Entrepreneurship

How Technology is Allowing Grameen America to Scale

August 14, 2018

Grameen America is a leading microfinance organization serving low-income women in 13 U.S. cities. Its roots stretch all the way to Bangladesh, the home of the Grameen Bank, and its founder, Muhammad Yunus, who pioneered microfinance and was awarded a Nobel Peace Prize for this work. Microfinance is one of the critical tools that has increased income and improved opportunity for millions across the globe. The organization is on a path to scale and financial sustainability. For example, in 2013, its branch in the neighborhood of Jackson Heights, Queens in New York City became the first U.S. microfinance organization to achieve 100% financial sustainability, with loan revenue exceeding operational expenses. To date, they have served over 100,000 women entrepreneurs and are on a path to reach a milestone in 2018 of $1 billion in lending investments. Grameen America’s growth and success as a premier microfinance institute has been pioneered by their leadership and staff through smart and timely investments in technology.

The Mastercard Center for Inclusive Growth in partnership with co-funders Apple and Citi have invested in Grameen’s technology and human capital solutions, including a cloud-based management information system designed to significantly modernize and bolster the organization’s operational capacity. These upgrades have allowed Grameen America to standardize and streamline their back-office processes, enabling the organization to achieve greater efficiency, more easily scale its services across the country and roll out new services and features. Additionally, Grameen America has digitized their microloans disbursement by delivering capital on reloadable Mastercard cards instead of using paper checks. Leveraging these technological innovations not only creates savings for members in the form of fewer fees, but they also enable the organization to find time and costs savings on administration. These savings are being directed to enhance the delivery of services to members, increasing Grameen America’s ability to serve more customers and enabling them to establish new branches across the country, as evidenced by the recent additions of branches in Miami, FL and Newark NJ.

Today, Grameen America has published a report about the impacts of going cashless and paperless on their organization. In the post below, the organization discusses some of the highlights.

Grameen America is the fastest-growing microfinance organization in the United States. To keep up with our rapid growth and provide the best services to our members, last year we completed a multi-year project migrating to a cloud-based management information system. The new system allows us to be nearly cashless and paperless, digitize our data collection and seamlessly interface with other systems and software. These technological advancements enable us to operate more efficiently and grow at unprecedented rates. Importantly, this new system helps us further empower low-income women entrepreneurs, helping bridge the gap in women’s financial inclusion and transforming the ways in which they do business.

With support from Mastercard Center for Inclusive Growth, Grameen America recently engaged with a faculty member and graduate student at Berkeley University Haas School of Business to document our use of technology in community development, focusing on how innovations enabled us to scale lending and services. The Pivotal Role of Technology in Scaling aims to share our findings, best practices and lessons learned with the broader microfinance and community development field.

The Benefits of Going Digital

In the past, our members would pay back their loans in cash at their weekly center meetings. Our loan officers, called Center Managers, would spend up to 45 minutes of the hour-long meetings collecting, counting and documenting these payments. It became increasingly obvious that moving to a cashless and paperless system would be highly beneficial and allow us to grow, become more efficient and would be better for our members as well—carrying around large amounts of cash was not safe for them (or our Center Managers). Moreover, by moving to mobile technology, we would be helping our members transition to digital banking and the increasingly cashless U.S. economy, helping to ensure their competitiveness and future success.

Our Pilot

We piloted a cloud-based loan repayment software called Mambu at our Puerto Rico branch and then at our Sunset Park branch in Brooklyn, New York. Testing out the system in two locations ensured that the new software would be accepted by the Center Managers and members, and helped us build evidence of how it would improve the efficiency and accuracy of our operations. Mambu worked well with another program called PayNearMe, which allowed each member to repay the weekly portion of their loan at a nearby CVS or 7-11 store prior to the center meetings.

The benefits were soon evident. Within one month, the time required to handle transactions and take attendance at the center meetings was cut down by an average of 50 percent.

The Manager of our Sunset Park Branch said that moving over to the new system was not easy for her staff, but, “Now they love it. If you’d ask them ‘Do you want to go back to the old system?’ they’d say ‘Never!’”

Scaling the Solution and its Impact

After adjusting and customizing the system to fit our needs—and after getting buy-in from the branch staff and the organization’s senior leadership—we began to transition all branches to the new system. Making the change had numerous positive effects: improved loan processing, enhanced auditing capacity and overall improved experience for our members.

The new software has also improved the integrity of the data we collect and allowed us to better analyze how specific branches are performing. Additionally, it has enabled us to be more responsive during crisis situations. After the devastating Hurricane Maria hit Puerto Rico in 2017, we were able to process emergency loans more quickly and pause repayments so that members did not become delinquent.

With this new technology, our field staff now has more time to serve more members and to deliver financial education and training to our members during their weekly meetings, rather than using that time just to collect loans. We are exploring new ways we can offer financial and business training and additional support to our members during these valuable meetings.

The success of our transition to a new banking platform illustrates the power technology can have on increasing the accuracy, efficiency and safety of an organization’s operations. We hope the lessons learned in this paper will be useful to other organizations embarking on this same journey.

 

This article was originally published on Grameen America.