Agile Financial Times July 09 Edition

8/14/2019 Agile Financial Times July 09 Edition

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CUSTOMER SPOTLIGHT

PERSPECTIVE

Financial Inclusion

Repco Foundation

Business Agility Through

Central Processing

Services

AgileFINANCIAL TIMES

July

2009

SOLUTION SPOTLIGHT

Agilis Universal Micro-Finance Solution

Trends in Africa, South East Asia and India


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Greetings!

Thank you for the enthusiastic response to our

last issue where we talked about inclusionof

Micro-Finance software to our solutions stack.

Responding to requests to hear more on this,

we have made Financial Inclusionour cover

story for you along with Micro-Finance case

studies and solution highlights!

A special contribution this month is from our CEO, Kalpesh Desai,

thanks to repeated requests to hear from him. We have been featured

in many publications and are now known for our thought leadership in

the BFSI sector. Kalpesh is much heard and read about in forums and

media world-wide and our readers asked why not in our own Agile

Financial Times. So here it is, in this issue.

Having personally spear-headed many successful initiatives in the

BPO/shared services and central processing space, Kalpesh shares his

Perspective on the many benefits of setting up and outsourcing a

shared back-office to leverage economies of scale. Its a win-win like no

other.

Please continue to send in your feedback on what you would like us tocover in forthcoming issues. We promise the inclusionof your wish as

our command!

Be Agile!

Shefali Khera

Chief Marketing Officer

Write to us at [email protected]

CONTENTS

Editors Note

CUSTOMER SPOTLIGHT

Repco Foundation 4

COVER STORY

Financial Inclusion 7

PERSPECTIVE

Business Agility Through

Central ProcessingServices 11

NEWS

Global Update 14

SOLUTION SPOTLIGHT

Agilis UMFS 16

July 2009


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Repco FoundationMaking a Difference

4

Agile FT recently acquired the

Universal Micro-Finance

Solution from ThemeTechnologies, which is now

called Agilis UMFS. Agile FT

has plans to offer this as a

software platform as well as an

outsourced service to micro-

finance institutions in emerging

markets. This case study

highlights the implementation of

Agilis UMFS at Repco

Foundation, which is a

subsidiary of Repco Bank.

Repco Foundation for Micro Credit (RFMC) is a NGOpromoted by Repco Bank, a Government of Indiaenterprise. RFMC is a not for profit entity registered as aSection 25 company. Its primary business is to extendsupport to Self-Help Groups (SHG) that are financed by

Repco Bank, with a view to increasing the income level andeventually improving the standard of living of its members.Repco Bank floated RFMC as the services offered by otherNGOs operating in Repcos target geography were notsatisfactory and left much to be desired especially in termsof creating awareness and imparting skills amongst thetarget groups. This is a unique model, which is the first of itskind to be implemented in India, under which SHGs arereferred to Repco Bank by RFMC for extending creditfacility. RFMC also monitors and engages in capacitybuilding activities of the beneficiaries, as a result of whichtheir credit absorption capacity is expected to increase in thelong term.

About the Foundation

RFMC is committed to the development of SHGs byextending micro credit to reduce poverty and forempowering the poor to become self-sufficient. To this end,it aspires to evolve into a preferred micro-finance institution(MFI) in bringing about a perceptible change in the lives ofthe poor through formation of SHGs.

With more than 17,000 SHGs under its wing, to whom morethan INR 100 crores credit has already been extended,

RFMC is well on the way to success. RFMC currently has 57branches, which are likely to increase to 75 in the next coupleof years. A key characteristic of the micro-credit business isthe high recovery rate which is a result of group-based

CUSTOMER SPOTLIGHT


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6

CUSTOMER SPOTLIGHT

achieve our goals. In addition to significant cost savings dueto mobile branchless banking, the implementation of UMFShas significantly reduced the possibility of identity fraud,and has also enabled the IT department to provide topmanagement with an accurate and comprehensive view ofoperations in real-time," says R. Rajagopal, General Manager- IT, Repco Bank.

RFMC had also considered other offerings from otherindustry players, but felt that Themes technology would beable to quickly adapt to changing requirements and thepartnership would provide a high level of commitment toRFMC, as opposed to its larger counterparts.

Technology

Agilis Universal Micro-finance Solution (UMFS) is a user

friendly and web-based financial platform designedspecifically for micro-finance institutions. It includes groupand individual customer information management, sharesand savings management, loans and deposits, transactionprocessing and financial accounting. UMFS is built on acomponent-based architecture that allows RFMC theflexibility to change the functionality and workflowdynamically. This is especially critical in micro-finance as anumber of practical problems that come up in the field canbe worked around without compromising the integrity ofthe system and processes.

