Executive Summary

Micro-finance banks provide a broad range of financial services such as deposits, loans payment services, money transfers, and insurance to poor and low income households and their micro enterprises.

Asia-Pacific region has 95% of the 180 million economically challenged households not having access to financial services. Over the last couple of decades, however, this huge untapped market for micro-finance services has been explored substantially. This is indicative in the fact that there are now about 7,000 micro-finance institutions (including non-governmental organizations) in developing world alone. This figure is growing at an outstanding rate.

For these rapidly growing micro-finance institutions in developing world, the key to survival and profitability lies in lowering the operational and transactional cost and having effective control, compliance and reporting mechanisms that would subsequently result in timely recovery. This dual requirement of “low cost” and “timely monitoring and reporting” can only be met with the help of technology that can even be applied down to the unit, or transaction, level. Automation of micro-finance functions that includes deposits, withdrawals, loans, cash management and accounting operations is the key to lowering per transaction cost and long term success of micro-finance institutions.

Automation of Banking System for Microfinance Banks proposes to design a comprehensive workable solution that would automate the various functions of a micro-finance institution including deposits, withdrawals, loan disbursements/reimbursements, cash management system and accounting operations.  In addition, the automated solution should help the growing number of micro-finance institutions to lower their per-transaction cost which in turn will help the poor and low income households reap the benefits of commercial banking.

BearingPoint plans to spend significant amount of time to conduct research in local and international microfinance institutions. Micro-finance institutions will be able to have a robust and rich core banking solution throughout their organization.

Based on this survival and profitability need of micro-finance institutions, BearingPoint Pakistan wants to further refine, restructure and add new functionalities to its Core Banking Software (CBaS) and publish it in the OpenSource community.  This will not only help the various micro-finance institutions in the developing nations implement an automated solution but also promote education in the field of information technology by utilizing the talent pool of various management trainees from different institutions across Pakistan.

The key benefits of this project are given below:

• Micro-finance Institutions will benefit with implementation and integration of Core Banking Software into their current systems to survive and prosper in this globally growing industry
• The product will manage complete automation of basic processes with no one-time and licensing cost
• There will be reduction in per-transaction cost and less administrative and operational cost.
• The product will yield enhanced compliance and reporting

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