Maintaining Growth through Technology
Reliance Financial Services, The Gambia
Founded in 2006 by three Gambian professionals, Reliance Financial Services (RFS) operates as a savings-led financial company deeply committed to the development of the Gambian people. To provide financial services to the “average Gambian,” especially those at the base of the economic pyramid, RFS, with CapPlus support, began serving small businesses soon after its founding and it proved to be a profitable and fast growing segment.
Results
A technology plan developed by the CapPlus team guided RFS through a successful IT system conversion that was critical to supporting the institution’s growth. By following the detailed roadmap to set up in-house IT capacity, RFS is now able to manage its IT infrastructure, assets and activities effectively.
Approach
CapPlus assisted RFS in an IT system conversion and strengthening of its IT department, working to identify overall business objectives, current levels of IT capabilities, and risks associated with the upgrade of the core banking solution. A CapPlus banking expert provided guidance, oversight and implementation support for the IT department, including annual planning and budgeting, asset management, data management, and security.
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IDLC Finance Limited, Bangladesh
IDLC Finance Limited (IDLC) was created in 1985 as the first leasing company in Bangladesh. It is now the largest multi-product, nonbank financial institution in the country, with two subsidiaries on the Dhaka stock exchange, more than 20 branches, and 800 employees. IDLC focuses on the corporate, retail, and SME sectors with aggressive growth plans to be the leader in SME finance in Bangladesh. CapPlus conducted a diagnostic, which served as the basis for a long-term implementation plan to achieve IDLC’sambitious targets.
Results
IDLC is now following a comprehensive roadmap to implement the changes necessary to make SME finance its leading business line. Management wholeheartedly acknowledges CapPlus’ role in assessing its strengths, challenges and opportunities, as well as providing guidance for addressing weaknesses and taking advantage of market opportunities.
Approach
CapPlus conducted a small business banking diagnostic to identify high impact opportunities for improvement. The diagnostic is a comprehensive assessment tool that analyzes the drivers of SME Banking success and overall strategic and operational improvements that are necessary to successfully serve small businesses.
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FIRST+II Program, Ghana
For decades, the journey for a Ghanaian smallholder farmer or a rural entrepreneur to obtain a bank loan was a marathon – the process could take more than 7 months from the first application to final disbursement. Ghanaian rural banks frequently require clients to build up savings deposits for 6 months, after which they may submit a loan application; banks then determine applicants’ repayment capacity based on their monthly savings. After applying for a loan, clients often wait another 3 to 8 weeks for their applications to be approved and disbursed, adding up to at least 7 months to access much-needed finance.
Because their money is tied up in the required savings account, prospective borrowers cannot use it for their businesses. For a farmer wanting to buy seeds before the rains or a trader needing inventory for a peak season, this delay can be a recipe for business failure.
Today, that narrative is changing. Under the FIRST+II (Financial Institution Resilience and Strengthening) program, a strategic partnership between CapPlus and the Mastercard Foundation, seven Ghanaian rural banks have successfully compressed that 7-month ordeal into a 7-day cruise to loan disbursements.
The FIRST+II Solution
The FIRST+II program was designed to solve systemic barriers such as these, and does so by delivering capacity building and technical innovation. FIRST+II’s team designed and is now deploying an unsecured MSME loan product grounded in cash flow-based lending. While the model itself is not new, it is novel to most rural banks in Ghana.
CapPlus has also developed and installed the Integrated Creditworthiness Appraisal Module (iCAM) as the primary appraisal tool to assess borrowers’ ability and willingness to pay. iCAM is an automated system tailored for each bank that replaces the 6-month mandatory deposit with a thorough analysis of standard customer data that ensures quality appraisals, speed, equity and transparency. Credit officers are also well-trained in understanding iCAM’s assessments and borrowers’ financial situations.
Impact on Businesses, Women, and Youth
In the first four months of implementation, the seven banks achieved an average 6.8-day turnaround time from application to disbursement and loaned GHS 8.98 million to 438 farmers and businesses. Women and youth especially benefit since they tend to have less collateral and savings: women received 74% of the loans and 66% of the total loan value, and youth received 33% of the loans and 23% of the total loan value. By reducing the waiting period, banks have also seen a surge in first-time borrowers, especially people younger than 36 years.
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