The work-flow based portfolio management system presentin UMFS allows RFMC to manage the complete cycle ofsolidarity group and individual lending portfolios fororigination, disbursement, collection and recovery. The coretransaction processing module handles the data capture ofall debit and credit transactions and it automaticallymaintains general ledger entries based on user definedparameters. The built-in report generator produces all

standard operational reports as well as statutory reports. Akey feature is the intuitive front-end that is integrated onlineto a mobile branch hand-held device with a smart cardreader, which makes it a powerful solution for use ingeographically-dispersed and remote field operations.Through this hand-held device, RFMC is able to perform alllending and deposit activities, including generation ofreceipts and statements for individual customers.

Business Benefits

The solution offered to RFMC meets the requirements ofthe micro-finance industry. It supports RFMCs vision ofintroducing branchless banking across three states to service17,000 SHGs. It allows RFMC to build a high level ofconfidence with its customers by enabling the field staff toprovide e-statements at the group and individual level. Sincethe data is relayed on real-time basis to the central server,there is absolutely no data redundancy and the foundationhas real-time visibility of its field activities. Due to the multi-level authentication mechanism built into the process, thelikelihood of fraud by individual customers is minimal, andthis has helped its recovery percentage to a large extent."Without this solution, we would not have been able to

automate the micro-finance business," says R. Rajagopal,General Manager - IT, Repco Bank.

Conclusion

RFMC has gained a significant competitive edge over otherMFIs by virtue of using UMFS. The success of the micro-credit venture is spurring the foundation on to provide morethird-party services to its large customer base which willgenerate substantial fee income. Being one of the earlymovers in facilitating micro-finance in a quick andtransparent manner has given RFMC a substantial

advantage over its competition, and more importantly hashelped it to serve the less privileged and make a differenceby uplifting the lives and future of thousands of peopleliving on the edge of poverty.R Rajagopal, Repco Bank

The success of the micro-

credit venture is spurring the

foundation on to provide

more third-party services toits large customer base

which will generate

substantial fee income.


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7

In the last five years, one issue that has generated a lot of interest is provision ofbanking and insurance services for the poor. These facilities are inherentlyimportant to the well-being of any community, and will eventually also helpaddress and alleviate some of the root causes of poverty.

The provision of financial services to the economically disadvantaged segment

of the population has now matured and is manifested in most developmentschemes. The United Nations (UN) is a keen participant as it hopes to replicateeffective initiatives across countries to reach the poorer sections of the society.The UN efforts were published in its Blue Book, to analyze impediments andinitiatives to achieving financial inclusion in different geographies.

The most common form of access to banking is opening a no-frills savingsaccount. With increasing emphasis on financial inclusion, other schemes such ascollateral-free micro-credit and micro-insurance are now gaining ground. Savings,deposits and credit are being given equal importance to develop an all inclusiveand balanced strategy. Initial experiments and pilots in micro-finance reportedsuccess with high levels of responsibility among beneficiaries.

While the reason that micro-finance institutions (MFI) originally started business was to address the unorganized money-lending business, the overall intentionwas to empower the poor. Micro-Finance enables this segment to get out of their

Financial

Inclusion

The majority of developing

countries find it challenging to

provide basic amenities to their

citizens. Poverty is

predominant, with millions

earning less than US$ 2 perday. The usual issues of lack of

food, medicine, housing,

education, and security have

been on the radar of various

governments and other

charitable organizations for a

long time now.

Trends in Africa, South East Asia and India


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debt traps from local money lenders by providing credit forincome generating activities, and, in addition, providesservices that allow a safety net for their families, such asmicro-insurance. This market segment also offers atremendous return on investment if the business is carriedout professionally, as the percentage of defaults from thiscommunity is miniscule, a fact that is attributed largely to thegroup-based lending practice where peer pressure to payback is high.

Africa: Tackling Natural and Man Made Adversities

Some African countries face harsh natural conditions, while,some others have endured wars and been strife-ridden fordecades. With governments concentrating more on wars andinternal conflicts, the welfare of citizens has hitherto beenfairly low on the agenda. However changes are now visible

with more schemes tailored to suit the needs of variouscountries in the region.

Some African countries depend largely upon internationalorganizations such as the UN, the Red Cross and otherorganizations for aid. Non-government and not-for-profitorganizations drive most of the welfare initiatives. A numberof micro-finance institutions (MFI) operate in the region.The schemes are suitably flexible to adapt to diverserequirements demanded by the region and take intoconsideration the need to pool group resources and leveragetradition.

