founders. We have a trickle of individuals who have supported what we are building. But we have not been able to get the attention of bigger foundations with huge amounts for sponsorships. Therefore, the public needs more education on the activities of developmental centres like ours for them to appreciate that lives can be enriched through the channels.

The Figures Showing DEC’s Borrowers, Active groups, Groups, etc., Are They Real?
(Smiles) They are real. We don’t fabricate figures. We have over close to 90,000 borrowers, 108,162 active savers in 6,000 groups and actively working in 19 states including the FCT. If you consider how long DEC has lasted and the peculiarities of our duties, the figures are evidence of hard work and commitment to the course. To us, 28 years down the line, we don’t feel fulfilled in terms of the number of groups we have. The other way round, there are institutions that within the first five years of establishment they became comatose, but DEC has remained in operation due to the accountability of the management. Secondly, DEC has never personalized institutions, because we know that institutions and individuals will and go. So, lack of changes in institutions inhibits the growth. So, if you have a vision but cannot deliver, then give way for others to deliver it. The 6,000 groups are real. If not for the crises they ought to have surpassed the number. In a population of about 180million it is just as a drop in the water that we are serving. We are not there yet.

What Are The Impacts Of Security Situation, Especially In The NE Affected DEC Programs?
Well, it has slowed our expansion programs. Because of the crisis, we have recorded losses; some groups were closed, affecting the clients’ level adversely. As we speak, our offices in some areas are shut due to the crisis. Microfinance banking is a business in such that when your money is in people’s hands and you cannot recover, it has also eaten deep into our capital. Some of the loans have to be written off, because they cannot be recovered. Some of them are now among Internal Displaced Persons (IDPs) living in camps. The crisis is a threat to us as an organization and the society at large. We are trying every possible means to protect the lives and property of staff; our office was once burnt down and staff are sometimes trapped. But in all things we thank God that no life was lost. But we have suffered hardship as a result of the insurgence.

What Other Challenges Do DEC Experience While Providing Social And Micro Finance to The Rural Women?
Women are the most vulnerable. Many don’t have shelter, food and exposed to poor health conditions. For us as a woman organization we deem it as retrogressive. For instance, what have been built over the years are been destroyed. Notwithstanding, this has opened our eyes to look into peace building and conflict resolution. So, there are emerging challenges and opportunities. Also, the resources of the people have been dealt a blow. It hurts us and we look for close collaborations among NGOs and the Government to cushion the effects and engender developments in our society. It is not a one-man show. We understand that due to the insecurity funds meant for developmental projects are been pushed into equipping the armories. Aids coming to the country and technical supports are diverted too; so development cannot happen unless there is peace.

Those Accessing Funds From DEC How Have Their Lives Improved?
We have been able to measure a bit of the impact of the loans on clients. During our last stakeholders’ forum, some of them testified how impactful the programs are. We also documented some of their achievements. As a result of the partnership, some were able to give their children qualitative education; there are those who now own houses, cotton farms, leased more farm lands, supplying raw materials to production companies, while others are doing very well in their entrepreneur businesses. At the community level, they have access to safe water while many can now read and write. Although, we are not perfect, however, we learn from mistakes and strive to get it better next time. So, as people keep demanding for new products, we explore other opportunities, partnerships and pilot projects for capacity building.

Let’s Talk About Your Partnership with Oradian On Instafin
The Oradian’s Instafin, a cloud-based microfinance platform, we embraced it with the understanding that technology is the king of the era. As a management, if you are able to have information/data at the click of buttons them you are on the path of efficient and speed decision-making process. So, technology is critical to what we are doing. First, it helps us to know the quality of the portfolio we have. Secondly, it helps us to measure our risk levels so we can manage it well. At the executive level it aids timely decision-making. It is a sure way to measure performances and productivity, because the staff performances are made open.

How Has Instafin Implementation Been?
It has been challenging because it is new. The migration was a big task and the cost was there too. We are the first organization to implement the software which was a big unknown, but we looked at the investment and the future of the application; we said it is worth implementing; they are a great team and we believed in them. Globally, technology is the in-thing in the micro finance business. If you don’t have software of this caliber, you find it difficult to fit-in. so, we needed t keep to the global trends, especially with the software’s positive impact on our processes.

What Are DEC Plans To Further Explore Instafin?
I think there are a lot of other technological divides Instafin will help us to bridge. Looking at our environment, it is where the people are sustained. We hope to explore it in aiding the people to efficiently manage their resources. With regards to the micro-finance, we want to revolutionary in e-payment system, mobile payments, e-vouchers and others in Nigeria. We want to key into those areas and bring cashless-economy system to the rural women. That will minimize our risks too. Aside that we are still exploring means of using technology to providing water to the people.  

 

 

 

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