Benefits and Limitations of Technology in MFIs: Come to Save (CTS) Experience from Rural Bangladesh

Adoption of Information Technology (IT) in Microfinance Institutions (MFIs) has become one of the key indicators to improve operating efficiency and productivity of staff at all levels of the organization. Though the cost of investment in IT is a matter of concern, it has manifold benefits ranging from productivity improvement to socio economic development of the target clients. This paper focuses on the adoption of Point of Sale (POS) technology in MFIs and its benefits in operation, cost reduction and stakeholder relationship through an evaluation of a small-scale MFI, Come to Save (CTS), operating in Bangladesh. This paper reinforces that timely implementation of technology reduces cost of operation, attains economies of scale and increases outreach through increased staff productivity. DOI: 10.4018/jeco.2010040105 Journal of Electronic Commerce in Organizations, 8(2), 54-65, April-June 2010 55 Copyright © 2010, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. cost effective in their operations and to deliver financial services smoothly. Family Economic Security (FES) Program, a program domain of Plan Bangladesh has been promoting flexible microfinance programs to provide financial support to the poor and extreme poor in a sustainable manner. Come to Save (CTS), an MFI, is implementing this program as a partner organization of Plan Bangladesh with extensive technical and financial support from Plan. CTS had been partnering with Plan since 1998 and offering a demand driven, savings led, flexible microfinance program targeting the poorest of the poor. The paper essentially focuses on the following key objectives by presenting a case study. Firstly, it identifies the cost effectiveness of the handheld POS in terms of staff productivity; secondly, it reviews the performance of the handheld POS in the areas of reducing human error and increasing client satisfaction at field level; and thirdly, it analyzes critically the strengths, weaknesses, opportunities and threats in relation to operational and technical viability of the microfinance program implemented by CTS. The background section provides details of microfinance, technology and the key organizations involved. The main topic section looks at the pilot implementation of POS by CTS and the learning from it. Finally, we conclude with the future research directions, suggested for further strengthening of POS implementation in CTS.