Micro-finance initiatives that have worked well have beenexpanded to include other socially- related issues, such as

schooling. An example of this is Yum, also referred to asGroup of Common Initiative of the Women Farmers ofBogso (GICPAB), which started with efforts to improvecassava produce, process, transportation and marketing.

Members worked together and the collaborative effortssaved time and reduced costs. This initiative then expanded with loans to those who registered their children orgrandchildren in schools, for books, meals and fees.

The use of traditional banking practices and the associatedtransactional costs have hampered the growth of micro-finance services in remote areas and villages. Theimplementation of the relevant technology to enablebranchless banking will speed up the process and enableaccess without having to establish branches. Training

members from within the group to handle technology willenhance community involvement and increaseindependence of these groups. The Consultative Group toAssist the Poor (CGAP), an independent institution housedat the World Bank, and the Bill & Melinda Gates Foundationlaunched a US$ 26 million technology and micro-financeinitiative to test mobile banking, ATMs, card readers andother technologies underlining the importance oftechnology to deliver micro-finance.

Micro-finance must gradually expand to include micro-enterprise. Encouraging small-scale entrepreneurs will helpin poverty eradication, and also reduce the number of rural

poor moving to urban areas in search of employment. Avisible line of scalability allows beneficiaries more options tomove ahead.

Banking and insurance services need a push to increaseconfidence in efficacy of these initiatives and change habitsof people. Individual savings are low, directly affectingcapital accumulation, which in turn affects the overallgrowth rate. Saving and investing will increase financialviability, participation, and provide for other benefits such asbetter education and housing.

South East Asia: Success Depends on Stability

Financial inclusion in South East Asia went through a phaseof non-acceptance and doubt. However, persistent efforts,

8

COVER STORY

The Consultative Group to

Assist the Poor and the Bill &

Melinda Gates Foundation

launched a US$ 26 million

technology and micro-finance

initiative to test mobile banking,ATMs, card readers and other

technologies underlining the

importance of technology.


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COVER STORY

keeping their risks in mind. A unique scheme based oncommunity responsibility when an earning member of afamily passes away has been used successfully in thePhilippines. CARDs Mutual Benefit Association uses thepractice of Damayan - a local custom in the Philippine ruralareas where members of community and relatives donatecash to a family that has lost a member. The practice ismutual as death in any family would be followed by a similarcustom. CARD used local information, informal monitoringand enforcement system to develop a cluster of client-members with the vision that they would co-own aninsurance company. Almost 98% of CARD clients are poorwomen. This format took care of high transaction costs, theperception of lack of capacity to afford regular insurancepremiums and credit-worthiness. This scheme was furtherregularized using certain mandates to ensure maximumbenefits.

India: Innovating in the Face of Diversity

India has the second highest number of people in the world without access to banking services. However it is thediversity of needs that is even more overwhelming. Thefinancially excluded populace of India resides in urban andrural India and each segment has unique characteristics thatneed to be addressed.

While agriculturists form a major segment, otherprofessionals such as artisans and people working in cottageindustries need aid as well. The urban poor are usually daily wage earners, or those that have low-paying regular jobswhich do not offer adequate security.

According to estimates, only about 10% of Indians whoneed funds to improve their economic condition have accessto it. To promote financial inclusion, public sector banks are

required by the government to dedicate a requisitepercentage of funds to priority sectors and offer no frillsaccounts. Women in rural and urban areas are majorcontributors to household incomes and run small scale

performance, and due importance and schemes bygovernments has made it one of the priorities for policymakers. Though conditions across South East Asia differ,and not all countries boast of successful ventures,experiments continue to try and formulate workableoptions.

With increase in acceptance levels for micro-finance, it hasmoved beyond traditional NGOs to soliciting investmentsfrom regulated financial institutions. Micro-financeinvestment vehicles are tools to leverage foreign capitalinvestment in MFIs. To maximize the reach of financialinclusion, innovations in delivery models and use oftechnology is on the rise.

To cite an example, Cambodia has launched a mobilebanking initiative called WING, which is a mobile-enabled

payment service that allows customers and businesses totransfer, deposit and withdraw money using cell phones at alow cost. WING has more than 150 points ofrepresentation in Cambodia, with representation in 16 ofthe 24 provinces. WING customers comprise garment workers and other rural customers who have traveled tourban centers for work. The payment service offered by WING allows them to transfer money using a safe,affordable and fast transaction system.

