Is SaaS the Appropriate Technology for Microfinance?
This paper analyzes the operation of Software as a Service (SaaS) in an international microfinance setting. It discusses the role of management information systems (MIS) in MFIs and illustrates the same through case studies.
The paper suggests the use of SaaS as an information solution that could reduce transaction and operation costs and enable MFIs to lower their interest rates. The benefits, as illustrated by the case studies include:
- Improved efficiency and reduced complexity of IT infrastructure;
- Lower risks, with expert solutions to security problems;
- Easier upgrading, exchange and procurement of system components;
- Better returns on investment due to elimination of lump-sum IT costs.
The difficulties in adapting SaaS to the microfinance environment include high integration costs for MFIs with existing software, threat of vendors going out of business, aligning contracts and incentives, and ensuring data security. The paper suggests that while large MFIs can use standardized software, smaller MFIs should consider adopting SaaS to reduce operating costs and focus on growing their business.