Loan Cycle digitalization in AB Microfinance Bank Nigeria
By Dusko Dimitrov (AccessHolding) and Oluwole Olajide (AB Microfinance Bank Nigeria)
Achieving portfolio growth, expanding physical presence, increasing efficiency and at the same time keeping the operating cost controlled is a guiding principle that has led the microfinance business model for years. Harmonizing all the aspects has proven to be difficult with the legacy approach, as it is a highly labour-intensive process conducted in environments that not seldom lack basic infrastructural developments.
The last decade was marked by the entrance of MNO’s into the payment sphere who challenged the brick and mortar service point approach; launch of numerous Fintech startup’s offering loan and payment products that were delivered in a short period of time questioning the need for human presence in the whole process; and introduction of affordable and highly scalable core banking systems accessible via the Cloud that started to replace legacy systems which have become outdated, inflexible and costly to maintain.
The question is no longer “are we going to digitally transform our established way of conducting business’’ but rather “when do we start the digital transformation and how it can be incorporated into our business model’’. Gaining efficiency, expanding physical presence and at the same time keeping the operating expenses under control can be achieved by introducing digital tools, that can fully or partially replace existing manual processes by offering service that are delivered in timely manner and in some instances available 24/7. Finding an appropriate balance between products and service offered via digital tools and platforms, and human interaction, which is still highly regarded and trusted amongst our target group, is key for the future development of our business model.
In March 2020, AccessHolding embarked on the journey towards the digitalization of the loan cycle by selecting two partners who offered the relevant technical solutions and AB Microfinance Bank Nigeria as a pilot institution for the project.
“The Field App is just a tool and to fully reap the benefits provided by it the implementation institution must be ready to take a critical look at their existing manual processes that were introduced way back and be ready to challenge the status quo.“
Dusko Dimitrov, AH Senior Business Expert
At the inception of the project, there were concerns about the implementation itself and usage of the application, both of which were legitimate concerns considering the complex lending process Loan Officers and clients have had to deal with for years.
In the first step of this project we reviewed and redesigned the entire loan cycle and related documentation in order to achieve a more efficient and lean process. In the second step we focused on converting the optimized process into the digital applications to be used by loan officers while visiting the clients in their premises, “in the field”, hence the name of the application – Field App. As outcome of this phase, two functioning Field App’s were deployed at ABN. Nine Loan Officers each in two separate bank branches were assigned to test the provided solutions with the clients for one month. The collected results were reviewed jointly by AccessHolding and AB Microfinance Bank Nigeria considering achieved results, user experience, solution scalability and flexibility, and consequently the Field App by vendor Juakali has been selected.
Juakali’ s application has been piloted with selected users including Loan Officers, Back Officers, Group Leaders and Client Advisers from five branches using real life scenarios. The first feedback received from all the stakeholders, especially from our clients, was very positive and motivating.
The application is simple and straight forward with offline and online capabilities, which makes it possible for Loan Officers to work anywhere and at any time. Client’s loan application and assessment data are collected electronically in the field, stored and shared real time with the colleagues who are working in the office on the further data processing. This way the loan processing has been accelerated and data quality at the same time improved.
“Simplifying the loan application and enhancing productivity in the lending process, while ensuring improved customer experience, are the main objectives of this project. Judging from the pilot testing, that has already been carried out, the Field App is ticking the boxes!“
Oluwole Olajide, ABN, Head of PMO
In the coming weeks the operational deployment will begin. Each of the 430 Micro Loan Officers of AB Microfinance Bank Nigeria will be equipped with a mobile device (tablet) and will start using this application. It is expected that the successful onboarding of this innovation will create a significant value to the bank’s customers and the overall business process of the bank.