Governments have contributed by making policyenvironment conducive to development of micro-finance.

For instance when the Government of Malaysia identifiedagriculture and agro-based sectors as the key growth areas inthe Ninth Malaysia Plan, Bank Pertanian, a specializedfinancial institution for the agriculture sector, underwentrestructuring and strategic changes to enable greater accessto easy financing for the identified sector, followed by venture capital funding. The idea was to ensure that theentire value chain in the agriculture sector receives benefits.

With innovations in technology, illiterate people have beenable to gain access to the advantages of micro-finance. InIndonesia, PT Bank Danamon used biometricauthentication leading to a paperless environment and

eventually lower costs. Fingerprints were scanned forverification replacing the manually filled forms, making theprocess easier for first-time users or the illiterate, to engagein banking transactions.

The financial inclusion initiative in SE Asia needs to developinto a self reliant mechanism. To develop this, emphasis onsavings, and strict credit disciple need to be implemented.Greater stress on group initiatives, which have provedsuccessful in other locations, will help.

SE Asia suffers many natural calamities, due to which

financial inclusion for poor people must accommodatemicro-insurance. Low income groups are especiallyvulnerable to the loss of an earning member, therefore it isextremely important for them to have a scheme devised

To promote financialinclusion, public sector

banks are required by the

government to dedicate a

requisite percentage of

funds to priority sectors and

offer no frills accounts.


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COVER STORY

house-based enterprises such as tailoring and food-based small scaleenterprises. Efforts to drive the entire initiative through them are taking shape,as they have proved to be prompt at repayment.

Technology has been used to gain access to consumers in remote areas, to cutcosts, make delivery faster and easier. Kiosks and smart cards are expected tomake transaction costs much lower. Some private sector banks have alsosucceeded in converting micro-finance from being a socially responsibleactivity to a profitable venture.

An example of this is ICICI Bank, which has been a front runner in the areaof micro-finance, pioneering innovative schemes and initiatives. It introducedthe partnership model forging an alliance with existing MFIs. The MFI, in turn,undertakes the responsibilities of identifying and training end-customers, anddisbursing and recovering the money. ICICI Bank also launched GrameenCapital India, a company that promotes micro-finance as an attractive assetclass by enabling access to the capital markets and a wider canvas of investors.

India has a huge population that does not officially fall in the category ofpoor - those that earn about US$ 2 - US$ 5 per day. The specialty of this grouplies in the fact that they may be able to regularly repay small loans without anydifficulty, though collaterals may not be an option for them. No frills accountsfor households with low but regular income, would ensure their participation inthe banking system, and also encourage savings. India also has the highestgrowth rate in cell phone penetration, and financial institutions must exploitthis channel to deliver banking services.

Systemic Impact

In all regions around the world, micro-finance has impacted not only the ruraland urban poor, but also a number of businesses that serve this target segment.In addition to financial services, companies that manufacture mobile phones,household goods (such as televisions, refrigerators, water purifiers and stoves),consumer products (soaps, shampoos and detergents) and farm equipment(including tractors!), have made an aggressive foray to service the rural areas.Some companies have even created innovative products such as a refrigeratorwithout a compressor, and are selling it at a price point that has been arrived atafter taking market feedback from potential customers. With the number ofpeople under the MFIs umbrella increasing exponentially, these companies areusing MFIs as a channel to distribute their products.

With new products entering the rural market, it has led to a high demand for

rural sales agents for these products, with many companies appointing ruralhousewives to market products within a community for a sales commission.This has automatically led to a higher income generation for many ruralfamilies, and has also helped empower women to a large extent by providingthem with an opportunity to earn income and have a sense of purpose.

With the rural and urban poor having access to fairly regular income, a numberof them who realize the value of providing education to their children, are nowwilling and able to spend on it. Although the fees gained through an individualstudent are very less, the potential numbers are very attractive from a businesspoint of view, especially with technology-led education gaining popularity invillages.

All this opens us new scenarios and ambitions for the rural and urban poor, andresults in a powerful economic and social impact within the community, village,town and region, and finally at the country level.

Technology has been

used to gain access to

consumers in remote

areas, to cut costs,

make delivery faster

and easier. Kiosks

and smart cards are

expected to make

transaction costs

much lower.


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geographies where the company operates, calls formodifications to the underlying applications. A furthercomplication is seasonal demand, which means thatcapacities and staff levels must be maintained to cater topeak loads. For in-house IT, this creates a large andexpensive internal organization.

