Grameen Koota Deploys Mifos From Aditi

Grameen Koota, a Bangalore-based NBFC microfinance institution with a vision to bring mainstream financial and capacity-building services to poor households, has deployed Mifos, a software developed by Aditi Technologies. Grameen Koota provides rural women with funds to carry on any income-generating activity for themselves and their families.

“About 60% of our population is outside the financially sound sector and we intend to address this segment,” says KK Suresh, Director, Grameen Koota. “We take bulk loans from various banks that are with us in this noble cause, and distribute them as small loans to rural women who are committed to their work and seem potential income earners.”

The importance of Technology

Microfinance is an activity that aids the poor with financial help and is also a commercially viable option for institutions. Institutions would naturally need a robust system to keep a check on the transactions, details, accounts, etc.

“Technology is critical for our business. Without it, it’s impossible for us to maintain the accuracy of accounts, transactions and HR resources. We’re no different from a bank. Though we don’t do all the work or provide all the services a bank does, the volume of transactions we do is as much as that of a bank or even more. Our transaction amounts are smaller, though – we do not give more than Rs 10,000 per person. We do more of relationship banking. There is scope for fraud and error in this business, so without technology it would be impossible to keep a check on the accuracy,” explains Suresh.
Concerns of Accuracy and Security

“There was no ready-to-use software in the market that fit our requirements, as the microfinance industry is not a field that most big software vendors would want to target a product at, given the nascent nature of the industry in our country. Accuracy of details was a very big concern, for no software had this methodology in place. Security was another issue that the available software weren’t focused on, and those available were not in line with our process,” says Suresh.

Grameen Koota believed that if it bought ready-to-use software that did not meet its requirements, it would have to rely on the vendor for all future supports and upgrades. Hence, it built a whole new application around an existing application with missing features. This standalone software supported just three loan processes and only a group of five names could be fed at a time. This proved inadequate with geographic growth, and the only option to make the situation better was to quickly move to a web-based solution.
Implementing Mifos

“We tried approaching various big software companies with our requirement. Many false promises were made but nothing materialised,” says Suresh. “Mindtree and Infosys were some of the companies we approached. Mindtree helped us in our analysis of the actual requirement; they spent almost a month on us. We spent a lot of time researching on ready-to-use products. We also researched Grameen Foundation software used by a microfinance institution in UP, and decided to go ahead with its development as it fitted some of our requirements. The Grameen Foundation got Aditi Technologies to code the Java-based software Mifos for us.”

Realising that migration from legacy software to Mifos was going to be a difficult task, Grameen Koota outsourced this to a software company, but it was unable to live up to expectations. According to the Grameen Koota management, the company underestimated the time required and the depth of the process, and thus failed to deliver.

Then IBM came forward to help with the migration. The company has been working with Grameen Koota for eight months now. The migration process has become smoother and real-time information is now available as and when required. The new system is rolling smoothly, so Grameen Koota can withdraw the old one completely, but plans to give it some more time.

The deployment process incurred additional costs as it required a server, which was hosted by VSNL. It has good bandwidth and all the branches have now started using Mifos effectively.

Other challenges faced

Getting the staff to use the application – and use it effectively – was the biggest challenge faced by the management of Grameen Koota. Converting the manual data to soft format was another major challenge.

Says Pradeep Singh, CEO, Aditi Technologies: “Grameen is a non-profit organisation and we developed Mifos as a free application. It is open-source and available for anyone to download, upgrade and use. Our biggest challenge while building Mifos was to develop an application that would meet the expectations of the highly sophisticated and intelligent open source community, which also includes very experienced developers.”

Internet-based software is always the best option for a business with a wide reach like ours,” explains Suresh. “However, one challenge was that we work in rural areas where the Internet is still not stable and well-established. VSNL’s broadband has helped us in this regard, and is easing our issues slowly but steadily. Now things are much more manageable,” he adds.