Over the past three decades, the global micro-finance sector has grown substantially, with mainstream banks realising its benefits for social support and meeting profit margins. But simple issues still plague everyday operations.
In India, for instance, handwritten entries on paper forms, which are often illegible, incorrect or incomplete, make it difficult to maintain accurate and updated local records on microfinance self-help groups.
Addressing this, Aishwarya Lakshmi Ratan, as part of the Technology for Emerging Markets Group at Microsoft Research India, spent 15 months figuring out how to help local microfinance cooperatives improve the quality of their financial records.
The solution she explored with colleagues at Microsoft Research and with a partner non-governmental organisation, PRADAN, is a low-cost digital system that combines the convenience of writing on paper, while simultaneously recording the handwritten entries and instantly storing them in a digital format.
“We used a hybrid digital slate prototype device that allows both paper-based as well as digital recordkeeping. It comes with an A5-size digitising pad and digital pen as well as a small touch screen. The ledger book is placed on the digitising pad and entries are made with the pen in ink. The minute you start writing, the movement of the pen is tracked in the background and all the entries have a corresponding digital copy created.
“The digital entries are then run through a digit recognition tool and the numbers are fed into a local database on the device. These figures are then processed and instant updates are generated. A financial record management application, based on the paper accounting system used by the self-help group, allows the accounts writer to verify all entries on the screen. Audio feedback in the local language is then played back so that the entries are validated by the members. Once the errors are corrected, the data is saved. What this means is that the solution allows users to get digital processing and feedback in response to regular handwritten paper-based entries,” explains Ms. Ratan.
An immediate advantage is that these digital records can be shared easily with banks supporting the self-help group. This hybrid solution, which made it to the MIT Technology Review TR35 list of 35 innovators under age 35, yielded entries that were 100 per cent complete in field trials with significant improvements in accuracy.
“Each self-help group runs its own little banking system. We realised that there were lots of gaps in the quality of financial data, and we wanted to help meet this need. Usually, the paper records are sent to town and then someone transcribes them into digital records for processing. Printouts of updates are then sent back to be used at the next meeting. The logistics of getting the data transcribed were heavy, and the reconciliation of errors was difficult, since the people who entered the first set and those who were transcribing it were different,” Ms. Ratan adds.
Among the many challenges the solution faced was one of no power or unreliable electricity since the device needed to be recharged. A solar charging unit was then attached to it, but that raised costs. Ms. Ratan says: “The other challenges included issues of the audio output. Our first prototype just had the numbers being read out, but field tests showed that saying them in a locally familiar format improved member engagement. We were very conscious that the solution needed to either meet or beat current costs, so we explored methods by which groups could share a device since each group only meets once a week.”