While being a problem, this also offers a tremendousopportunity to reduce cost. Enter the CentralizedProcessing Centre (CPC). A CPC is either formed by verylarge companies for processing their internal requirementsfrom a centralized location, or increasingly today by serviceproviders who have set up centres with capabilities in diversesegments.

The outsourcing industry today is at a maturity level whereit can completely take over, and at times run more efficiently,

almost all technology related non-core operations of anybusiness. For many segments, especially BFSI, outsourcingsuppliers can provide robust platforms and support for corefunctions.

CPCs, especially when outsourced to independent serviceproviders, can facilitate innovation and greater productivityin all facets of technology as a driver of business, includingdesign of the business model, deployment of theappropriate technology, scale and agility, accessibility andsecurity, integration and cost.

Business Model Design

The emergence and ubiquity of every new technology(internet, mobile) opens up avenues for creativity by the usercommunity. Most innovative products and services beingoffered to BFSI customers today are made possible by theavailability of technology, to the extent that managementcan now take an anything is possible customer-centricapproach while designing their business model. Theresponsibility of executing the business process isundertaken by the service provider.

Process Optimization

Moving transaction processing to a central processing centrecan create an opportunity for the financial institution toreview their existing processes, and engage in processoptimization. With the deployment of effective workflowmanagement tools, it is now possible to replicate the samefunction carried out in the back-office with lower skilledpersonnel who need to follow a defined task list in theprocess workflow. The replacement cost of the above itselfgenerates a visible, definable ROI, and simultaneouslyenables bankers to focus on the front office, customerexperience, product development and risk management.

Deployment of Appropriate Technology

Keeping up with technology is essential to remain

competitive, but can be prohibitively expensive. Mostorganizations can afford to upgrade their core internalsystems only every five to ten years. In effect they are unableto reap the benefits of new technology until their nextupgrade cycle. Added to this is the cost of retraining stafffor every set of skills required for all applications, wheneverthe upgrades are implemented. In contrast, supplier-runCPCs continuously invest in technology, people andprocesses, as this is a core business function for them. Theyare thus able to take advantage of technology improvementsvery quickly, and pass on the benefits to their customers.

Scale and Agility

Supplier-run CPCs are typically highly scalable, as they offersimilar services to many companies, and therefore have alarge installed capacity for any application or process.

Consequently, they are able to respond immediately to asudden rise in volumes from any customer, without anyincrease in per transaction costs. By the same token, whenthe demand ends, they are able to re-deploy staff withoutany carrying or retention cost to the customer. In terms ofadoption, CPCs are able to acquire new technology and getit working faster than an internal IT department. Similarly,they are able to develop and deploy applications rapidly,offering the customer a much faster time-to-market.

Accessibility and Security

In order to offer a superior client experience, companiesneed to offer their clients access to services not only viahuman interaction (typically during business hours) but also via the Internet and mobile. Third party suppliers are theleading providers of such access mechanisms. Beyondaccess, security of client information is the top priority forcompanies operating in the BFSI industry. Here again,service providers are better equipped to ensure technicalsecurity of client data. As service providers, they arerequired to operate at the highest levels of compliance inorder to at least meet or exceed the levels practiced by theircustomer companies.

Integration

Cross-selling products and services has become a criticalsuccess factor in the financial services industry. However, while multiple services under the same roof may wincustomers over initially, unified management and reportingmechanisms are essential to retain them. For example, inaddition to retail banking, a bank may want to offer mutualfunds, portfolio management, and unit linked insuranceplans to the same customer, with a seamless automatic flowof funds from one service to another as and when needed,as well as a common record of all static information related

to that customer.

Additionally, if all these include a reporting/reminderservice either by direct mail, email, mobile or telephone,

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PERSPECTIVE


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Kalpesh Desai, founder and

CEO of Agile FinancialTechnologies, envisioned the

creation of an unparalleled

enterprise that would be a

technology partner to leading

players in the BFSI sector

enabling business agility. He

has over two decades of

experience in spearheading

technology companies to

achieve and sustain a positionof market leadership and

organic growth.

13

such messages too can be integrated into a single communication. Regulatorycompliance is also tightening continuously, and satisfactory compliance alsodemands extensively integrated systems.

Cost

The most significant cost advantage when using a CPC is in not having toinvest in infrastructure or staff. While the pay-per-use model may come at asmall premium, the cost of obsolescence is zero. And in cases where multipleservices (like IT and BPO) are outsourced to the same supplier, overall costsare lowered by a reduction in the total number of transactions. In addition, theusage of CPCs significantly enables business processes to become streamlined,and thus provides companies with a strategic advantage that goes beyond costefficiency.

An Alternative: Cloud Computing

CPCs managed by external service providers do, however, have some entrycriteria. They require a certain minimum level of operational discipline andrecord keeping on the part of the customer. More importantly, there is a set-up time and effort involved, and the model is based on economies of scale,which means that benefits accrue only beyond a threshold transaction volume.For companies whose operations are not large enough, there is a viablealternative - cloud computing - which offers most of the benefits of CPCs, butcalls for some self service. Specifically, no capital investment is required foreither hardware or software, and therefore technical staff too.

While this does require permanent functional staff, they need to be trained onlyonce on how to use the software-as-a-service (SaaS) applications, with

subsequent technological advances automatically incorporated into thesoftware by the SaaS provider.

Conclusion

The concept of central processing, whether via service provider-run CPCs orcloud computing, has significantly changed the way companies are able toservice their customers.

First, it enables businesses to adopt and leverage technology which may havebeen prohibitive otherwise. By outsourcing technology as well as routinebusiness processes, the company is able to focus on its core businesscompetencies.

Second, it substantially reduces the time required to implement and roll outnew innovative applications. The reliability of the software too is far greaterthan an individual company may be able to achieve on its own.

Third, it enables complete seamless integration across all relevant applications,offering the companys clients a unified view of all the information of interestto them, while minimizing the number of separate transactions needed to beperformed by the client. Such integration also enables personalization ofservices to an individual customers needs, in turn helping to attract newcustomers, and retain existing ones.

Finally, and probably most importantly, it allows a company to achieve greatersecurity and regulatory compliance. By spreading the cost across all customers,suppliers are able to provide fully customizable levels of security, integrity, andcompliance at a wide range of comparatively low price points.

PERSPECTIVE


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NEWS

Global

UpdateA quick review of industry news from

around the world.

Dubai Financial Market Records a Net Profit of

AED 128.3 million

Dubai Financial Market has announced its financial resultsfor the second quarter, disclosing a net profit of AED 128.3million, compared to AED 58.5 million in the previousquarter, representing a growth of 119%. The quantum jumpin net profits in the second quarter is a reflection of theincrease in market activity as the total trade value jumped113% to AED 58.8 billion compared to AED 27.6 billion inQ1 2009.

According to Essa Kazim, Executive Chairman of DubaiFinancial Market, "The market witnessed good performanceduring the second quarter of 2009, with significant increasein different market indicators such as trading volumes and

values, the performance of listed securities and the DFMgeneral index. The market performance in Q2 2009 reflectsimproved investor appetite and their confidence in thesound fundamentals of the national economy and publiclylisted joint stock companies. We are optimistic about theoutlook, and hopefully the market can acquire additionalmomentum to be able to record more positive results byyear end".

National Bank of Kuwait buys 13.2% in

Boubyan for US$ 295 million

National Bank of Kuwait, the countrys biggest bank byassets, has bought 13.2% of the Kuwait InvestmentAuthoritys stake in Boubyan Bank for US$ 295 million at apublic auction. This takes the National Bank of Kuwaits

stake in Boubyan to a total of 27.5% or 321 million shares.It is believed that National Bank of Kuwait had earlier triedto buy a 19.2 percent stake in Boubyan from Commercial

Bank of Kuwait (CBK) but the sale was disputed byInvestment Dar.

Qatar National Bank Sweetens Terms for

Banking Accounts

Qatar National Bank has announced that customers holdingcurrent and savings accounts with the bank will no longerhave to maintain a minimum balance. However, they willcontinue to receive the same benefits as usual, which meansthat account holders will be able to earn credit for all fundsmaintained on deposit, qualifying for special promotionsand receiving preferential service rates wherever applicable.

The bank also announced it plans to decrease tariffs on anumber of its banking products and services, includingsafety deposit box rental, cheque books, personalized debitcard replacements and certain inward money transfers.

Government of Qatar Purchases Banks

Property Investments

With banks in Qatar struggling with their exposure to realestate deals, the central bank has announced that thegovernment has earmarked QAR 15 billion (approximatelyUS$ 14 billion) to buy real estate portfolios held by banks.

The government had earlier announced that it would offerto buy banks property portfolios and loans to support thebanking sector which was suffering and also guaranteecontinued growth in the economy.


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NEWS

"The programme has been implemented, funds have beenallocated to eligible banks and payments have been madeaccording to conditions," said Sheikh Abdullah Bin Saud AlThani, according to Qatar News Agency.

Actis Buys 9.3% in Egypts Comml Intl Bank for

US$ 244 million

Actis, a private equity firm, has agreed to pay US$ 244million for a 9.3 percent stake in Commercial InternationalBank, Egypts largest bank by market value. Justifying itsinvestment, Actis, which invests in emerging markets, hassaid that Commercial International Bank has excellentgrowth potential. The investment has been welcomed by thebank, which says that the investment will help accelerate itsgrowth in consumer banking.

Doha Bank Announces 24% Increase inOperating Profit

Doha Banks financial results for the first half of 2009 wereannounced by His Excellency Sheikh Fahad Bin MohammadBin Jabor Al Thani, Chairman of Board of Directors. Thebanks net profit for the first half of 2009 increased by 12per cent to QAR 646 million, compared to QAR 579 millionfor the corresponding period last year.

The bank also recorded substantial growth in net incomeand total assets. Incidentally, the bank has been pushing the

concept of Green Banking to encourage each customer toprotect the environment by adopting paper-less banking.Doha Bank has also been voted as the "Best CommercialBank in the Middle East" recently.

ANZ Looking to Acquire Bank Assets in Asia

Melbourne-based ANZ may buy Royal Bank of Scotland(RBS) units in at least five Asian countries, and is believed tobe in advanced negotiations to acquire RBSs retail andcommercial-banking units in Hong Kong, Taiwan,Singapore, Vietnam and Indonesia. The growing number ofbad loans in Australia has had an adverse impact on ANZ,

which has cut its dividend this year. ANZ sold A$ 2.5 billionworth of shares two months back to fund the bid. It alsopaid A$ 114 million to increase its stake in Indonesias PTBank Panin, and plans to open six new offices in Vietnam.

Japans Tokio Marine to Cut Hedge-Fund

Investments

Tokio Marine Holdings, which is Japans biggest casualtyinsurer, plans to reduce hedge-fund investments and shiftmore of its portfolio in the industry to strategies such asmacro and long-short equity funds. In order to minimize

fees and increase profit, Tokio Marine will stay focused onsingle hedge funds, rather than fund of hedge funds. TokioMarine currently invests in around 60 hedge funds, morethan half of which are based in the US and Europe.

European Union Warns State-Aided Banks of

Possible Forced Sales

Banks that received government bailouts, such as LloydsBanking Group and Dexia SA, may have to sell branches orunits to gain approval for restructuring plans under new EUguidelines. The EU announced that its recommendationscall for stress tests, disclosure of impaired assets and areview and possible closure of unprofitable operations.

The guidelines will be used to review lenders that receivedaid after the credit crisis prompted EU governments toapprove more than 3.77 trillion euros to support banks.

Central Bank of Brazil Slashes Benchmark

Interest Rate

The Central Bank of Brazil has slashed the benchmarkinterest rate for the fifth time this year to 8.75%. Centralbank President Henrique Meirelles had cut the rate by atleast a full point in all four previous policy meetings of 2009,and the latest cut signals the possible return of economicgrowth in the region.

According to the Organization for Economic Cooperationand Development, the Brazilian economy is expected toexpand 4% next year, powered by domestic demand. According to the IPCA index, the annual inflation hasslowed to 4.8 percent in June, down from 5.2 percent in May

and the lowest since March 2008.

Economic Growth Slows in Sudan

According to the International Monetary Fund (IMF),Sudans economic growth will slow to 4 percent this yearfrom almost 7 percent in 2008 because of lower revenuefrom oil exports. Foreign reserves have dropped to aboutUS$ 300 million this year from US$ 2 billion last year, due tolower oil prices and the central banks intervention to boostthe value of the local currency.

Although Sudan does not qualify for funds from multilateral

lenders such as the IMF and World Bank due to USsanctions, China and India are expected to provide loans tobuild the infrastructure in Sudan.

Bank of Yokohama Plans Expansion

Bank of Yokohama, Japans largest regional bank, hasannounced plans to surpass Nomura Holdings to becomethe biggest retail brokerage in Kanagawa in terms of assetsunder management. With demand for loans going down lastyear, Bank of Yokohama established a joint venture withTokai Tokyo Financial Holdings to expand into the

securities businesses and increase fee income. The securitiesventure which started with 7 branches in Kanagawa, plans tohave 22 outlets within four years, most of them containedwith Bank of Yokohama branches.


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The need of the hour is to enable delivery of services suchas credit, pensions and insurance quickly and efficiently, thusensuring sustainability of programmes. And such

sustainability efforts have to be cost effective to ensureoutreach to new communities, villages and regions,otherwise micro-finance institutions (MFI) will not achievetheir mission of reaching out to vast multitudes of people.

In addition, the technology that is used has to be transparentto the end-customers, so that it builds a high level ofconfidence in them and encourages them to switch overfrom the local unorganized sources of money, to aprofessional micro-finance institution. While thesustainability v/s outreach challenge still exists when itcomes to reaching out to people in remote areas, or topeople with low economic and social status, technology is

continuously evolving, and is today available to circumventand/or address these challenges and enable MFIs to furthertheir positive impact on society.

Agilis Universal Micro-finance Solution (UMFS) is a user-friendly and web-based financial platform designed toservice the end-to-end needs of an MFI includinggroup/individual customer information management, sharesand savings management, loans and deposits, transactionprocessing and financial accounting. The solution, which isCGAP-compliant, is built on a component-basedarchitecture which gives MFIs the flexibility to change

dynamically with changing requirements.

The workflow-based portfolio management system allowsMFIs to manage the complete cycle of solidarity group and

Technology for Micro-finance

16

Micro-finance is an area which is arguably the

most dependent on technology in order to be

effective in terms of provision of services to its

target audience, and in a cost effective and

operationally efficient manner.

It is also an area where sustainability and

outreach are both extremely important, i.e. if

either of these qualities is compromised, it

would have a negative effect on all initiatives

and as a result, on the countrys economy.

Agilis UMFS

SOLUTION SPOTLIGHT


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18

SOLUTION SPOTLIGHT

The solutions

intuitive front-end is

integrated online to

mobile and handheld

devices such as smart

card readers, which

makes it a powerful

solution for use in

geographically

dispersed and remote

field operations.

precise provisions automatically by applying regulatory norms and is highlyparameterized so that changes in regulation can be configured with ease. Thesolution also enables users to set up signals and alerts for delinquencies; basedon which the branch managers can initiate follow up action with the customers.The recovery module captures all the details of the delinquent accounts and itsstatus of recovery to facilitate branch managers to initiate action on re-scheduling, closure and write-off.

Reporting Engine

The reporting engine is designed to provide the MFIs with information foroperational control, management control and strategic planning, and providesthe following reports:

Savings Loan Activity Portfolio Quality

Income statement Balance sheet Cash-flow

Mobile Branch in Field Operations

The mobile branch is used by loan officers to capture transactions in the field.Smart cards are used as access cards by individual customer and groups.Transaction details are updated in the smart card for effective control. Activitiesperformed using the hand-held device include:

Savings, repayments and past-due payments.

Group and individual validation and smart card updation Issue of spot receipts Auto generation of repayment fund transfer.

Smart Switch

The smart switch serves as an intermediate router/network switch forintegrating the Mobile Branch hand-held devices with Agilis UMFS through adedicated link for secure money transactions. Data integration takes place eitheron-line through GPRS or off-line through serial/USB port connectivity. Thefeatures of Smart Switch include:

Dynamic Routing and effective Network Traffic Management Secure Message Transfer Using Industrial standard message formats. Protocols to handle integration of (wireless) handheld devices and MFIs

database controller. ISO 8583 message digest for increased scalability Triple DES encryption algorithm for secure message transmission of PIN. AES encryption algorithm for ISO message transfer. Audit logs for overall management of message transfer.

Financial Accounting

The financial accounting module automatically maintains general ledger entriesbased on user-defined parameters. All savings, deposit and loan products are

linked to the corresponding general ledger accounts. Branch codes, donorcodes and cost centers serve as analytical codes for MIS reporting. The fundaccounting module facilitates MFIs in efficient reporting on fund usage todonors.


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www.agile-ft.com

Views expressed in this publication do not necessarily represent the views of Agile FT and the information contained herein is only a brief synopsis of the issues discussed herein. Agile FT makes

no representation as regards the accuracy and completeness of the information contained herein and the same should not be construed as legal, business or technology advice. Agile FT, the authors and

publishers, shall not be responsible for any loss or damage caused to any person on account of errors or omissions.

Agile Financial Technologies

808-A, Business Central Towers

TECOM, Dubai Internet City

P.O. Box 503007

Dubai

United Arab Emirates

Tel: +971-4-4331825

Fax: +971-4-435-5709

Agile Financial Technologies Pvt Ltd

701-A, Prism Towers

Mindspace, Malad (West)

Mumbai 400064

India

Tel : +91-22-42501200

Fax: +91-22-42501234

Agile Financial Technologies Pte Ltd

20 Cecil Street, #14-01

Equity Plaza

Singapore 049705

Tel: +65-64388887

Fax: +65-64382436


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